Dallas-Fort Worth Real Estate Review – Fall 2020

Page 1

DFWREALESTATEREVIEW.COM

Experts ON 2021 Top real estate minds tell us what next year holds for Dallas-Fort Worth—and why it’s the place for the future. ALSO INSIDE: THE CRANE REPORT / ANATOMY OF A DEAL: UNT FRISCO / LARGEST LEASES

FALL 2020


Kubota Kubota Headquarters Headquarters USA USA Mercedes Mercedes Benz-USA Benz-USA GameStop GameStop Headquarters Headquarters Gaylord Gaylord Texan Texan Hotel Hotel Resort Resort & & Convention Convention Center Center Paycom Paycom TheThe Trade Trade Group Group Great Great Wolf Wolf Lodge Lodge Grapevine Grapevine Mills Mills Mall Mall Wineries Wineries Bass Bass ProPro Shops Shops SeaSea LifeLife Aquarium Aquarium Award Award Winning Winning Golf Golf Courses Courses Legoland Legoland Historic Historic Downtown Downtown Fine Fine Dining Dining Award-Winning Award-Winning Festivals Festivals 60 60 Mile Mile Shoreline Shoreline Lake Lake

Grapevine Grapevine hashas overover 100100 years years of innovation of innovation andand imagination imagination thatthat drives drives growth growth andand creates creates opportunities opportunities for for ourour businesses businesses andand families. families. Blending Blending historic historic charm charm with with commercial commercial growth growth provides provides both both a great a great place place to live to live andand work. work. TheThe CityCity of Grapevine of Grapevine is home is home to many to many wineries, wineries, finefine dining, dining, nationally nationally ranked ranked festivals, festivals, successful successful businesses businesses as well as well as numerous as numerous andand select select attractions attractions andand resorts. resorts. Grapevine Grapevine hashas earned earned a well-deserved a well-deserved reputation reputation as one as one of the of the nation’s nation’s premier premier destinations destinations by drawing by drawing 20 million 20 million visitors visitors annually. annually. OurOur unique unique geographic geographic location location andand variety variety of amenities of amenities makes makes Grapevine Grapevine an amazing an amazing CityCity location location andand destination destination for for success. success.

Grapevine Grapevine Economic Economic Development Development

200200 South South Main Main Street, Street, Grapevine, Grapevine, Texas Texas 76051 76051 BobBob Farley, Farley, Director Director bfarley@grapevinetexas.gov bfarley@grapevinetexas.gov | 817.410.3108 | 817.410.3108 ChooseGrapevineTX.com ChooseGrapevineTX.com


Onward and Upward

Uber Elevate Urban Mobility Hub Concept Dallas, Texas

FUTURE-PROOFING PARKING STRUCTURES ▪ UBER ELEVATE eVTOL AIR TAXI TRANSPORTATION HUBS ▪ TRANSIT-ORIENTED DEVELOPMENTS THAT CONNECT AND ENLIVEN ▪ RESPONSIBLE STEWARDSHIP OF ENVIRONMENTAL AND REAL ESTATE RESOURCES ▪ NEXT-GENERATION WORKPLACE ENVIRONMENTS THAT ENHANCE WELL-BEING ▪ BALCONIES AND AMENITY DECKS THAT PROVIDE ACCESS TO FRESH AIR ▪ WIDE-OPEN FLOOR PLATES FOR FLEXIBILITY AND SOCIAL DISTANCING ▪ HEALTHIER AIR DISTRIBUTION SYSTEMS THAT COMBAT DISEASE TRANSMISSION ▪ NEARLY 45 YEARS OF THOUGHT LEADERSHIP IN DESIGN

bokapowell.com

Victory Commons One Dallas, Texas

BOKAPowell

architecture interiors planning

graphics strategy


ON THE COVER: Commercial real estate experts in Dallas-Fort Worth— JLL’s Brad Selner, The Beck’s Group’s Eric Perpall, Cushman & Wakefield’s Maureen Kelly Cooper, Hillwood’s Bill Burton, Colliers’ Allen Gump, The Retail Connection’s Allen Shor, Streetlights’ Tom Bakewell, and more—share what’s in store for DFW and the industry in 2021.

FALL 2020

CONTENTS

16 FEATURE

Upfront . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

FOUNDATIONS DFW Market Statistics, Economic Indicators, and Commercial Real Estate News . . . . . 8

BUILDING TOMORROW TOGETHER It’s Alive! Dallas-Fort Worth is emerging as a hub for biotech and life sciences. . . . . . . 14

FEATURE 21 Experts on 2021 Top real estate minds tell us what next year holds for Dallas-Fort Worth. . . . . . . . . . . . . . . . . . . . . . 16

38 ANATOMY OF A DEAL

ANATOMY OF A DEAL Future Ready UNT at Frisco will be a $100 million campus on donated land where students will prepare for the ‘Fourth Industrial Revolution.’ . . . . . . . . . . 38

2 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

FA L L 2 0 2 0


TAKING IT TO THE NEXT LEVEL. CLASS AA SPACE REINVENTING THE ARTS DISTRICT.

