Cresa Connection: Tollway Corridor - August 2021

Please find August's edition of my monthly update on the North Dallas/Plano/Frisco office market detailing lease transactions recently signed, tenants searching for office space in the market and the latest office building news.

If you have an office decision to make this year please contact me for help with your real estate needs.

Market News

Hall Park’s newest office development, which will represent a 14-story, 300,000 square foot tower at the corner of Warren Parkway and Internet Boulevard directly across from The Star, is scheduled for delivery in October 2023. This land site was previously developed with two, 3-story office buildings that were demolished last year after only having been in existence for approximately twelve years, which shows the meteoric rise in land values at Hall Park over the last decade. The Tower at Hall Park will feature 27,000 square foot floor plates on the upper 8 floors and tier down to 12,000 square feet on the 1st floor. Hall Park is currently marketing space in the to-be-constructed building at $41.00/SF, NNN (+-$17.00/SF). An adjacent 236-key boutique hotel and 300-unit apartment tower are also planned for the site, which comprises four acres.

Linking the upcoming performing arts center at Hall Park to The Star will be a 5-acre park that was recently approved by the Frisco City Council. The park, which is projected to cost $30 million, will resemble Dallas’ Klyde Warren Park and be located along the south side of Warren Parkway between Gaylord Parkway and Internet Boulevard. The city is contributing $15 million toward the park with the remaining $15 million coming from Hall Group founder Craig Hall. Site work will begin in late 2021 and will feature a food hall, stage, water features, dog area, children’s play area, splash pad, art pavilion and green space.

Jerry Jones’ Blue Star Land Co. is moving forward with site work on their 11-story, 325,000 square foot office tower near the corner of the Dallas North Tollway and Cowboys Way at The Star. The $65 million office project is scheduled to deliver in early 2023.

Keurig Dr. Pepper’s 350,000 square foot office building, which is situated at The Star on the north side of the Dallas Cowboys training facility, will deliver later in August 2021. The company currently employs 1,100 workers and has the expansion capability in the building to grow to a 1,500-person workforce.

Plano-based Resilient Healthcare announced last month that it has partnered with United Healthcare, making its services in network for United patients. Resilient specializes in home healthcare for patients with serious illnesses and is the first healthcare company that specializes in home-based, interdisciplinary care to partner with United. Resilient has more deals in the works, including launching a hospital-at-home program with HCA Healthcare’s North Texas division. Resilient currently employs 40 full-time employees and over 130 clinicians across a wide range of specialties. CEO Dr. Jackleen Samuel started Resilient in 2018 when she was 26 years old with the mission of reducing emergency room visits for dehydration, infections and other ailments that could be treated with home healthcare.

Florida-based real estate investor ESJ Capital Partners has acquired Park Ventura, a single-story, three-building office complex located just west of Preston Road on the north side of Park Boulevard. The 194,000 square foot business park, which was developed from 1999 to 2001, is currently 90% leased to a variety of tenants, including Chevron, Cardinal Financial and Radnet. This represents ESJ’s first purchase in the DFW market.

Colorado-based investment firm Tyton Holdings has acquired the Addison Airport Office Center at 16051 Addison Road and will be relocating its headquarters from Littleton, Colorado. The 52,117 square foot building is located at the southwest corner of Addison Road and Keller Springs Road and was sold by Dallas-based Harkinson Investment Corporation. The building has attached aircraft hangars that will house the buyer’s corporate aircraft. Harkinson, which had owned, leased and managed Addison Airport Office Center since 1997, had recently invested $2.25 million in capital upgrades, included a glass lobby overlooking the airport. The asset was 56% leased to 19 tenants at the time of the sale and is currently quoting rental rates of $19.50/SF + Electricity. Tyton Holdings has invested in businesses in the oil and gas, fabrication, waste management and aircraft manufacturing sectors and has annual revenues of over $500 million.

Dallas-based developer Trammell Crow is seeking approval from the city of Plano planning and zoning commission for the go-ahead to build the second tower in its Legacy West office project. Crow is currently building a 21-story, 327,000 square foot office tower on Legacy Drive west of the Dallas North Tollway that is 100% leased to pharmaceutical firm Reata. In June, Crow filed plans with the state for a second, 25-story, 400,000 square foot office tower to be built next door to Reata’s high-rise. Designed by HKS, the second building would cost $85 million and construction would start in November 2021 with a late 2023 completion date. It is rumored that a California company is shopping the Plano and Frisco markets for a large block of office space that would fit the bill for this project.

Ericsson, the Swedish telecom giant with its North American headquarters near Legacy West, has announced a partnership agreement with Verizon to expand its U.S. 5G network in a $8.3 billion deal. Under the five-year agreement, Verizon will utilize Ericsson’s different technology solutions to expand its ultra-wideband 5G coverage. This includes the Massive MIMO, Ericsson Spectrum Sharing and the Ericsson Cloud Radio Access Network. The deal represents Ericsson’s single largest transaction in its history, which dates date to 1876.

