Cresa Connection: Tollway Corridor - March 2022
Please find March's edition of my monthly update on the North Dallas-Plano-Frisco office market detailing the latest office tenant and building news as well as lease transactions recently signed.
If you have an office decision to make, please contact me for help with your real estate needs.
Louis Vuitton, the world’s most valuable luxury brand, is expanding its presence in Texas once again after having recently opened a new handbag manufacturing facility on a 265-acre ranch on the outskirts of south Fort Worth in Johnson County. Louis Vuitton, the largest brand of Paris-based Louis Vuitton Moet Hennessy which has its U.S. headquarters in New York City, has filed a construction permit to renovate an existing 3-story, 160,000 square foot office building at 2901 Kinwest Parkway in Irving. The company purchased the Irving building from Dallas-based Sunwest Real Estate in August 2021 and is planning a $15 million interior renovation. To land Louis Vuitton’s manufacturing facility in Texas in 2019, state and local officials offered incentives to the designer brand, including $851,700 from the Texas Enterprise Fund, $1.25 million from the state agricultural department to redevelop a roadway fronting the new facility and a 10-year tax abatement of 75% based on the property value and equipment. Louis Vuitton Moet Hennessy achieved record sales of $51 billion last year.
National construction firm Hoar Construction has opened a new DFW office in McKinney after a group of remote-working employees decided to migrate to the DFW region, and specifically to Collin County, during the pandemic. Hoar, which is based in Birmingham, Alabama, said this was a strategic move to position itself with its talented workforce, high-profile clients and trade partners in the DFW region. The firm, which already has offices in Austin and Houston, will move into 20,000 square feet of space at 300 E. Davis Street in downtown McKinney.
A Washington, D.C.-based real estate investor, PRP Real Estate, is searching to secure office tenants for a new Legacy West office project adjacent to the FedEx Office campus, which is situated at the northeast corner of Legacy Drive and Headquarters Drive. The future development site (6301 Headquarters Drive) is located on the east side of the FedEx Office property and is currently utilized by FedEx Office for surface parking. PRP Real Estate, which has owned the FedEx Office property since 2017, is proposing a 300,000 square foot office building for the site. Along with the new building, a large parking garage will need to be constructed between the new building and the FedEx Office building to replace the existing surface parking lot currently utilized by FedEx Office. Locally, PRP also owns the Pioneer Natural Resources headquarters campus in Irving, which it acquired in 2019 for $584 million after partnering with capital investors from Saudi Arabia and New York.
PRP Real Estate Legacy West Rendering (Source: HKS)
6301 Headquarters Drive Rendering (Source: D Magazine)
Nack Development has announced Frisco’s first brewery – Frisco Brewing Company – will break ground within the next few months at the intersection of Frisco Square Boulevard and First Street within Frisco’s Rail District after receiving city council approval for zoning changes. The 16,000 square foot facility, which is expected to deliver in mid-2023, will be home to a brewery as well as a restaurant, bakery and butcher shop. A 3-story, 22,665 square foot office building will compliment the brewery. The two buildings will be separated by an 18,550 square foot outdoor entertainment space that will host events and live music. Frisco City Council approved a $3.6 million grant for the project.
Frisco Brewing Company Rendering (Source: Community Impact)
Wilks Development has unveiled new images and updates on its plans for Frisco North (previously known as The Oxbow at Frisco), a 218-acre, $5.1 billion mixed-use development project at the southwest corner of U.S. Highway 380 and Dallas North Tollway. The project is expected to include 4,750,000 square feet of office space, 380,000 square feet of retail space, 2,200 residential units as well as hotels and a music hall. Plans also include an office campus for Uber Elevate, which is Uber’s flight transportation company, although we are unaware of any agreement in place between the two companies. Wilks estimates the project will be built out over the next 8 to 12 years.
Frisco North Rendering (Source: Community Impact)
The Frisco City Council and Frisco ISD have approved architectural firm Corgan to design the new performing arts center that will be located at Hall Park. Corgan was competing against 17 other design firms for the contract. The city of Frisco, Frisco ISD and Hall Group entered into a public-private partnership to construct the performance hall, which will be publicly owned by the district and will feature a seating capacity of up to 1,500 seats. An additional, 250-seat community venue will also be built alongside the performance hall and will by owned by the city of Frisco. The performing arts center is part of Hall Group’s $7 billion master plan to redevelop Hall Park over the next 15 to 20 years into a more full-scale, mixed-use project, including a 154-room hotel, 19-story luxury residential tower, 60 corporate executive suites and a 10,000 square foot food hall.
Dallas-based Cawley Partners has announced its newest office project – The Inwood at Alpha West – which will be situated at the southwest corner of Inwood Road and Alpha Road just north of LBJ Freeway. The 10-story, 300,000 square foot Class “A” office tower will be part of a 14-acre mixed-use development that will include a JPI-developed apartment community, Moxy Hotels by Marriott and a centralized park. Cawley is currently in the pre-leasing phase quoting $42.00/NNN for vacant space and will break ground upon achieving 100,000 square feet of pre-leasing for the office building. For more information on The Inwood at Alpha West development, see the property brochure.