FOR MORE INFORMATION, CONTACT: Ramsey March or Chase Lopez at 214.267.0400 TRAMMELLCROWCENTER.COM

owned by institutional investors advised by

leased and managed by


INNOVATIVE SPACES Touchless Tower: The Stack in Deep Ellum will offer a ‘frictionless path from your car to the office’ . . . . . . . . . . . . . . . . . . . . . . 42

E XC L USI V E LY P UB L ISHE D B Y D MAGAZINE PARTNERS

45 THE CRANE REPORT

PUBLISHER & EDITORIAL DIRECTOR Quincy Preston quincy.preston@dmagazine.com

CREATIVE DIRECTOR Michael Samples

THE CRANE REPORT Who’s Building What, Where . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

PROJECT EDITOR Sandra Engelland

SENIOR EDITOR

SCORECARD

Alex Edwards

DFW’s Top Office and Industrial Leases . . . . . . . . . . . . . . . . . . . . . 53

53 SCORECARD

CONTRIBUTING EDITORS Lance Murray David Seeley

CONTRIBUTING WRITERS Lauren Hawkins Dave Moore Gloria Salinas

INTERNS Chantal Canales Riley Farrell Sophia Gonzalez

AUDIENCE DEVELOPMENT DIRECTOR Amanda Hammer

AUDIENCE DEVELOPMENT COORDINATOR

SPECIAL ADVERTISING SECTION

Sarah Nelson South

Economic Development Directory Profiles of cities around the region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

BUSINESS DEVELOPMENT Steve Reeves 214-523-5259 steve.reeves@dmagazine.com

COMMUNITY The Real Estate Council, TREC Leadership . . . . . . . . . . . . . . . 56 Calendar of Events . . . . . . . . . . . . . . 57 Dallas Regional Chamber, Leadership Dallas . . . . . . . . . . . . . . . 58 Dallas Regional Chamber, Top-Level Members . . . . . . . . . . . . . 60

4 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

The Real Estate Council, Impact Investors . . . . . . . . . . . . . . . . 62 The Real Estate Council Photos: 2020 Dallas Catalyst Project . . . . . 63 View From the Top: Nancy Flores, McKesson . . . . . . . . . . . 64

Dallas-Fort Worth Real Estate Review® is published for The Dallas Regional Chamber and The Real Estate Council by D Magazine Partners, 750 N. St. Paul St., Ste. 2100, Dallas, TX 75201; www. dallaschamberpublications.com, 214.523.0300. ©2020 All rights reserved. No part of this publication may be reproduced or reprinted without written permission. Neither the Dallas Regional Chamber nor The Real Estate Council nor D Magazine Partners is a sponsor of, or committed to, the views expressed in these articles. The publisher is not responsible for unsolicited contributions.


@APImages

@alexandra.holmen

SEE YOURSELF IN FRISCO

Imagine living and working in Frisco, Texas. It’s 25 miles from DFW International Airport and downtown Dallas, and seven professional sports organizations call Frisco home. Imagine working with a highly-educated, robust talent pipeline, and sending your kids to one of the most sought-after public school systems in America. Can you see yourself in Frisco? You’ll fit right in.

Visit FriscoEDC.com to find out more.

Frisco Economic Development Corporation

972.292.5150 FriscoEDC.com


UPFRONT

Perspectives from the Dallas Regional Chamber and The Real Estate Council 2020 CHAIR OF THE BOARD John Olajide

OUR COMMITMENT TO DIVERSITY, EQUITY, AND INCLUSION

DALE PETROSKEY President and Chief Executive Officer Dallas Regional Chamber

At the Dallas Regional Chamber (DRC), we are committed to ensuring Diversity, Equity, and Inclusion (DEI) is at the forefront of our work every day to make the Dallas Region the best place for all people to live, work, and do business.

We moved quickly over the summer to form a permanent board-level DEI Council and create a new Senior Vice President for DEI role. More recently, we added a Senior Vice President for Community Engagement position. We are so proud to have announced the hiring of two great leaders, Tosha Herron-Bruff as our first-ever Senior Vice President for Community Engagement and Jared Fitzpatrick as our first-ever Senior Vice President for DEI. Tosha, a Dallas native and graduate of the University of North Texas, brings to the DRC, the largest chamber in North Texas, more than 20 years of experience championing a variety of marginalized communities, including more than a decade working in key roles for Habitat for Humanity. Most recently, she served as Habitat’s Vice President of Government and Public Affairs. Jared comes to us with extensive experience working on DEI initiatives in the Dallas Region. Most recently, he served as a Senior Culture and Human Resources Strategy Advisor at the Federal Reserve Bank of Dallas. He previously held positions with PricewaterhouseCoopers (PwC) and Huron Consulting Group. You will be hearing much more in the months to come from Tosha and Jared. Every one of us—our staff, board, members, and community partners—are energized to do work that will inspire action, lead change, and create opportunity. For the good of every business. For the good of all people. We hope you will join us.

IEDC: THE WORLD VISITED VIRTUALLY

LINDA McMAHON President and Chief Executive Officer The Real Estate Council

In October, Dallas virtually welcomed the International Economic Development Conference (IEDC) attended by 1,900 economic development professionals from around the world.

The conference was infused with the IEDC values of social responsibility, wealth creation, diversity, tolerance, and equity through each presentation. We showcased the region through rich virtual tours and highlighted local leaders. Ambassador Ron Kirk, former Dallas mayor and U.S. trade representative, and education champions Michael Sorrell, Paul Quinn College, and Joe May, Dallas College, spoke to the assets of the region. The Federal Reserve Bank of Dallas CEO Robert Kaplan talked about everything from monetary and fiscal policy to the COVID impact. But his call to action that “things need to be done differently” to ensure that every American holds an interest in the future economic growth of our country echoed the conference values. At TREC, these shared values have been evident in our work for 26 years. Our recent formation of a Diversity, Equity, and Inclusion Committee, led by Alex John, HKS, is committed to advancing equity in our industry. Our capital investments in three Dallas communities of color and poverty through workforce development, small business, and housing opportunity are the result of a yearlong equitable development planning effort. The residents in these communities’ vision of equity are the same as ours. In 2023, IEDC will bring the world back to Dallas. Our relentless pursuit of a more equitable city will give us much to showcase when they return.

