Monday, September 28, 2015

Still no oil price impact for D-FW real estate

So far North Texas’ hot real estate market is shrugging off the plunge in oil prices.

And economists who are tracking property markets predict that the Dallas-Fort Worth area will continue to outperform other Oil Patch cities, according to a new report by CBRE Group Inc.
“The collapse in crude oil prices that began a little over a year ago brought uncertainty, speculation and a negative outlook to key energy markets and how the pricing outlook might affect commercial real estate,” Robert Kramp, CBRE’s director of research and analysis, said in a statement. “Even though crude oil prices are expected to remain low for the foreseeable future, Dallas-Ft. Worth’s vibrant commercial real estate performance demonstrates how the state is well hedged against the energy downturn.”
The commercial real estate firm predicts that office vacancy rates will continue to fall in North Texas through the end of next year because the energy industry has such a small share of the local economy.
“Given the diverse industry base of Dallas-Ft. Worth and the energy sector’s 1.1 percent share of metro employment, any economic impact from low oil prices is expected to be marginal on a local level,” Michael Caffey, executive managing director with CBRE, said in the report. “This means commercial real estate occupancy sees minimal effects as our region looks to other industries like finance, insurance, wholesale trade and transportation for growth.”
D-FW’s commercial property market is still prospering while conditions are deteriorating in energy markets including Houston and Calgary, according to CBRE.
Houston leads the country in office construction and has seen a surge in empty sublease space this year as oil and gas firms have cut back.
North Texas’ office, apartment, shopping center and industrial markets are all forecast for continued growth, according to the commercial real estate firm’s report.
Energy has a larger share of Texas economy than in any other state – about 47 percent of the state’s gross domestic production.
Steve Brown/Dallas Morning News

Wednesday, September 23, 2015

Behind CBRE’s massive multimillion-dollar redo of Galleria Towers

 Not every kind of investor can buy a property for more than $300 million and invest even more millions to bring it back to its former glory, but CBRE Global Investors has a fund for that.

"We see this as an amazing opportunity to restore a landmark in the Dallas metro area to an iconic position and we're excited about making that happen," said Claudia Walraven, senior director within CBRE Strategic Partners U.S. Value 7, which is the fund that acquired Galleria Towers.
"We plan some pretty heavy re-positioning with this particular asset," Walraven told the Dallas Business Journal."For us, this will be a significant re-positioning effort compared with other properties we've bought."
Galleria Towers fits perfectly into the fund's focus of adding value to the property and its tenants, she said. The fund is also part of one of the largest brokerage firms in the world, which helps bring enough funding and know-how to re-invest in massive properties like Galleria Towers.

The Class A towers are considered a value add property because by the end of the month Dallas-based FedEx Office plans to move into its new West Plano campus within the $2 billion Legacy West development and leave about 200,000 square feet of space in Three Galleria Tower.

After FedEx Office leaves the tower, it will leave the complex about 60 percent occupied, Walraven said. In North Texas, the average occupancy rate is 82.1 percent with an average asking rate of $20.75 per square foot, according to CBRE research.
Walraven said the upgrades would help bring new office tenants to the towers. She declined to share the terms of the acquisition or amount of money being spent on the renovations of the towers.

The fund has hired Dallas-based Entos Design to oversee the architecture of the renovations. Walraven said the fund has yet to hire a general contractor.

CBRE's Celeste Fowden, Shannon Brown and Kenzie Kilgore were also hired by the fund to oversee the future leasing of Galleria Towers.

Candace Carlisle/Dallas Morning News

Economist: Texas is not in a housing bubble

Home prices in five Texas markets are well above their historical peak levels, but according to one Texas economist, this doesn't mean the state is in a bubble.

“We don’t think we are in a price bubble, but we are well aware that home prices have been increasing at almost twice their normal annual rate of increase for the last several years,” said James Gaines, research economist with the Real Estate Center at Texas A&M University.

A recent report from CoreLogic (CLGX) identified 14 of the top 100 markets in the U.S. as currently overvalued, with five from Texas.

"Home prices in five Texas markets are well above their historical peak levels partly due to strong job growth and to the absence of the severe boom-bust housing cycle that was seen elsewhere," CoreLogic reported. "Between 2006 and 2014, an oil and gas boom had fueled job and population growth in some markets, pushing home prices well above their sustainable levels in these markets.”

