Thursday, June 01, 2017

Major upgrade to Dallas' iconic Fountain Place to lure big tenant

With construction underway on a $70 million upgrade to the iconic I.M. Pei-designed Fountain Place skyscraper in downtown Dallas, real estate executive Johnny Johnson said he expects to land a big tenant in space now occupied by the local division of the U.S. Environmental Protection Agency.

EPA's Region 6 plans to leave Fountain Place for another downtown Dallas office tower in early 2019, leaving a large opening in a high-end office building in the city's central business district for a big tenant shopping for a new locale.
"This will be a unique opportunity for a large user that would've otherwise looked at a build-to-suit or other large tenant play in the Arts District or in Uptown," Johnson, an executive managing director at Cushman & Wakefield, told the Dallas Business Journal.

"We will have almost 300,000 square feet of space, which is the largest block of existing office space in a major Class AA building," he added. "With the development underway, we are experiencing peaked interest from major tenants."
Johnson said there are two or three active real estate deals in the preliminary of shopping for more than 100,000 square feet of new office space in downtown Dallas.

And there's been a "great flurry," of activity on lease renewals in the building, sparked by the massive redevelopment of the skyscraper, which will add a new 10-story garage with four plaza-level restaurants at its base with building enhancements.

Those new renewals include:
  • Bracewell LLP extended its lease for nearly 40,000 square feet
  • Wells Fargo renewed its lease totaling 123,650 square feet
  • Gerald Ray renewed its 11,500-square-foot lease earlier this year
Tenet Healthcare (240,000 square feet) and Hunton & Williams (87,800 square feet) also signed long-term lease extensions in 2015. Johnson and Lauren Napperof Cushman & Wakefield represented the ownership group, Atlanta-based Goddard Investment Group.

Along with Goddard's investment in Fountain Place's renovations, AMLI Residential is also underway on a $150 million, 45-story luxury apartment tower at Field Street and Munger Avenue on the tract adjacent to the skyscraper.
The 367 high-end apartments, coupled with the new restaurants, will further enhance Fountain Place for its office tenants, Johnson said.

"This will make a profound impact on the quality of the life of people working here," he added. "We are also repurposing the building's space to add a tenant lounge concept and take out the mezzanine in the lobby to bring in expanded 30-foot ceilings."

Fountain Place is an occupancy rate of 85 percent, with about 155,000 square feet immediately available. In 2019, the EPA's departure will free up 295,000 square feet.

The 1986-built building will be transformed from a 1980s-vintage office property into a newer, more millennial-friendly, model, real estate executives say.
Goddard Investments' Principal Richard Markham said even though the exterior of Fountain Place is "impeccable and timeless," that the interior felt like "your grandfather's building."

The goal: Bring Fountain Place in line with the finest buildings in the country.
Johnson, who has worked on real estate in downtown Dallas for more than 30 years, said this is the largest redevelopment he has seen yet on a skyscraper.
"Nothing like it has ever been done before," Johnson said. "Trammell Crow Center will be a phenomenal redevelopment and I see Trammell Crow Center and Fountain Place as two buildings doing significant redevelopments on iconic buildings.

"Big tenants are looking for an urban core environment and we are seeing tenants wanting to attract a younger workforce looking at this kind of space."
JP Morgan Asset Management is making a major investment of $135 million into a multi-phase redevelopment and ground-up development at Trammell Crow Center.