President and CEO Axxess PRESIDENT & CEO Dale Petroskey CHIEF OPERATING OFFICER & CHIEF FINANCIAL OFFICER Angela Farley COMMUNICATIONS & EVENTS, SENIOR VICE PRESIDENT Scott Goldstein RESEARCH AND INNOVATION, SENIOR VICE PRESIDENT Duane Dankesreiter RESEARCH AND INNOVATION, MANAGING DIRECTOR Eric Griffin

2020 CHAIRMAN Bill Cawley Cawley Partners VICE CHAIRMAN Mike Ablon PegasusAblon PRESIDENT & CEO Linda McMahon VICE PRESIDENT, LEADERSHIP & CULTURE Holland Morris CFO Carla Brandt

6 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

FA L L 2 0 2 0


A

TEXAS DESTINATION FOR

GRANDSCAPE LIFESTYLE CENTER - NOW OPEN

Keri Samford, Executive Director of Development 972.624.3127 • edc@thecolonytx.org • www.TheColonyEDC.org


FOUNDATIONS

A baseline for the region’s future

INDUSTRIAL

COVID BOOSTS ALREADY BOOMING DFW INDUSTRIAL MARKET, CAUSING 'FIVE YEARS OF E-COMMERCE GROWTH' IN ABOUT FIVE WEEKS Dallas-Fort Worth was the top market in the country for industrial property absorption in the second quarter of 2020, according to a report from Marcus & Millichap. The region absorbed more than 6 million square feet of industrial space—more than 1.5 million above the next two hottest markets of Atlanta and Houston. Many of those deals were already in place before COVID hit, but leasing and construction activity remained strong well into the third quarter. At the end of the second quarter, vacancy rates for DFW were 6.9 percent and trending in a positive direction based on quarter-over-quarter figures. The vacancy rate is higher than many markets, but the demand for space is high, too, as evidenced by the best absorption numbers in the nation. A variety of factors play into the increased demand for warehouses and distribution centers. Consumers’ panic buying in the early stages, consistently much higher e-commerce rates, and movement to reshore critical supply chains have all impacted

“THIS HIKE HAS CREATED A RIPPLE EFFECT FOR INDUSTRIAL REAL ESTATE, RIGHT DOWN TO THE LABOR MARKET.” — ADAM ABUSHAGUR, Senior Vice President Investments, Marcus & Millichap

the industrial market, which will take more time to develop. “The pandemic has, in essence, caused fi ve years of e-commerce growth to occur in about a fi veweek period. This hike has created a ripple eff ect for industrial real estate, right down to the labor market,” said Adam Abushagur, Senior Vice President Investments at Marcus & Millichap. Panic buying resulted in shortages and showed the limitations of the just-in-time inventory, while the increase in online purchasing to avoid trips to the store created a need for more small warehouses and cold-storage facilities close to population centers. Last-mile warehouses are key for retailers like Walmart who want to offer

same-day delivery. Entering the second half of 2020, vacancy in the 10,000 to 100,000 square-foot segment was under 5 percent nationwide, according to the Marcus & Millichap report. The industrial deals grabbing the most attention locally continue to be of the mammoth variety. Amazon is, of course, the big player, with more than 1 million square feet leased recently in Southern Dallas, as well as a new fulfillment center in Frisco and another 1 million squarefoot fulfillment center planned in Forney. The facilities will add a few thousand jobs to Amazon’s already large regional workforce. HelloFresh plans to hire more

than 1,000 employees for its new 375,000 square-foot coldstorage and shipping facility in Irving. Amazon, HelloFresh, and other e-commerce giants are using both automation and skilled workers to keep those packages landing on your doorstep. “With the urgent need for additional warehouse and distribution spaces, automation technology and higher demand for skilled labor has increased, even with the current high unemployment numbers," Abushagur said. "Although some believe automation to be a solution to cut costs, the irony remains that automation requires some of the most labor expertise.” —Sandra Engelland

OFFICE

AS VACANCIES HIT A PANDEMIC PEAK IN Q3, RENTS REMAIN STABLE BUT THE VACANCY RATE IS SIMILAR TO HIGHS IN THE DOT-COM CRISIS AND THE PEAK OF THE GREAT RECESSION. While the Dallas-Fort Worth office market continues to show evidence of a pandemic recession in the amount of vacancies, asking rents remain unchanged in most area submarkets, according to a report from Transwestern. Direct lease vacancies are at 16.2 percent for the region, and net absorption for the 12-month period ending Sept. 30 was at negative 2.25 million square feet. The vacancy rate is similar to highs in the dot-com

crisis in the early 2000s and the peak of the Great Recession in 2010. The available sublease space likely peaked at 8.9 million square feet in Q3 2020, a 50 percent increase compared to a year ago. While new sublease listings peaked in August, they began to drop rapidly through September and early October, which may indicate that the market is starting to recover. Most areas saw little change in direct rents, with the exception

8 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

of Uptown/Turtle Creek and Upper Tollway/West Plano, which saw increases in average rents as sublease space came available in more expensive properties. Leasing activity for Q3 was similar to the previous quarter finishing at about 2.3 million square feet. One positive trend was an increase in new leases and prelease transactions for large and mid-size office users. Notable leases include private

mortgage lender Caliber Home Loans taking 159,320 square feet at Cypress Waters in Coppell and Haynes and Boone, DFW's largest corporate law firm, signing a prelease deal for 124,000 square feet at Harwood No. 14 in Uptown. New office construction is down slightly, with 5.82 million square feet currently under construction. Without preleasing, the current economy squelches speculative development. —SE

FA L L 2 0 2 0


F FOUNDATIONS RESIDENTIAL

HOMES ARE SELLING FAST IN DFW—AND STARTS ARE STRONG OPENDOOR'S CHRIS WESTROM SAYS THE REGION'S RESIDENTIAL MARKET IS 'MUCH STRONGER THAN WE’VE EXPERIENCED EVEN IN RECENT YEARS.' The residential real estate market in the Dallas region has held strong, says Chris Westrom. Market indicators are continuing to improve, even though they typically start slowing this time of year. Still, with the uncertainty in the economy, Opendoor's senior GM says "innovation and adaptation are the keys to success" right now. Here's his take on the state of the residential market. WHAT'S THE OUTLOOK FOR THE DALLAS REGION INTO 2021?