Plano-based snack foods company Stryve began trading on the NASDAQ under the ticker symbol “SNAX” in late July. The company’s merger with special-purpose acquisition company Andina Acquisition Corporation valued the snack foods brand at $170 million. The combined company was renamed Stryve Foods Inc. Stryve began by selling cured meats known as biltong, which is an air-dried, jerky-like beef originating form South Africa that boasts less sugar and additives than traditional beef jerky. Stryve has been growing rapidly year over year, recording $14 million in sales in 2019 and $20 million in 2020 and estimates it will reach $51 million in 2021. Its biltong snacks are in 17,000 stores nationwide, including Walmart, Kroger, Sprouts, 7-Eleven and 25 other retailers. The company has also pulled in executive talent with experience in the snack foods industry, including from Dr. Pepper, Snapple and 7-Eleven.

Uber Technologies’ freight business will acquire Frisco-based logistics technology firm Transplace from TPG Capital for $2.25 billion. Uber announced that the transaction to acquire Transplace would accelerate Uber Freight’s path to profitablilty, with Uber forecasting the combination will propel its Uber Freight segment to break even on profit by year-end 2022. The transaction will be paid via $750 million in parent company Uber’s common stock and the remainder in cash. With Transplace’s premier shipper network platform combining with Uber Freight’s innovative supply platform, Uber expects to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment along with greater efficiency and transparency for shippers and improved operating ratios for carriers.

Local corporate employees of J.C. Penney have been working remotely since the beginning of the pandemic and vacated its longtime Legacy West office campus last November. For in-person meetings, employees are reporting to a former Penney store at Vista Ridge Mall in Lewisville that closed as part of Penney’s bankruptcy reorganization. An active search for a permanent home office location is in the works, with Collin and Denton counties representing the most likely address. Based on pre-pandemic employee-to-square footage ratios, Penney is likely in the market for 250,000 to 350,000 square feet of office space.

Plano-based aerospace company Martin UAV has been acquired by San Diego-based Shield AI. With the acquisition, Shield AI – which applies self-driving car technologies to military aircraft – will integrate its Hivemind autonomy software to Martin UAV’s vertical takeoff and landing unmanned aircraft (called V-BAT). Martin UAV, founded in 2015, serves several different markets, including the defense, government and commercial industries. The addition of AI technology will better equip the V-BAT to complete sustained operations in difficult environments. “GPS and communications on the battlefield are no longer assured. A great aircraft without AI to make intelligent decisions will be sidelined against China, Russia and an increasing number of adversaries who are fielding electronic warfare and anti-air systems,” said Martin UAV CEO Ruben Martin. The V-BAT is propelled by a single, ducted, thrust-vectored fan and takes off and lands like a SpaceX rocket. The aircraft offers 11 hours of flight time, carries 25 pounds of payload and has a logistics footprint that fits in the bed of a pickup truck or Blackhawk helicopter. Terms of the deal were not disclosed, but Shield AI raised $90 million in Series C funding in February 2021.

Arizona-based Taylor Morrison Homes has purchased a tract of land from Hunt Realty Investments and Karahan Companies for almost 500 single-family homes within the 2,500-acre, $10 billion Fields development, which stretches between Panther Creek Parkway and U.S. Highway 380 north-south and Preston Road and Teel Parkway east-west. The Frisco project, which surrounds the PGA of America’s new headquarters and two championship golf courses, is planned to include 14,000 homes and apartments along with retail, restaurant and office space. Hunt Realty and Karahan purchased the 2,500-acre tract of land in 2018 from the estate of the late Dallas businessman Bert Fields Jr. Home prices in the Taylor Morrison subdivision will range from $500,000 to over $1,000,000 and construction will start this fall. At full build-out, the Fields development is expected to have a daytime population of 30,000 residents and workers.

Lease Transaction Comps

1. Eikon Consulting Group
Building: 6513 Windcrest Drive / Tollway North Office Park
Type: Renewal
Size: 5,324 SF
Term: 62 months
Free Rent: 2 months
Start Rate: $17.00/NNN
Bumps: $0.50/SF
TI: As Is

2. Sweet Water Financial
Building: 5057 Keller Springs Road / Liberty Plaza II
Type: New Lease
Size: 4,408 SF
Term: 65 months
Free Rent: 5 months
Start Rate: $22.00 + Electric
Bumps: $0.50/SF
TI: $15.00/SF

3. Meriplex
Building: 2745 Dallas Parkway / Parkway Centre Three
Type: New Lease
Size: 10,950 SF
Term: 52 months
Free Rent: 2 months
Start Rate: $27.00 + Electric
Bumps: $0.50/SF
TI: As Is

4. Cortica
Building: 5055 W. Park Boulevard / Park Ventura
Type: New Lease
Size: 5,332 SF
Term: 39 months
Free Rent: 3 months
Start Rate: $23.00/NNN
Bumps: $0.50/SF
TI: $10.00/SF

5. Moody Nolan
Building: 5001 Spring Valley Road / Providence Towers
Type: New Lease
Size: 3,342 SF
Term: 63 months
Free Rent: 3 months
Start Rate: $23.00/NNN
Bumps: $0.50
TI: Turnkey

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I specialize in representing office tenants in the North Dallas/Plano/Frisco market. Please let me know if I can be of service with your real estate needs (relocation search, expansion, lease renewal negotiations, building/condo purchase, sublease, portfolio management).

Learn why Cresa only represents tenants/occupiers exclusively.

Tor Erickson | Senior Vice President

Cresa
5005 Lyndon B. Johnson Freeway, Suite 800
Dallas, TX 75244

469.323.5395
terickson@cresa.com
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