| COVER STORY, JULY 2005
OFFICE SHAPE-UP
New office projects are underway in Frisco, Plano and San Antonio.
Susan H. Fishman
Though the office market in Texas has had its share of turmoil, forecasters are seeing some positive trends with increased leasing activity, positive absorption, more stable rents and continued investor interest. As such, several developers are moving forward with various projects around the state, and Texas Real Estate Business talked to a few to see what’s currently taking shape.
Bridges One
Duke Realty Corporation has broken ground on Bridges One, a 158,000-square-foot spec building on 70 acres of land at the northeast corner of the North Dallas Tollway and Warren Parkway in Frisco, Texas, a fast-growing submarket of Dallas.
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Duke Realty Corporation is developing Bridges One, a 158,000-square-foot spec building at the northeast corner of the North Dallas Tollway and Warren Parkway in Frisco, Texas.
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Located in the Frisco Bridges, which encompasses several acres of retail (including IKEA), the Frisco Roughrider’s Baseball stadium and several hotels, the Bridges One will be three stories with a 25,000-square-foot footprint. The project stretches from Preston Road to the Tollway on east and west and runs all the way to front State Highway 121.
“In that mile and a half circumference, there’s more retail than anywhere in the U.S.,” says Jeff Turner, senior vice president of Dallas operations with Duke Realty. “In the park itself, there are plenty of restaurants, great shopping, fun things to do after work — baseball games, hockey games, a brand new world-class soccer center that’s going in just north of us — and plenty of hotels. And it’s also very close to all the new housing that’s exploded up in the northern part of town; Frisco is moving in 1,000 people a month.”
Office development in Dallas is new for Duke Realty, which started with 1 million square feet of industrial buildings in Dallas and about 40 acres of raw land. Since that time, the company has grown its portfolio to 8 million square feet, with close to 300 acres of raw land.
“We do everything in-house, from leasing to property management to marketing,” says Turner. “Once you’ve grown your business like that, the natural progression is to leverage all of that and go from the industrial business into the office business. For the last 3 years or so, we’ve been looking for a way to enter the Dallas office market because it’s so volatile, and we decided the best way would be through development. So we were looking for just the right spot and happened to land on it in Frisco.”
Frisco has suddenly become a very popular place for tenants to relocate, adds Turner, because they can get a brand new building in the fastest growing, nicest submarket in Dallas, as well as a lot of incentives from the Frisco Economic Development Corporation (EDC).
“Frisco has become very well known for its aggressive EDC,” he says. “They’ve really stimulated activity by offering incentives to tenants and corporations to relocate to the area. They’ve become kind of the great tie-breaker in these competitions for getting new office tenants.”
Bridges One has no tenants to date, and expects to finish the project the last week of December.
Granite Park Three
Granite Properties, a diversified real estate investment, management and development company, just began construction on Granite Park Three in Plano. The third office tower in Granite Park, at the southeast quadrant of the Dallas North Tollway and Highway 121, Granite Park Three will consist of 369,000 square feet in 14 stories. Adjoining it is a garage and a two-story building that consists of 25,000 square feet of retail on the first floor with 25,000 square feet of office on the second level, fronting Highway 121. The new building will bring the developed space in Granite Park to 1 million square feet.
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Granite Properties is building Granite Park Three in Plano, Texas. The 369,000-square-foot, 14-story building will have an adjoining garage and two-story building with retail on the first floor and office on the second level.
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“We started our park in 1997 and built the first two high-rise, Class A office buildings — we have the tallest office buildings out there at 10 stories, and we’ve had great success with those buildings,” notes Greg Fuller, Granite Properties’ managing director, Dallas. “We had a lot of pent-up demand from our existing client base, and with a 93 percent vacant market and more people moving in to the area every day, both business and residential, it makes more sense that there is a need for space. With all these other developers coming up here, it just means there’s probably going to be too much space very shortly — so we decided to differentiate ourselves by going to the next level in terms of quality, height and amenities.”
The Class A office building will include covered parking, a two-story lobby, enclosed dock loading, storage for tenants, a fitness center, deli and common conference space. Currently, the northern Tollway competitive Class A buildings are 93 percent occupied; buildings One and Two in Granite Park, totaling 500,000 square feet, are 97 percent leased.
“As any market matures, there’s always a need for the high-end space as well as the value office or most economical space, so by providing this building, we’ll have a range of rental rates from $18 to $25, and we think that’s a positive thing,” says Fuller. “Our experience here has been to attract a lot of larger tenants with a branch office, and so they’re doing a 10,000- to 25,000-square-foot lease and want a nicer environment. Other people have built similar quality space, so we’re taking it up a notch.”
Granite Park Three is slated for completion in July 2006, which coordinates with the infrastructure in the area. The Tollway/121 intersection, as well as Granite Parkway and Parkwood Boulevard, will be completed this year.
BOKA Powell is serving as the architect for Granite Park Three. Austin Commercial is handling construction. Civil engineering is by Weir Associates, and landscape architecture is by TBG Partners.
Huebner Town Center
Last month, San Antonio developer Efraim Abramoff with Ariel Texas Star Inc. completed the first phase of Huebner Town Center, a 12.5-acre project in the 15300 block of Huebner Road in San Antonio. The project is being developed by K&A Development, and Ariel Texas Star is serving as the general contractor.
The development will have three one-story office condo buildings and a restaurant and will be marketed for sale or lease to doctors and other professionals.
“The trend now is to buy instead of rent because the interest rates are so low,” says Abramoff. “Tenants can own the building and pay less than if they rented, and receive all the benefits, like tax deductions.”
The well-landscaped, garden office building provides parking all the way around the project. The office condominiums are approximately 4,000 to 6,000 square feet. “The project will take place in three phases with development of roughly 135,000 square feet of space,” explains Abramoff. “The second phase of the project — another 30,000- to 33,000-square-foot, two-story building — will break ground in a few months. And the third phase calls for an additional 90,000 square feet.”
“It’s a great location with a lot of rooftops and high family incomes,” adds Abramoff. “We have a lot of tenant interest, and I believe we’ll fill the building in a very short time.”
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