As we head into 2021, I believe this strong market will continue. Given the pandemic and pressure on our economy, there will continue to be uncertainty and things could change quickly. And with the holidays approaching, it’s unclear what the impact will be. Historically the market slows down in December, but this year has been highly atypical, so it’s tough to predict. Nationally, the market remains strong, but we're starting to see some cities begin to slow down, which is normal for this time of year. Dallas is above average.

CHRIS WESTROM

WHAT OPPORTUNITIES AND CHALLENGES DO YOU SEE AHEAD FOR RESIDENTIAL DEVELOPMENT?

I see two opportunities. The first is tied to financing. This year, mortgage rates have reached historic lows, and the Federal Reserve announced plans to keep them low through 2023. As a result, more homebuyers are entering the market and experiencing stronger purchasing power, enabling them to aff ord more home than they could otherwise. The second opportunity is continued innovation in the real estate industry. With safety as a top priority, technology has helped make certain aspects

DFW SNAPSHOT

of the transaction safe and contact-free. When it comes to buying homes, virtual and self-tours are gaining popularity. In an August 2020 Opendoor survey, we found twice as many homebuyers felt more comfortable touring unoccupied homes compared to occupied ones. Realtor.com found in a May 2020 survey that 65 percent of homebuyers believe that virtual tours will continue to be a great resource even after the pandemic. The real estate market will also have some challenges ahead. I anticipate we’ll continue to see low home inventory with high buyer demand. There has been limited availability of building materials, especially lumber, that is causing delays in new home construction and renovation projects. As a result, the prices for new homes and projects are rising. Continued uncertainty from the global pandemic is another major factor. Things could change quickly. Nobody knows for sure what will happen to the housing market and economy at large, making forecasting and predicting the future very difficult. —Quincy Preston

Residential Strategies has a by-the-numbers look at DFW development. Principal Ted Wilson says builders are embracing the growth in demand that's being presented today: "With this heightened demand, we're witnessing renewed lot price inflation and tougher deal terms from developers.”

12,844

Number of starts in 3Q 2020; the highest since 2006

34.2%

Increase in starts over 3Q 2019

$319,000

Median home price, down from $328,000 a year ago, due to increased starts

71,034

Number of vacant developed lots at the end of 3Q 2020, down 1,548 from previous quarter

New home demand has surpassed the industry’s expectation. — TED WILSON, Principal, Residential Strategies Inc.

ECONOMIC DEVELOPMENT

DALLAS 'ROADMAP' POINTS THE WAY TO ECONOMIC AND SOCIAL PROGRESS THE COMMUNITY TRANSFORMATION ACTION ROADMAP IS A STRATEGIC FRAMEWORK OF ECONOMIC DEVELOPMENT THAT BENEFITS EVERYONE IN DALLAS. The City of Dallas is launching its "Community Transformation Action Roadmap," taking a nontraditional pathway to tackle the city's pressing challenges and create a more socially and economically progressive city for all. Eric Johnson, Dallas' Chief of Economic Development and Neighborhood Services, took the lead in developing the Roadmap, briefing Dallas City Council members in an October

FA L L 2 0 2 0

meeting. Johnson stressed that the document will evolve over time. It's not a plan, he said, but an action-oriented intent to connect dots and resources across critical issues that can collaboratively catapult Dallas toward being the best place to invest, work, live, and play—for everyone. “There's an urgent need to create a fluid and coordinated strategy and a holistic strategy to further economic and social progress for all City of Dallas

residents,” Johnson said. The Roadmap is a concerted effort to engage members of the community to work together to solve critical issues such as the need for affordable housing, the revitalization of underserved communities, access to healthcare, and public safety. In all, the Roadmap cited nine key areas for integrated community development. Johnson said that he and his team had met with more than 60 groups, from representatives of businesses and higher education institutions to nonprofits and healthcare providers, all have agreed to participate in the transformation process. —SE

ERIC JOHNSON

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 9


F FOUNDATIONS COWORKING

ADAPT, SURVIVE, AND (EVENTUALLY) THRIVE LOCAL COWORKING FIRMS USE DIFFERENT APPROACHES TO DEAL WITH COVID CHALLENGES

COMMON DESK AT THE CONTINENTAL GIN BUILDING

which was looking for temporary space to accommodate growth while the company updates its existing Las Colinas campus. Microsoft is expected to take on 82,000 square feet in the 305,000 square-foot facility. The former Vista at Solana campus sat vacant for 11 years before VariSpace purchased it last year. VariSpace Southlake is one of two coworking locations (the other is the fully leased VariSpace Las Colinas) owned by Coppell-based Vari, makers of the VariDesk. The report also identified a paradigm shift, with coworking companies transitioning to property management. Common Desk recently went in on this trend, becoming an

PHOTOS: COURTESY WORKSUITES, COMMON DESK

To survive a COVID-19 economy, coworking companies are relying on various strategies to help them withstand the storms brought on by the pandemic. A recent report from Cushman & Wakefield notes that at the end of Q2 2020, the vacancy rate for all office spaces in the Dallas market was 19.4 percent, an increase over the 18.6 percent forecast for the period prior to the pandemic. Vacancy rates for subleasing in the market accounted for 1.3 percent of total office vacancies, a lower percentage than during the 200809 Great Recession (1.4 percent sublease vacancies) and the dotcom recession in the early 2000s (4.1 percent sublease vacancies). The bad news for coworking spaces in 2020 went beyond stayat-home orders. Freelancers and small start-ups were more likely to terminate their coworking leases or ask for rent relief. But the report also had some good news, noting that negative impacts to the broader office leasing market can make short-term leases in coworking/ enterprise spaces more attractive to corporations. For example, VariSpace Southlake recently signed a shortterm leasing deal with Microsoft,