Gaines explained that yes, Texas had an oil and gas boom that brought jobs and people.

“When you bring people and jobs, that creates a heavy increase in the demand for housing, rental and owner,” he said.

However, now the state is experiencing a slow down in land development and construction because of the new restrictions on lending, he added.

“Over the last several years, the demand started going up much faster than the supply could keep pace with,” said Gaines. “For example, all of our housing markets are reporting significantly low volumes of homes being listed for sale relative to the demand. A normal market would have 6 months of inventory, while we are running at 3-month inventory.”

Gaines said, “Bottom line, we don’t think there is really a bubble.”

Texas never saw the same kind of volatility that happend in other markets when properties went up too much.

Looking ahead, he said while all of Texas will get through 2015, 2016 and 2017 will be rougher, with the market really feeling a hit in the first quarter or two of 2016.

“The demand for housing is still relatively strong, and even if it does fall, it will fall to a more balanced supply. When you have balance of supply and demand, it is long sustainability,” said Gaines.

Brena Swanson/Housingwire

Tuesday, September 22, 2015

It's official: CBRE Global Investors buys Galleria Towers in Dallas

A fund affiliated with Los Angeles-based CBRE Global Investors has closed on the Galleria Towers — a three-building, 1.4 million-square-foot Class A office complex in North Dallas — after having much anticipation by the real estate community.

CBRE Strategic Partners U.S. Value 7 has acquired the towers at 13355, 13455 and 13155 Noel Road adjacent to the Galleria Mall as part of a larger fund strategy. The deal is estimated at more than $300 million, according to real estate sources.

“Dallas, which is a target market for Strategic Partners U.S., has beenone of the better performing office markets in recent years,” said CBRE Strategic Partners U.S. President Vance Maddocks, in a prepared statement.

“Companies continue to relocate to Dallas, citing lower costs of doing business as well as proximity to transportation infrastructure, and the expansion of the LBJ Expressway will benefit access to this property," he added.

Gary Carr, Robert Hill, John Alvarado, and Eric Mackey of CBRE represented the seller, California-based Cannon Commercial Inc., which purchased the property for more than $300 million in 2008.

Last month, the Dallas Business Journal reported that CBRE Global Investors had the office complex under contract and planned to close on the property this month.

CBRE Strategic Partners plans to heavily invest in the property by adding its signature 5-Star Worldwide service and amenity program, which includes conference facilities, enhanced on-site tenant amenities and a fitness center.
Fund officials hope this will drive tenant demand, which will be needed as one of the property's largest tenants — Dallas-based FedEx Office — leaves for its new West Plano campus this month.

FedEx Office had a lease for eight floors totaling about 200,000 square feet at Three Galleria Tower at 13155 Noel Road. The company is in the midst of moving to its new headquarters campus within the $2 billion, 240-acre Legacy West development.