The Inwood at Alpha West (Source: CoStar))
Atlanta-based real estate developer Cousins Properties is teaming up with Dallas-based Lincoln Property Company to develop the first of two high-rise office towers (Legacy Union) on a 4-acre site near the northeast corner of the Dallas North Tollway and Legacy Drive within The Shops at Legacy mixed-use development. The developers have announced that they will break ground this summer on Legacy Union Two, which will be a 13-story, 321,730 square foot office tower and feature a conference center, fitness center, coffee shop/deli and 4.0/1,000 SF parking garage. The tower will cost approximately $85 million or $265/SF to construct and is expected to deliver in early 2024. Lincoln is currently asking $40.00/NNN ($15.00/SF) for vacant space in the building. The proposed office towers will be situated next to an existing 12-story former Encana Oil & Gas tower called Legacy Union One at 5851 Legacy Circle. For more information on the Legacy Union development, see the property brochure.
Legacy Union Two (Source: CoStar)
Dallas-based hotel management company Remington Hotels, which currently owns and/or operates 90 hotels worldwide, has announced its intention to acquire another operator this year. President and CEO Sloan Dean was quoting as saying, “I do think scale matters. We’re 90 hotels and our procurement cost goes don if we continue to get a little bit bigger. Our ability to recruit, retain and have the best general managers out in the field is better if you have 150 hotels versus 100. I do think we’re at a size where an M&A transaction is accretive.” One third of Remington’s portfolio represents third-party operations and the company expects that figure to increase to half its portfolio by the end of the year. Remington Hotels currently occupies 26,633 square feet at 14185 Dallas Parkway (Centura Tower) in north Dallas.
Plano-based Green Brick Partners revealed that the homebuilder increased the number of lots it owns or controls by 98% from December 2020 (14,468 lots) to December 2021 (28,621 lots). Green Brick plans to spend $285 million on land development in 2022 and aims to deliver 4,700 home sites across 43 communities this year. Labor constraints have prevented the company from putting up nearly as many homes as they would like. Green Brick expects the firm to build on 10% to 15% of the 25,088 lots it owns or controls in DFW in 2022. Green Bricks subsidiaries include Trophy Signature Homes, CB Jeni Homes, Normandy Homes, Southgate Homes, Centre Living Homes, The Providence Group and GHO Homes. Green Brick, which has occupied office space at 2805 Dallas Parkway (Parkway Centre II) for almost 10 years, recently purchased the office building in November 2021 and currently occupies 24,000 square feet of space.
Dallas-based real estate developer Billingsley Co. has kicked off construction on the first phase of a 110-acre, mixed-use project on Coit Road just north of Bush Turnpike in Plano. The development, known as Beacon Square, will feature a combination of 800,000 square feet of office space, 20,000 square feet of retail space and 1,100 apartments and will also include 7 acres of parks. Billingsley has broken ground on 539 apartments in the project and is expected to break ground on the speculative retail space in March.
A New York court has dismissed fraud claims by owners of a failed Frisco real estate development at the corner of the Dallas North Tollway and Lebanon Road. The developers of the $2 billion Wade Park project had sued lenders who took ownership of the 175-acre property in 2019 after a loan default. Developer Wade Park Land LLC filed for bankruptcy and accused lender Gamma Real Estate Capital of defrauding the builder and wrongly taking the property. The developer has sought hundreds of millions in damages from the lender as a result of the failed deal. However, a New York federal court dismissed with prejudice the 17 claims against the lender. Atlanta-based developer Stan Thomas broke ground on the project in 2014 and construction stopped in 2017, leaving half-finished buildings and a huge hole in the ground. Gamma Real Estate Capital investors have been working with the city of Frisco on alternative development plans for the high-profile site.
Wade Park (Source: Dallas Morning News)
New York-based MetLife will be bringing The Plaza at Legacy (5465 Legacy Drive) out to market for sale. The 7-story, 223,389 square foot office building, which is situated along the north side of Legacy Drive just west of Hedgcoxe Road, is currently 82% leased with a 5.0-year weighted average lease term remaining and is anchored by LoanDepot (61,149 SF), Broadcom (50,543 SF) and Randstad (31,884 SF). MetLife purchased the building in 2014 for $58 million or $260/SF.
The Plaza at Legacy (Source: CoStar)
Dallas-based Champion Partners and Taconic Capital Advisors, which acquired the former Keurig Dr. Pepper office campus at 5301 Legacy Drive (Legacy Commons) in Plano in December 2019 for $50 million or $168/SF, have finalized a $73 million loan with California-based CIM Group to renovate the project. The partners purchased the 296,433 square foot building after the soft drink company announced plans to relocate its regional headquarters to The Star in Frisco. Since Keurig Dr. Pepper moved out last year, the owners have already spent $10 million in capital improvements to upgrade the vacant property. Renovations are currently being made to the property that will include a new building lobby and common areas, new building exterior entry and drive-up, new coffee shop, new outdoor lounge with outdoor kitchen and covered seating, updated food hall and dining area, fitness center with locker rooms and conference center. For more information on the Legacy Commons development, see the property brochure.
Legacy Commons (Source: CoStar)
Lease Transaction Comps
1. Tenant: Titan Rock Investors
Building: 2701 Dallas Parkway / Parkway Centre IV,
Type: New Lease
Size: 4,211 SF
Term: 65 months
Free Rent: 5 months
Start Rate: $17.25/NNN
2. Tenant: Northwest Hardwoods
Building: 2600 Network Boulevard / Hall Park
Type: New Lease
Size: 23,000 SF
Term: 129 months
Free Rent: 9 months
Start Rate: $24.75/NNN
3. Tenant: Proterra Advertising
Building: 16415 Addison Road / Addison Tower
Type: New Lease
Size: 3,943 SF
Term: 36 months
Free Rent: 0 months
Start Rate: $22.50/Full Service
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).
Tor Erickson | Senior Vice President
5005 Lyndon B. Johnson Freeway, Suite 800
Dallas, TX 75244