WORKSUITES

operating partner at the circa 1888 Continental Gin Building in Deep Ellum, offering design services, furnishings, marketing, leasing support, and property management. Common Desk founder and CEO Nick Clark, who launched the coworking startup out of Deep Ellum in 2012, said, “We’re incredibly excited to play a bigger role in the neighborhood as an industry innovator. It’s truly going to be a holistic offering the market has yet to see.” Other local coworking firms also are expanding during the wearying gauntlet that is 2020. The Cushman & Wakefield report discussed the suburbanization of the workforce that accelerated

with the pandemic as people seek more room to roam. Coworking companies that offer suburban spaces can take advantage of that trend. One is WorkSuites, a Dallasbased flexible office company that in June opened its 20th location with an almost-20,000-squarefoot space in Allen, across from retail-and-apartment-focused Watters Creek. The facility includes 85 individual private offices and some common areas that still allow for plenty of social distancing. Venture X took a different approach and is expanding in Dallas, adding a tenth location at the Braniff Centre at Love Field. Its 22,000 square feet of office space should be available in early 2021. —SE

FINANCIAL SERVICES

THE FUTURE OF OFFICE FOR FINANCIAL SERVICES: CONTINUING COVID IMPACT, AND A NEED TO TAKE A BREATH SENSITIVE TRANSACTIONS MAKE OFFICES A MUST FOR FINANCIAL SERVICES FIRMS, BUT THE AMOUNT AND DESIGN OF SPACES WILL BE IMPACTED FOR THE FORESEEABLE FUTURE. No matter what business they’re in, every company has been impacted by COVID-19. That’s required all of them to review their finances—providing opportunities for financial services firms. Still, financial services have faced

the same office challenges as everyone else, says James Cooksey, vice chairman and president of tenant relations at Newmark Knight Frank—reducing JAMES COOKSEY headcounts as employees work from home, and rethinking office space needs and design changes moving forward. WHAT OPPORTUNITIES DO YOU SEE IN CRE FOR FINANCIAL SERVICES? As companies across industries

1 0 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

continue to increase focus on managing financial operations in the midst of COVID-19—in terms of cash flow assessments, valuation strategies, and longer-term forecasting—financial services firms have a unique window of opportunity. HOW HAS THE PANDEMIC IMPACTED CRE FOR FINANCIAL SERVICES? The pandemic has caused companies in all sectors to pause and reassess real estate needs. Many financial services firms have reduced headcounts, as more banking and trading have been completed online and from home offices through the pandemic.

Though some financial services companies have traders returning to their headquarters in larger markets, more and more markets will require less in-office staff. While there will always be demand for office space from financial services firms—due to the sensitive nature of the transactions—the rise of remote work will impact the amount and design of office space for the foreseeable future. We tell our clients that information is the best tool, and educated decision-making continues to be the best approach in this economic environment. —QP FA L L 2 0 2 0


F FOUNDATIONS

RENDERING: THE KESSLER SCHOOL

KESSLER SCHOOL

NONPROFIT

REPURPOSING WITH A PURPOSE: ELIZA SOLENDER HELPS NONPROFITS AND SCHOOLS FIND NEW LIFE IN OLD SPACES SOLENDER REPRESENTED THE KESSLER SCHOOL IN THE PURCHASE OF THE FORMER CALVARY BAPTIST CHURCH OF OAK CLIFF.

FA L L 2 0 2 0

campus with 60,000 square feet of building space that was formerly the Calvary Baptist Church of Oak Cliff. The seller was represented by Roosevelt Broach of Church Realty Inc. “The Kessler School had to be in a specific geographic area and needed more space—both indoors and outdoors—to be able to increase enrollment and expand programs. When we walked into this historic church, we knew it was the perfect place,” Solender said. Officials with The Kessler School, currently operating in 12,000 square feet at nearby Kessler Park United Methodist Church, plan to restore and renovate the 96-year-old sanctuary, repurposing it as a “gymnatorium,” serving both as gym and auditorium space. They also will update the educational annex, built in 1953, to better allow for personalized education and current technology needs. On the grounds, they'll add sports fields, playgrounds, and other landscaping. “The response we’ve received from our new neighbors in the

ELIZA SOLENDER

PHOTO: THE KESSLER SCHOOL

How do you solve the issue of nonprofit organizations getting squeezed out of the communities they serve by the rising costs of real estate in Dallas-Fort Worth? It starts with who you call. Eliza Solender is president of Solender/Hall Inc., which assists nonprofits with buying, selling, and leasing commercial real estate in North Texas. Solender/Hall has been highly successful in finding unique spaces, often repurposing stores, banks, warehouses, churches, and even bowling alleys for nonprofi t clients. Repurposing old spaces and helping groups and schools find new spaces is something that Solender has done since starting the firm in 1991. You'll find dozens of local charities among her clients, from the AIDS Interfaith Network and American Foundation for the Blind to the World Aff airs Council and Zero to Five Funders. Sprinkled throughout the A-to-Z list are a number of private schools. Most recently, Solender represented The Kessler School in the purchase of a two-acre