Candace Carlisle/Dallas Business Journal

Young buyers, empty nesters push D-FW condo sales to record high

With summer winding down, 2015 will go in the record books as the hottest housing market ever in North Texas.
And it’s not just houses that are selling at unprecedented levels.
More condominiums have changed hands in the Dallas-Fort Worth area this year than previously recorded.
In August alone, real estate agents sold more than 660 condos — the largest one-month total so far.
The rise in sales has been across all prices and includes everything from small studios to the largest luxury high-rise units.
“I think we are in the best demand-driven condo market we’ve ever seen in Dallas,” said housing analyst Mike Puls with Foley & Puls. “I see this trend continuing because the demographics are there and growing fast.”
Puls said the condo market is being driven by a combination of older folks exiting houses for something smaller and young professionals who don’t want to keep shelling out thousands of dollars a year in apartment rent.
“Some of these condo buyers are selling their houses and in some cases have made a big profit,” he said. “Where are they going to put that? In the stock market?
“The don’t want the stairs and maintenance of a house and they want something they can lock up and go.”
Sales up 20%
Puls’ research shows that more than 50 high-rise and luxury condos have sold in the D-FW area this year with an average sales price of about $2.3 million. That’s about 10 times what the average North Texas pre-owned house sells for.
Sales of these units are up about 20 percent this year, according to Puls.
“It’s been a good year for this market,” said agent Sue Krider with Allie Beth Allman & Associates. “The same as with houses, there is a struggle for enough inventory to sell.”
Krider said she’s seen a steady stream of baby boomers and empty nesters looking at condos in Dallas.
“When I do open houses — no matter what price point — they are coming from Highland Park, Frisco, Plano,” she said. “They want to see what they can get for their money and if they can downsize that much.
“It’s a lot of young people, too. I love the increases in apartment rental rates.”
Joseph Gullotto with Dave Perry-Miller & Associates said a shortage of condos to sell has held back the market.
“There is just not a lot to buy,” Gullotto said “People like the low maintenance, and they want to live in the city.
“There’s not a lot of new condo construction.”
In previous strong condo markets, Dallas saw lots of apartments converted to ownership. But that hasn’t happened as much this cycle because most of the apartments are owned by public companies and institutional investors.
Plus, job growth in North Texas is fueling strong increases in apartment rents.
“The landlords don’t have much incentive to convert,” Gullotto said.
Condo towers
One large condo tower is being constructed in Uptown. The 33-story Bleu Ciel is being built near the entrance to the Dallas North Tollway and will have more than 150 units.
Another high-rise condominium project planned on Turtle Creek by Canadian developer Great Gulf Homes is planned with about 60 units.
A 150-unit condo tower in the works at the $2 billion Legacy West development in Plano is getting early buyer interest.
The 30-story tower will be just east of where Toyota Motor Co. is building its new North American headquarters.
“We are seeing amazing response on Legacy West,” said marketing agent Al Coker. “We are just now getting to where we have floor plans.
“We already have 55 reservations.”
Coker said he’s just wrapping up sales of a small condo project in Oak Lawn that traded in “record time.”
“I wish I had 10 more of them.”
Steve Brown/Dallas Morning News

Wednesday, September 16, 2015

Exclusive: Regent Properties to buy, redevelop Texas Instruments' Spring Creek campus

It's been seven months since Dallas-based Texas Instruments (Nasdaq: TXN) placed its 84-acre Spring Creek campus in East Plano on the market and, now its under contract to a Los Angeles-based real estate investment firm.

Regent Properties plans to begin a massive redevelopment of the campus after the deal closes in mid-November, spending more than $150 million on re-positioning the nearly 1-million-square-foot facility, with a new master plan, facade improvements and interior renovations.

"We're very excited about this property," Regent President Eric Fleiss told the Dallas Business Journal in an exclusive interview. "We're going to overhaul it to create a destination office campus in East Plano."

This deal, upon closing, would be the biggest acquisition Regent Properties has made to date, he said. Terms of the deal were undisclosed.

The acquisition of the chip maker's Spring Creek campus at 6550 Chase Oaks Blvd. is being made after Regent Properties landed $300 million in equity commitments in December to acquire office property in North Texas and other parts of the western United States.

Fleiss said Regent Properties wants to capitalize on the in-migration of companies and jobs into Dallas-Fort Worth by redeveloping the property and marketing it Legacy Central.

The property is even more attractive because it's in close proximity to the State Farm Insurance and Raytheon campuses in Richardson, as well as the Toyota North America and Liberty Mutual Insurance campuses in West Plano.

"We think this property will give us the same, or frankly a better position than what's happening on the west side of Legacy," he told me. "We are at a much more competitive rental rate than Legacy Business Park with existing product."

After closing, the 1985-era buildings in the office park will be completely overhauled and marketed to big corporate tenants, he said. Right now, he said, Regent Properties is marketing the campus to about 7 million square feet of active, confidential deals floating around in North Texas.

The rates are expected to be 30 percent to 50 percent lower than lease rates in new build-to-suit construction. And expanding companies will have the ability to add four-story to 10-story office building to the property, he said.

Candace Carlisle/Dallas Business Journal

StreetLights Residential to move Dallas headquarters to The Union

Dallas-based StreetLights Residential plans to move its headquarters to The Union, a new mixed-use development at Field Street and Cedar Springs Road near the American Airlines Center.

The headquarters move is expected upon completion of the 22-story office tower in 2017.

