Monday, November 10, 2014

Investors plan big for newly purchased Dallas Design District properties

Jim Tuttle/Staff Photographer
The Scott+Cooner furniture store on Hi Line Drive is among the Design District’s trendy businesses. Investors have bought about 700,000 square feet worth of space in the area.
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A group of investors headed by Dallas real estate firm Dunhill Partners that includes oilman Tim Headington and Highland Park Village’s owners has bought a big chunk of Dallas’ Design District.
The partners acquired 33 acres and about 700,000 square feet in buildings along Hi Line Drive, Oak Lawn Avenue and Stemmons Freeway, just northwest of downtown.
The new owners plan to market the buildings that form the heart of the district to high-end designers and other tenants and eventually redevelop some of the property for high-rise construction.
The neighborhood, which got its start as a scruffy business district in the 1950s, is seeing a huge real estate boom, with new restaurants, apartment towers and retail.
“We are going to take what’s there and reinvigorate it and keep it going,” said Dunhill CEO Bill Hutchinson.
“Look at Uptown and all the high-rises over there,” Hutchinson said. “Where’s it going to go next? The Design District is a natural evolution.”
Dunhill purchased the more than one dozen properties from Houston investor Lionstone Group, which bought the real estate in 2007. Lionstone and its Dallas partner, Mike Ablon, were successful in transforming the former industrial and commercial neighborhood with a mix of expensive apartments, trendy restaurants and new retail.
At least three large new apartment developments are in the works for the area.
“It’s now cool, it’s trendy and it’s got great restaurants,” Hutchinson said. “And it’s still got the designers and the showrooms.
“There are designers who aren’t in the district that should be there, and I plan on attracting them,” he said.
At the same time, Hutchinson said the new owners will be looking for ways to upgrade existing properties and to make plans for further construction.
“I’ve got some of the biggest names in Dallas behind me to help me strategize for development,” he said. “We have over 100,000 square feet of vacancy down there we can immediately lease up.”
The biggest portions of Dunhill’s purchase includes the 110,000-square-foot Decorative Center complex at the corner of Oak Lawn and Hi Line and the 370,000-square-foot Dallas Design Center at 1025 N. Stemmons Freeway.
Smaller buildings that are part of the acquisition house popular restaurants including the Meddlesome Moth, Pakpao and Oak.
Dunhill and his partners bought the property after the prime real estate came on the market this summer.
“We had a lot of interest from around the country and a lot of offers,” said commercial real estate executive Jack Crews of JLL, who marketed the property along with Evan Stone. “It was very competitive.”
Headington, who is one of the investors with Dunhill, is a major player in the downtown Dallas property market, with projects along Main Street including the popular Joule Hotel.
Highland Park Village’s owners, which also are part of the new ownership, include Dallas businessman Ray Washburne and family members of the late Margaret Hunt Hill.
Longtime Dallas real estate broker Newt Walker is also an investor, Hutchinson said.
“It says Dallas people are investing in Dallas,” said Ablon. “It’s great when something works out that way.”
Ablon said he and the previous owners are “terribly sad to see it go” but it was the right time to sell.
Ablon and Lionstone probably more than any other group helped shape the district into its current form.
“This neighborhood has morphed itself,” Ablon said. “We tried to keep the fabric of the Design District and honor its history and bring in other pieces that make it interesting.”
Along with the Design District, Lionstone has been an investor in the Dallas office market along with Ablon.
“The Dallas Design District has been a solid investment for Lionstone,” Lionstone chief investment officer Glenn Lowenstein said. “We are thrilled with the development, and we wish Dunhill the best as they take the helm.”
Lionstone’s original purchase was from Dallas’ Trammell Crow family, which owned the properties for decades.
Some buildings were sold to developers and razed for apartments and retail projects.
More than 1,000 additional apartments are now in the planning stages in the area on sites near the real estate Dunhill just purchased.
Developers including Trammell Crow Residential, PM Realty and Harwood International all have major projects in the works between Stemmons Freeway and the Trinity River.