Sunset Hill neighborhood, as well as those who have been concerned about the future of the structures themselves, has been overwhelmingly positive," said Cooper Koch, president of the school’s Board of Trustees. "We look forward to reactivating these gorgeous old buildings while continuing to grow The Kessler School as an asset and contributor to North Oak Cliff ’s success." The school's new location should be ready for students next fall. Earlier this year, the new Simmons Family Gateway Resource Center opened in a building owned

by Catholic Charities Dallas after Solender/Hall brought the two nonprofi ts together. Family Gateway, which provides support services to children and families impacted by homelessness, is housing their non-shelter services at the new center. Family Gateway's Emergency Shelter in downtown Dallas, which used to house organization offices, is now solely dedicated to shelter services. The deal typifies the kind of creativity Solender brings to the table. At the March opening of the new center, she said, “As commercial real estate continues to increase in value, nonprofi t organizations are seeing more of their budget go toward rent and real estate-related costs, thus they have to become ever more creative in how they fulfill their space requirements. “A transaction like this is so satisfying because it is a win-win for both organizations. We have an understanding landlord who recognizes the unique needs of a nonprofi t service provider and wants to find opportunities for collaboration. Both organizations will be able to focus more of their scarce resources on critical community services.” —SE

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 1 1


F FOUNDATIONS ARCHITECHTURE

EMPATHIC SCHOOL DESIGN IS CREATING HEALTHIER, MORE RESILIENT COMMUNITIES BY DESIGNING SCHOOLS THAT CHALLENGE THE STATUS QUO, HKS IS CREATING A SAFER, TRULY INCLUSIVE ENVIRONMENT FOR THE BENEFIT OF LEARNING FOR ALL. Through much of 2020, the bells didn’t ring. School was out, virtual learning was in. As districts tiptoe toward a new normal, architects are using bigger-picture thinking to build schools that can create transformational change. Designing the future of education, says Leonardo González Sangri of HKS, is all about equity, community, adaptability, health—and keeping an open mind.

well-being. In the last decade we’ve learned of the alarming prevalence of anxiety, depression, and stress reported among students of all ages. We know from research that there are ways to use design to create spaces that help reduce these conditions and increase happiness in users. Finally, I see a chance to engage our clients in a deeper, more meaningful way, to help them uncover solutions that might be possible with bigger-picture thinking. As architects and designers, we’re trained to problem solve.

RENDERINGS: HKS

WHAT'S AHEAD FOR EDUCATIONAL ARCHITECTURE IN 2021? First and foremost, I see a chance to deliver equity in access to opportunity. How can school architecture influence equitable access to prosperity? What messages are being sent to students by virtue of the space we build for them? What message is sent by virtue of how we engage them in the design process? For us, it means addressing design problems with an open mind, without a pre-conceived idea. To listen intently, and let the conversation uncover the solution. Architecture that responds to the true needs of the community in support of the institutional goals can deliver transformational space. The challenges ahead in education are, as in most industries and realms, great ones, and go well beyond architecture. However, the primary challenge in educational architecture today centers around resilience. The current emergency has highlighted a need for additional considerations in the design of educational facilities that revolve around adaptability, flexibility, and most importantly, health and health safety. It's also shined a light on the importance of lifecycle analysis to understand building systems and the impact on health to focus on long-term benefits and balance initial capital costs. The challenge is to design

LEONARDO GONZÁLEZ SANGRI

The renovation of Lake Highlands High School in Richardson ISD is an example of HKS' user-centered approach where the firm used the district’s inclusive design process to uncover value for LHHS students and faculty.

buildings that can perform to high, measurable standards of performance. Healthy material choice, more efficient/higher-rated building systems, and strategies to improve indoor conditions should be evaluated—along with desired outcomes of health and well-being— and become part of the stated objectives of building performance. Architecture needs to evolve to take advantage of available technology in service of the users.

1 2 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

WHAT ABOUT OPPORTUNITIES? The current pandemic can be viewed and ultimately leveraged as a tremendous opportunity to improve upon everything— including education and the way we design buildings for education. As the pillars of our communities, educational institutions are in the unique position to be agents of transformational change. Additionally, I see an opportunity to design for emotional health and

WHAT FEATURES WILL BE KEY IN SCHOOLS OF THE FUTURE? Resilience, sustainability, health and technology. Designing for resilience is of paramount importance today and into the future. As we move into a future riddled with great challenges, our built environment can play a big role in building resilience in support of our communities. Schools of the future can play a bigger role in the success of communities, leveraging interdependent programs or functions that consider intergenerational and inclusive environments. By designing for flexibility and adaptability, with relevance to place and in consideration of human needs, our buildings can help us manage crisis and build community. This adaptability will manifest itself through rapid repurposing of spaces, flexible design and more agile infrastructures.—QP FA L L 2 0 2 0


F FOUNDATIONS MULTIFAMILY

NET-LEASE INVESTMENTS

DALLAS-FORT WORTH LEADS THE NATION IN APARTMENT DEMAND FOR Q3 2020 THE DFW MARKET ALSO LED IN THE SECOND QUARTER WITH MODEST GAINS DUE TO GOVERNMENT STAY-AT-HOME ORDERS. Dallas-Fort Worth led the nation for apartment demand in the third quarter of 2020, according to a report from RealPage. The top four markets in the nation were all in the Sunbelt, with Atlanta, Houston, and Phoenix coming in behind Dallas-Fort Worth. North Texas absorbed 8,957 units, Atlanta was at 8,425, and Houston at 7,751. Those top three markets accounted for 17 percent of the nation's total demand. Markets in many areas rebounded from the second quarter slump when government stay-at-home orders kept many apartment-seekers from moving. Even during the Q2 downturn, North Texas led the pack, absorbing 3,800 units. Occupied apartment counts in the 150 largest U.S. markets increased by more than 145,000

units on net from July through September. That's the largest Q3 demand since the Great Recession showing that job growth occurred in many areas. “While the U.S. economy has a long way to go before it’s fully healed, there’s enough job production to allow new household formation to return in some areas, so apartment demand is back,” said RealPage Chief Economist Greg Willett. “Leasing activity is still spotty by metro and by individual neighborhood, but the overall story is a good one.” Not all metro areas saw increases. New York and San Francisco saw massive move-outs, losing 11,705 and 3,637 units respectively. Along with occupancy growth, Dallas-Fort Worth led the nation

in the number of apartments under construction in Q3 with 40,349 units, 10,000 more than each of the next two busiest multifamily GREG WILLETT construction markets, Washington, D.C., and Los Angeles. Monthly rent charges in the Dallas region remained stable. Several markets saw sizable declines in rent charges compared to a year ago: San Francisco dropped 11 percent, San Jose 10.3 percent, and New York 8.5 percent. Riverside-San Bernardino was the leader in rising rents at 4.4 percent, followed by Sacramento at 3.7 percent, and Virginia Beach, VA, at 3.5 percent. —SE