"One of our objectives is to make StreetLights a great place to work and moving to The Union will punctuate that effort," said CEO Doug Chesnut, in a statement. "We can't wait to call such a dynamic project and neighborhood home."

The amenity package of The Union and the energetic design mirrors the values that StreetLights has built its company on and will help the firm attract top talent, Chesnut said.

StreetLights Residential has signed a lease for 18,000 square feet in The Union's new office tower. The Union is planned to include new office, residential and retail space that will total about 800,000 square feet. It is slated to open in 2017.

The mixed-use development will also include a 60,000-square-foot Tom Thumb grocery story on the ground level, as well as a range of restaurants that have yet to be announced.

RED Development is the project developer, who has been leading the overall design and construction of The Union since it was announced in May 2014. Dallas-based HKS Inc. is the project architect.

StreetLights is leading the design and development of the apartment portion of the project.

Dallas-Fort Worth's apartment boom continues to reach all-time records as an in-migration of jobs into the region bring more than 120,000 new residents to North Texas in the past 12 months.

StreetLights Residential has a number of new apartment towers under construction, or about to get underway in the Dallas urban core. The developer plans to bring the first high-rise apartment tower to Deep Ellum.

Candace Carlisle/Dallas Business Journal

HFF: The Village Apartments Get Refinanced

DALLAS--HFF has secured financing commitments for The Village Apartments, a 7,000-unit city-within-a-city multifamily housing community in Dallas.

The financing included a single-sponsor securitization and a floating-rate credit facility. All financing commitments were provided by Freddie Mac, and the loans will be serviced by HFF through its Freddie Mac Program Plus Seller/Servicer program. HFF was unable to offer additional comments about the transaction.

HFF worked on behalf of a joint venture between Dallas-based Lincoln Property Co.; Invesco Real Estate, acting on behalf of an institutional client; and Crow Holdings. Financing proceeds were used to retire an existing Freddie Mac loan facility and to provide additional capital for future development.

Originally developed in the ‘60s, The Village is located at the intersection of Caruth Haven and Greenville Avenue approximately eight miles northeast of downtown Dallas. The 309-acre property has an abundant amount of open green space, two lakes, a network of streams and water features and 2.5 miles of jogging/biking trails.

 Anna Caplan/GlobeSt

New apartment block coming to Dallas historic project

Dallas’ booming Victory Park neighborhood is getting another development, this one part of a century-old historic project.
Developer Leon Capital Group plans to build a six-story apartment block in the Magnolia Station community next door to Victory Park.
The 104-year-old former oil company complex was redeveloped into loft apartments in the 1990s. Now a 60-unit, one-of-a-kind rental building will go up as part of the development.
“We are hoping to start construction in the next 30 days,” said Leon Capital’s managing director David Cocanougher. “We are looking forward to adding some more rental units to the property and improving amenities for our residents.”
The new building will replace eight apartments built in the 1990s.
“It’s the only nonhistoric structure on the property,” Cocanougher said.
Dallas-based Architecture Demarest designed the building with red brick and glass to fit in with the old structures.
“It’s not as impactful as a lot of the other construction going on around us, but it complements the property very well,” Cocanougher said.
Victory Park is seeing a construction binge, with work starting on two more high-rise residential towers. Two more apartment towers are planned in the development on the northwestern edge of downtown.
“It’s pretty exciting to see what’s going on down there,” Cocanougher said.
Starting in 1993, Dallas developer Bennett Miller created Magnolia Station out of six vacant buildings built between 1911 and 1917 that formerly housed the Magnolia Petroleum Co. The office and manufacturing buildings were virtually unchanged since the 1920s when Miller redeveloped them.
There were more than 60 apartments in the original construction.
Leon Capital Group is a commercial real estate firm that has done projects in the Sun Belt and Mexico. The developer is also constructing a six-story apartment building on Oak Grove Avenue in Uptown.
Steve Brown/Dallas Morning News

