Friday, February 06, 2015
Turtle Creek office development is among several projects coming to the area north of Uptown
Prescott Group's 14-story 2727 Turtle Creek project is just one of several big investments being made in the area
The developers of an office project in the works in Dallas’ Turtle Creek neighborhood hope to catch a boost from the boom next door in Uptown.
Prescott Group has purchased a 5.5-acre property next door to the Mansion on Turtle Creek where it plans to build a 14-story, 380,000-square-foot office and retail project.
The development — called 2727 Turtle Creek — is just the latest in a series of new deals in the Oak Lawn market.
High land prices and soaring building rents in Uptown are causing builders and business tenants to take a look along Turtle Creek. Several new projects are on the way.
“This corridor is seeing a significant amount of new investment,” said Prescott Group president Vance Detwiler. “We are going to create a totally new product with our project.
“We have over 1 million square feet of leasing inquiries before we have even announced anything.”
Prescott is building its project on the site of the former Republic Insurance office campus. The developer just purchased the two-building office complex, which has been vacant for almost a decade.
“We’ve been looking at this property for almost two years,” said Prescott CEO Jud Pankey. “We had been hunting a corporate office site and had a couple under consideration.”
The new owners will tear down an eight-story building constructed in the 1980s. A six-story office building that dates to the 1950s will be stripped back to the beams and included in the new construction.
Merriman Associates Architects has designed a modern glass and concrete office tower that includes a landscaped deck overlooking Turtle Creek on the sixth floor.
A ground-floor restaurant space and conference center are planned.
The project will use the existing 1,100-space parking garage on the north side of the property.
Prescott plans to start construction next year and have the building ready by the end of 2016.
By using the existing parking garage and part of the old structure, Prescott plans to rent the space at a lower cost than new Uptown buildings, which are topping $45 per square foot.
With super-high office rents in Uptown and land prices above $200 per square foot, real estate brokers say that some businesses may opt to go to Turtle Creek and Oak Lawn for cheaper offices.
“It will be interesting to see what happens in that market,” said Joel Pustmueller with Peloton Commercial Real Estate. “Turtle Creek could become more important for offices.”
The Prescott office project is just one of several development and remodeling deals on the way along Turtle Creek.
The Perot family is building its new corporate headquarters on the south side of Turtle Creek at Bowen Street and the Katy Trail. The mid-rise building has been under construction for several months.
And a partnership that includes M-M Properties and General Electric Pension Trust is seeking tenants for an office building planned across the street at Turtle Creek Boulevard and Cedar Springs Road.
A couple of nearby buildings are set for remodeling.
Cardinal Capital Partners just bought the 3131 Turtle Creek office tower and will renovate it. Built in 1972, the 140,000-square-foot building overlooks Turtle Creek park and has views of downtown Dallas.
Another office tower, at 3811 Turtle Creek, has been acquired by KBS Realty, which plans to remodel the property.
“KBS is going to spend money on the building and upgrade it,” said Scott Walker with commercial real estate firm Transwestern, which is working on the project. “They will minimize the 1980s look and get rid of some of the old finishes.”
Walker says the Turtle Creek market can compete for some office tenants who want to be close to the central business district.
“This whole area has a lot of history to it, and it’s well-located between the Park Cities and Uptown,” he said.
Turtle Creek has seen millions of dollars in building purchases this year.
The 3500 Maple Avenue office tower sold for more than $64 million. And 3811 Turtle Creek is estimated to have been purchased for close to $75 million.
A sale of the 14-story Park Place at Turtle Creek office tower is in the works and is estimated to be in the area of $45 million.
Real estate broker Newt Walker — who arranged the sale of the Republic Insurance buildings to Prescott Group — said it will be hard for developers to find affordable office construction sites along Turtle Creek.
Walker said high-rise apartment developers are competing for properties.
“Because of what the apartment rents are generating, they can afford to buy the land,” Newt Walker said. “The residential market had outperformed office in the last couple of years.
“Now that Prescott has bought the Turtle Creek tract, there’s not much left to choose from."
Steve Brown, The Dallas Morning News