TRENDS

In researching commercial real estate trends impacting the 2021 outlook, Deloitte surveyed 200 industry leaders to identify how companies are evolving to handle current challenges. Here are top takeaways:

For many companies, COVID-19 exposed shortcomings in digital capabilities and a need to create a roadmap for digital transformation.

FA L L 2 0 2 0

While overall net-lease investment in Dallas-Fort Worth fell sharply in Q2 2020, it comprises a record share of the much smaller pie of commercial real estate activity during the pandemic, according to a report from CBRE. "Dallas-Fort Worth has been set up to weather the current storm better than most other markets," said Jared Aubrey, senior vice president with CBRE in Dallas. Net-lease investment (which includes office, industrial, and retail properties) reached 20.2 percent of total DFW real estate investment in Q2, eclipsing 13.1 percent in Q1 2020 and 14.9 percent for a full year in 2009 during the Great Financial Crisis. Since 2012, it had remained in the 11- to 13-percent range. "As long as construction continues and we’re able to maintain supply, we’re in a great situation to continue to see high net-lease investment activity," Aubrey said. —SE

Dallas-Fort Worth has

DELOITTE SURVEY: THREE WAYS PANDEMIC FALLOUT WILL IMPACT CRE IN 2021

TECH GAPS

A BIGGER BITE OF A SMALLER CRE PIE

been set up to weather the current storm better than most other markets. There is still a strong demand for netlease investment properties, and we’ve actually seen prices for certain assets go even higher than they were pre-pandemic. — JARED AUBREY CBRE

LOCATION NO LONGER TOPS THE LIST

OVERCOMING EMPLOYEE ANXIETY

Health- and safety-related smart building features and occupant density likely will play a more important role in 2021 leasing decisions than location.

Employees' fear of returning to work will challenge companies in the near term while the ability to recruit both Gen Z and Gen X workers will require an approach that adapts to the future of work and prioritizes diversity and inclusion. D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 1 3


B BUILDING TOMORROW TOGETHER

DA L L AS -

EMER S I H T R O F OR T W

Over the years, I’ve come to expect to see our region at or near the top of most “best cities” or “best places for” lists, particularly when the ranking is based on economics, growth, or corporate recruitment. We lead the nation in population and job growth. We’re No.1 in both categories for 2019 and for the entire 2010 decade, for good reason. Our region is a premier location in the U.S. for headquarters, manufacturers, and logistics. We’re home to an enviable roster of companies across major sectors like aerospace, automotive, data, energy, engineering, insurance, finance, food and beverage, retail, semiconductors, telecommunications, and transportation. Eight Fortune 500 companies have decided to move headquarters here since 2004. The

1 4 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

G

BI R O F B U H IN G A S A

OT

ENC I C S E F I L D E CH A N

ES.

most recent is Charles Schwab, whose move to Westlake from San Francisco will take effect Jan. 1, 2021. DFW is also out front with new and emerging sectors. Artificial intelligence, augmented reality, autonomous vehicles, big data, cybersecurity, and distributed ledger technology companies and jobs are here, and growing. We have it all. Almost. You have not seen Dallas at or near the top of any list of “best cities” or “best places for” BY MIKE ROSA when the ranking is based on life sciences or SENIOR VICE PRESIDENT, biotechnology. Chances are we’re not on the ECONOMIC DEVELOPMENT, list at all. DALLAS REGIONAL CHAMBER Boston, San Francisco, San Diego, Washington D.C., Raleigh-Durham, New York, New Jersey, and a few others share that spotlight. More than most sectors, biotech companies cluster when choosing where to build facilities, invest and create jobs, even if costs are higher. Boston, San

FA L L 2 0 2 0


B BUILDING TOMORROW TOGETHER Francisco, and the others offer the established and branded aggregate of great research universities, existing and significant biotech and life science companies, a big talent pool, lab space, patent generation, and funding from venture capital firms or the National Institutes of Health. Yet in recent years, the Dallas Regional Chamber has led bids that advanced DFW as a finalist for new biotechnology manufacturing facilities by Genentech, Novartis, and a few others. We were in the game on the strength of our overall attributes as a great place to do business and a few stellar centers of biotech excellence like Alcon in Fort Worth and UT Southwestern Medical Center in Dallas, the only academic medical center in the world to serve as home to six Nobel Laureates. With a funding level of about $470 million annually, UT Southwestern Medical Center is our shining star. UT Southwestern conducts research and launches companies across a variety of fields including cancer, heart disease and neuroscience; as well as training 3,600 medical professionals each year. Yet we were not selected. Our biotech ecosystem was not as deep or evident compared to the winning locations. Now that’s changing quickly, for the better. On Sept. 22, 2020, biotech industry leader BioLabs announced that it is locating its first central U.S. location in Dallas. BioLabs provides lab space and wrap-around services to incubate and accelerate biotech. BioLabs will operate in a 37,000 square-foot flexible life science coworking facility at Pegasus Park, developed by J. Small Investments, partnering with Lyda Hill Philanthropies. Pegasus Park is just north of downtown Dallas and is within walking distance of UT Southwestern Medical Center, a collaborator on the Park. BioLabs’ other locations are in hotspots like Boston, New York, San Diego, and RaleighDurham; places where, for years, our own Dallas entrepreneurs, scientists and researchers sometimes had to go to launch their enterprises. Companies like Alcon, Astra Zeneca, Peloton Therapeutics, Reata Pharmaceuticals, and

WANT TO LEARN MORE ABOUT HOW TO GET INVOLVED IN BUILDING TOMORROW TOGETHER?