Thursday, September 10, 2015

Home resales and prices set scorching pace in August

North Texas’ hot summer housing market racked up more big gains in August.
Sales of preowned homes in the area were 13 percent higher than in August 2014. And median prices rose 9 percent year-over-year, according to the latest numbers from the Real Estate Center at Texas A&M and the North Texas Real Estate Information Systems.
Real estate agents last month sold 10,223 preowned single-family homes through their multiple listing service. It was the third month in a row that resales in North Texas topped 10,000 — a new record.
Through the first eight months of 2015, preowned home sales are running about 5 percent ahead of the same period last year.
And with pending sales for next month 50 percent higher than a year ago, it’s likely the home market will hit new highs in September.
“Everything we are hearing from the Realtors and the builders is the demand remains very strong,” said housing analyst David Brown with Metrostudy Inc. “A lot of times when a home is formally listed for sale it’s already under contract.”
On average it took just 38 days to sell a house in North Texas, according to the latest estimates. There’s less than a three-month supply of properties being marketed by agents.
Brown said high prices in the new home market are driving more buyers to preowned properties.
“One reason the resale market is staying so strong is the new home market is getting so expensive,” he said. “The median price of new homes is pushing toward the $300,000 level.”
Preowned homes sold in North Texas last month had a median price of $210,000, according to the Real Estate Center.
Only 21,270 houses were listed for sale with real estate agents in the more than two dozen North Texas counties included in the report. That’s down 4 percent from August 2014. The Dallas-Fort Worth area has some of the fastest-growing housing prices in the country.
Recent reports by CoreLogic and the National Association of Realtors show that median prices in the area are up between 9 and 12 percent this year.
Steve Brown/Dallas Morning News

Tuesday, September 08, 2015

Canadian investors are making big property plays in North Texas

An East Dallas shopping strip that just sold is a small but beloved local landmark.
Matt’s Rancho Martinez restaurant and the Buzz Brews diner keep the place packed.
Maybe that’s why the 65-year-old shopping center was just snapped up by one of Canada’s largest financial institutions.
Sun Life Assurance bought the Skillman Live Oak Center from Texas investor Stone Lake Capital, which fixed up the property.
The retail buy is the latest in a string of local property purchases by investors from north of the border.
Starting in the late 1970s, Canadian real estate firms have had a big impact in Big D.
Canadian developers built a half-dozen of downtown’s office skyscrapers. They developed whole neighborhoods in the suburbs.
In recent months, they’ve ramped up purchases in North Texas, including:
The 13-story Waterway Tower in Las Colinas, a 33-year-old building in Irving, was also acquired by Sun Life Assurance.
3660 Regent Boulevard in Irving, an office campus south of LBJ Freeway, was acquired by Second City Capital Partners of Vancouver. Second City is also part of the group buying the 45-story Ross Tower in downtown.
1700 Pacific, a 49-story downtown skyscraper, was purchased by Montreal-based Olymbec Group.
The Amalfi Stonebriar apartments in Frisco, a 395-unit luxury complex, was purchased by Pure Multi-Family REIT LP of Vancouver.
Running Brook, a 232-unit apartment complex in Arlington, sold to Toronto-based Marlin Spring US Realty, the company’s first acquisition in the area. CBRE arranged the deal.
A Canadian real estate investor, H&R REIT, is also financing the project to convert downtown’s historic Dallas High School into offices for architect Perkins+Will and engineering company WSP.
“The majority of research indicates that Canadian investors make up the largest percentage of international investors in U.S. real estate,” said Andrew Levy, senior managing director of investment banker HFF. “Canadians tend to invest in the U.S. for the same reasons that most international investors do — high-quality asset base, ability to participate in the U.S. economy and diversification outside of their borders where there are also fewer opportunities.
“What is interesting about the Canadian investors, unlike a lot of Asian and European investors, is that they seem to be much more comfortable in nongateway markets like Dallas, and this is not a new phenomenon,” said Levy, referring to coastal cities.
Foreign investors in general are very bullish about America’s real estate markets.
Last year, they poured about $40 billion in direct investment into U.S. property — about 10 percent of the total market.
In the first quarter of 2015, they put in an additional $22 billion, representing about 17 percent of commercial real estate investment in this country, studies show.
Last year, Canadian investors purchased more than 450 U.S. investment properties valued at around $11 billion, according to estimates from commercial real estate firm JLL.
That’s almost four times the volume of China, the No. 2 foreign investor in U.S. real estate.
JLL last year estimated that Dallas was the fifth-most-popular market for foreign buyers, behind New York, Los Angeles, Chicago and Houston.
“Of all of the international buyers circling Dallas, they are the most prolific,” said Jack Crews, managing director in JLL’s Dallas office. “We should see others come, and are, but Canadians are here for sure.”
Steve Brown/Dallas Morning News

Office Market Is 'Very Good' in Dallas

 DALLAS--DFW added 131,000 people last year, and the area is proving to be an attractive environment for corporate relocations.

