Dallas Developers: Go Mixed-Use in 2019 or Go Home As Dallas Adds Thousands of New Residents Develo
When Dallas developer Craig Hall acquired a big parcel of land off a deeply rutted dirt road in Frisco in the late 1980s, he envisioned a place where he could build an upscale office park. Today, it's the fastest-growing city in the country -- and a symbol of the transformation of North Texas.
But at the time, not many people even bothered showing up to Hall's grand opening affair of the new park. Frisco, which only had about 6,000 residents at the time, was one of the last places envisioned for such an office park. Now, nearly three decades later, Hall is once again looking to transform this little piece of North Texas into something greater. Show Full Story
Hall Park, a 162-acre park with 2.5 million square feet of office space, sits in what is now the city adding residents faster than all others, according to the federal government. At last count, the U.S. Census clocked Frisco with 177,286 residents. And Hall has begun putting together early plans for the next iteration of the office park, which will better connect Hall Park to its neighboring developments, which includes The Star in Frisco, the home of the National Football League's Dallas Cowboys.
He has begun to develop plans for a high-end office and residential building at Hall Park, which, once design is complete, could include up to 500,000 square feet of office space and about 40 residences. The addition would bring a new use -- residential -- to Hall Park and add to its growing density. "We are looking at plans and what we want to do next because we have plenty of room to add quite a lot of square footage," Hall said. "We need to make sure we have a variety of uses from office to residential to retail space."
Hall isn't the only developer looking at the next evolution of mixed-use developments in North Texas in 2019. Other builders are clamoring to enhance their projects and build the region's next great walkable community, following in the footprints of the success seen at Legacy West, a $3.2 billion mixed-use development in Plano, which was created by developer Fehmi Karahan. Developers have seen how mixed-use projects pay off financially, with corporate America and residents voting with their feet as office tenants flock to these new centers of activity residents willing to pay rental premiums for apartments in amenity-rich mixed-use projects.
This trend has been on the development forefront for years, but has really gained traction in Texas in the past decade, partly because of the migration into the area from other major U.S. cities seeking this kind of construction and the readiness of lenders to back mixed-use projects, said David Kahn, CoStar's market analyst for Dallas-Fort Worth.
"The growth of mixed-use developments has accelerated this cycle because of the stigma left behind after the Great Recession from building stand-alone office buildings or garden-style apartments in the middle of nowhere," Kahn said. "Lenders and city officials have seen the need for these projects to work together in some master plan for a community."
Dallas isn't a stranger to mixed-use projects prior to this decade. Victory Park, a 75-acre mixed-use development anchored by the American Airlines Center began to take shape in the early 2000s. But that project was widely considered a failure before the Great Recession, a casualty of timing. In the past few years, Victory Park has finally found a winning combination with the help of a $100 million upgrade, added retail, restaurant and entertainment options and thousands of apartments.
For developers, Kahn said they have realized the importance of creating connections rather than competing or existing in their own worlds. That has big names, such as Dallas-based real estate investment and development firm Howard Hughes, Dallas development firm KDC, Hunt Realty, and Houston-based developer Hines, along with many others, looking to create some of Texas' next great cities or mixed-use destinations. And, Kahn said, he wouldn't be surprised if even more mixed-use projects begin to take shape in 2019.
"At the end of the day, if we keep adding 150,000 people a year to Dallas, which is essentially what the region has done for the last eight years, we're going to still see an insane amount of demand in commercial real estate in Dallas," he said.
One of the region's most effective master-planned, mixed-use communities known for luring big business to the North Dallas area is Cypress Waters, a 1,000-acre community that sits on the edges of North Lake and spans from three municipalities.
So far, Nokia, Brinker International, a spin-off division of Toyota Group and 7-Eleven, along with dozens of other companies, have already decided to plant major operations at Cypress Waters. The proximity to Dallas Fort Worth International Airport, which sits less than seven miles away, coupled with the natural beauty around North Lake and highly-ranked schools have led to some big corporate victories.
Dallas developer Lucy Billingsley, the daughter of famed real estate developer Trammell Crow, knew the location would be appealing, but, she said, she didn't know it would be such a corporate magnet.
"We knew this area had a lot of great benefits," Billingsley said. "But we didn't know we could create a place to attract millennials, but we were fortunate enough to have ideas that worked and then we got momentum."
Cypress Waters has become a mecca for business this real estate cycle, but it has also added to the amenity base in this part of the Dallas area. Those amenities include retail and restaurants, some which will be lakeside at North Lake, as well as a six-mile hike-and-bike trail around the lake, a variety of residential homes, dog parks and outdoor sculpture art transforming the landscape into a creatively interesting environment.
The developer also programs the campus from fitness classes to outdoor activities, helping their tenants recruit top talent, basically stepping in and bringing services found at much larger corporate campuses, said Marijke Lantz, a senior vice president at Billinglsey.
It's a complete shift from the historical role played by developers, Billingsley said, with developers -- and landlords -- focused on how they can enrich an environment to aid in the recruitment and retention of employees. With that in mind, Billingsley said she plans to add to Cypress Waters' profile in coming years by adding a new convention hotel and a rail line station with the added 26-mile DART Cotton Belt Rail Line transporting people from eastern Plano-Richardson through Cypress Waters to Dallas Fort Worth International Airport. Billingsley has already begun talking to various hotel flags for the convention hotel.
Shortly after adding The Boardwalk, a restaurant hub connected by a boardwalk, to Granite Park, a 93-acre, 2.6 million-square-foot office park with convention center hotel in West Plano, the developer set a new suburban office sales record on the newly completed Fannie Mae regional campus.
A German-based investment group purchased the 10-story, 324,100-square-foot office building at 5600 Granite Parkway for nearly $165 million, or $506 per square foot, putting it on par with building acquisitions in Uptown, which also have some of the highest rents in North Texas. By adding a walkable amenity base for tenants and creating a destination for restaurants, Plano-based Granite Properties Inc. was able to maximize the real estate value in the office park.
The record-setting deal underscores the developer's future plans to create a more 24-7 environment for companies and their employees in the park, said Will Hendrickson, managing director of the Dallas area for Granite Properties.
Granite Properties plans to begin a $3.5 million project to extend The Boardwalk with a music performance area and create more walkability in the park. The development team is also in the design process to deliver the park's tallest building yet: A 17-story, 400,000-square-foot office building with the potential for some retail or hospitality-like component.
With the office park being 94 percent leased, Hendrickson said the development group is looking for a big tenant to help kick off the new building. If the group lands a big corporate tenant, he said the project could begin as early as mid-2019. Dallas-based BOKA Powell is the exterior architect on the project. Dallas-based HKS is the interior architect working on the amenity areas of the proposed building.
Hall, who can build up to more than 7 million square feet of office, residential and retail space at Hall Park, said he's not only looking to build more real estate, but also bring connectivity to the growing number of billion-dollar developments in Frisco. Those connections range from the recent addition of autonomous vehicles to Hall Park, a big park on the northern end of the property, and the addition of a new Performing Arts Center with the capacity for 1,700 seats in a public-private partnership, which is still in the works. Each use will enhance Hall Park and the City of Frisco, Hall said.
"The world is changing in its desires and employers want to be in a place in which they can recruit and retain the best employees," he said. "My job, as a developer, is to help them by building the right environment."