In the second RealShare Dallas panel, “Office: The Changing Landscape,” moderator Corbett Nichter, senior vice president, Adolfson & Peterson Construction, led an insightful discussion on the evolution of the sector.

“It’s a very good market,” said Greg Fuller, chief operating officer, Granite Properties. “Everybody wants to compare it to the ‘80s, and if you’re from New York, you’re afraid we’ll repeat that. But the dynamics in play in the '80s are very different than what’s at play today.”

Key submarkets involved in the action include Uptown, Preston Center, Las Colinas, Richardson and Legacy.

As for the upswing in the market, Fletcher Cordell, CCIM, and principal at Transwestern, questioned: “Are we seeing a new baseline?”

It's true: The success and scope of new projects is reaching new heights. Look no further than KDC, who is responsible for many of them in the area. Walt Mountford, executive vice president, said--to laughter in the crowd--“Essentially, we are a custom corporate homebuilder.”

From the Liberty Mutual development to CityLine, the 2.5-million square foot project with State Farm and Raytheon in Richardson, Mountford’s view is decidedly optimistic. State Farm was a previous client, and asked KDC to build them a campus, with a caveat.

“They asked us to integrate in their buildings privatized [entities],” he said of what he called a “place-creation asset.” “That’s why the apartment community is so important, to maintain the restaurant and retail that is already there. They were one of the first folks to see the labor bubble and they wanted to be that employer of choice.”

In additional, the project’s access to light-rail “extends the walkability of CityLine, which is a real attribute,” he added.

One area of concern remains the escalation of construction costs. With a lot of product on the market in a condensed time frame, it is a challenge.

Coming full circle, the conversation routed back to labor.

“On the office side, it’s all about work force,” said King White, CEO of Site Selection Group, one of the only participants, he said, with non-landlord insight. “One dollar in labor cost savings is the equivalent of $10 in rent. It’s not just a real estate cash-flow analysis. When you look at cost benefits, lots of factors come into play. You’ve got to see from the national scene, can DFW continue to the same labor rates? Economic incentives are the icing on the cake. With Gov. Abbott coming on board, things are now more streamlined.”

The outstanding current state of the sector was not to be overstated.

“This is likely to be the most phenomenal market that we’re likely to ever see and we’re not going to screw it up this time,” Mountford said.

Anna Caplan/GlobeSt


Stephen Ketner has heard this talk before. On Monday morning, Steve Brown at the Dallas Morning News reported plans that Westdale Properties and StreetLights Residential are teaming up to bring a 17-story high-rise to the outskirts of Deep Ellum, and the hand-wringing was almost immediate. This could be the death knell for Deep Ellum, the latest sign of gentrification and greedy developers creeping in to sap the neighborhood of its soul — and right when things were looking up.

But Ketner, a musician with the Stevie James Trio and the Free Loaders who has lived in Deep Ellum since 2008, doesn't share those concerns. “When I first moved in it was pretty dead; there was like one bar open,” he says of Deep Ellum. “I like what’s happened since, and the apartment complex is far enough away; they’re not tearing down Trees." He's not worried about the Uptown crowd moving in and ruining things, either. "Those guys will ride over on their bikes, get a beer and put a dollar in my tip jar,” he insists.

Deep Ellum has changed rapidly this year, with the return of The Bomb Factory in March being followed by the arrival of Braindead Brewing in the spring and a slew of other new businesses, particularly bars and restaurants that have opened along Elm Street in the past month. Places like Brick and Bones, Armoury D.E. and On Premise have helped attract much bigger crowds to the area each week, and while many if not most of those new visitors don't match the tattooed artist archetype, they are almost certainly necessary for the neighborhood's continued growth.

It hasn’t helped that the language of StreetLights CEO Doug Chestnut, as quoted by the DMN, is so patronizingly wary of this kind of backlash. Empty phrases like “neighborhood-friendly urban development” and assurances that the towers — set to be located on Main Street near Baylor Medical Center and called The Case Building — will be “inspired by the architecture and style of Deep Ellum” ring fairly hollow to anyone who’s seen this sort of development before. Trust doesn’t come easily, especially for the corporate types bringing sizable developments to our neighborhoods.

Then again, it’s always a matter of perspective, because the most staunchly anti-gentrification folk among us will be right there in line for shows at the Westdale-owned Bomb Factory, despite the fact that the impact of its revitalization was far from small and did its own damage to the surrounding citizens (even if that impact has overall been positive). Bucks Burnett knows that side firsthand, having had his one-of-a-kind 8-track museum shut down in the wake of rising property values, a shift that also forced other tenants in his building to move.

Yet Burnett has consistently described Westdale as treating him and the others affected with kindness and generosity. “My museum currently sits in a storage unit with an unlikely future,” he says. “So as one who actually has the right to complain, I simply won’t.” Instead, his advice to worried small business owners and residents is to “make friends with the giant” in the neighborhood and embrace the new customers these apartments will likely bring. Adapt or don’t, survive or perish.

Frank Campagna, owner of Kettle Art Gallery and a Deep Ellum staple for more than 30 years, echoes Burnett’s suggestion, though with a noticeable streak of pessimism. “All you can do is support your local businesses and hope for the best,” he says, after expressing his worry that artists will have to move out of the area thanks to property values still on the rise. Burnett is even more pointed: “Deep Ellum is overrated anyway,” he contends, admitting that he may pay for the remark later. “A 17-story high-rise isn't intrinsically bad. This is what developers do. You don’t have to be a bunch of crybabies about it.”

As Burnett points out, the apartments will bring an influx of new potential customers to the area, and everyone from businesses to artists will have the chance to make them regulars. The only way for Deep Ellum to grow, although this idea may be at the root of the disagreement, is through a continuing rotation of cultures and personalities, businesses and residents.

Like every reasonable responder, Ketner realizes this is all out of our hands. “I worry about the city’s reaction,” he says, expressing the optimistic hope that they will work together with landlords to keep rents from skyrocketing. “They have to realize why the value is going up in the area: It’s the musicians, the business owners and the artists that hang out there. That’s what people want to be a part of.”

The times may be a-changin’, but at least in Deep Ellum, it’s all pretty predictable. As for Burnett, what’s his biggest concern? “We need a gas station around here.” Hard to argue with that.

Brian Peterson/Dallas Observer

HRI Properties gets underway with massive $56M redo of historic downtown Dallas building

New Orleans-based developer HRI Properties has begun an extensive $56 million redevelopment of the historic Mayflower Building in downtown Dallas, which will convert the building into an apartment and retail building.

The Mayflower Building at 411 N. Akard St. is blocks away from the LTV Tower in downtown Dallas, which HRI Properties also owns. The Akard Street building will be converted into 215 apartments, 14,000 square feet of retail space and on-site parking.

"We are excited to announce our plans to redevelop this historic property into a mixed-use building with luxury apartments and ground floor retail space," said Tom Leonhard, the firm's president and COO, in a statement.

"The building's convenient downtown location will offer both residents and guests of Dallas another quality property that complements the exciting resurgence of downtown Dallas into a 24-hour neighborhood," he added.

Dallas-based Merriman Associates/Architects Inc. is the project architect. Andres Construction Services LLC is the general contractor on the project.

The redevelopment will turn the historic building in a luxury apartment property with condo-level finishes that include stone countertops, hardwood floors and stainless steel appliances.

The apartment community will also include a fitness center, community room, rooftop kitchen and an outdoor kitchen.

The 14,000 square feet of retail space will be managed by Dallas-based E. Smith Realty Partners. Emmitt Smith said the Mayflower Building's redevelopment will play a vital role in the revitalization of downtown Dallas.

Financing for the $56 million redevelopment was provided by Capital One, AEGON and Stonehenge Capital. Earlier this year, HRI Properties received $10 million in a tax increment financing grant from the City of Dallas.

Candace Carlisle/Dallas Business Journal