FA L L 2 0 2 0

THERE ARE MORE THAN 60 COMPANIES AND 27,000 JOBS IN BIOTECHNOLOGY AND LIFE SCIENCES IN DFW. Taysha Gene Therapies are here in Dallas-Fort Worth, working on eye care, hyperkalemia, cancer, kidney disease, and diseases of the central nervous system. Other science in our region is focused on HIV, muscular dystrophy, brain research, and more. The University of North Texas Health Science Center in Fort Worth is conducting research in forensic genetics and Alzheimer’s. Texas A&M’s College of Dentistry in Dallas is nationally recognized for oral health and craniofacial research. As our region grows in population and diversity, researchers will be increasingly attracted here for clinical trials. There are more than 60 companies and 27,000 jobs in biotechnology and life sciences in DFW. McKesson, a Fortune 10 company and the nation’s largest pharmaceutical distributor, is now headquartered in Irving, for good reason. Dallas Fort Worth International Airport boasts a new 37,000-square-foot cold chain storage facility. It allows the refrigerated storage and rapid delivery to and from our region of temperature and time-sensitive pharmaceuticals and therapies. We have a lot of runway in the biotechnology sector in DFW, and our assets and reputation are building in a positive direction. Objective third parties are taking note. In an October 2020 life science cluster report by CBRE, DFW was ranked 6th on a list of top ten emerging life science clusters in the U.S. Biotechnology is alive and growing in DFW.

BUILDING TOMORROW TOGETHER The Dallas Regional Chamber’s economic development program, Building Tomorrow Together, provides organizations in Dallas-Fort Worth with an accelerated investment opportunity that helps advance our region’s success. This additional investment made by more than 130 organizations, in addition to annual chamber membership dues, allows organizations to increase their support of our efforts to further economic prosperity throughout the region. This initiative funds efforts related to direct contact with corporations and location consultants examining the DFW region.

Contact Mike Rosa, Senior Vice President, Economic Development, Dallas Regional Chamber 214-746-6735 | mrosa@dallaschamber.org

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 1 5


F FEATURE

1 6 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

FA L L 2 0 2 0


F FEATURE

BY QUINCY PRESTON AND SANDRA ENGELLAND

When COVID-19 hit Dallas-Fort Worth in March, it turned the commercial real estate industry inside out. But what’s in store for next year? Which pandemicrelated changes are here for the long haul? And is there any good news out there? While real estate related to offices, hospitality, and many forms of retail suffered when people stayed at home, those dealing with e-commerce, general industrial, and new home building saw a completely opposite picture. The demand for those spaces remained strong and in some cases skyrocketed. As Kaizen Development CEO Derrick Evers puts it, “The winners in uncertain times are those that can adapt the quickest.” To help DFW CRE professionals navigate the challenges in their path, we asked 21 experts representing a wide range of sectors and asset classes to look at their data (and perhaps their crystal ball) and offer their best guess on how to make the most of 2021. Interviews have been edited for brevity and clarity. For extended Q+A content, read more at DallasInnovates.com/CREOutlook2021

FA L L 2 0 2 0

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 1 7


F FEATURE OFFICE..

Brad Selner President, South Central Region JLL WE’VE ALL HEARD THE BUZZ ON THE future of office: Some say the pandemic has changed things forever, with WFH stressing the office market permanently. Others say the office is so essential for collaboration and connection, the “old normal” will soon return. Selner thinks both extremes have it wrong. The president of JLL’s South Central Region believes businesses and offices will be reimagined, not just in a one-off exercise but as a continual evolution. The key reason: great things happen when people have a place to interact, innovate, and move business forward. JLL aims to drive this evolution with its $100 million global venture fund, JLL Spark, and its new JLL Technologies division.

What’s the outlook for the DFW office market into 2021? How does that compare nationally? The future of office demand is evolving globally. As companies re-enter the workplace and engage searches for new corporate homes, North Texas remains on the shortlist for those interested in establishing a new regional office or relocating their operations. DFW’s long-standing economic fundamentals and pro-business environment continues to drive occupier and investor interest. There’s no question health and safety have leapt to the top of priority lists with many North Texas tenants. That said, having an office environment that attracts and retains top talent, reinforces team culture, and maximizes productivity is a close second.

How do you see the office market emerging from the pandemic in DFW?

The office has long provided a place for concentrated work and increasingly is a place for collaboration, connection, innovation, and social interaction. The desire for these characteristics hasn’t diminished. Its function will continue to evolve,

1 8 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

accelerating trends which emphasize the importance of collaboration and innovation to employee productivity. It’s too early to tell if the changing needs of office occupiers will have considerable impact on the aggregate level of space required. However, the function and design of their space will change, with many focusing on the health and wellness of their people.

What are the most important changes you see ahead? The pandemic forced a global work-from-home experiment that left employees craving connection. With an emphasis on health and safety, organizations that foster a sense of community and create engaging experiences on and offline can increase morale, productivity, and long-term business resiliency. While our team at JLL was innovative and nimble through remote work, we’ve seen many examples of being in an office leading to better collaboration, camaraderie, and productivity. Within the first week of our Phase 2 re-entry in September, two of our team members connected as they entered the building, which led to them creating a plan to help secure a mutual client a better deal. It’s our firm’s belief that this emerging new world presents significant opportunity. It will direct organizations to prioritize their most valuable asset—their people.

How do you expect tenant needs to evolve into next year and beyond? Historically, when a business disruption would occur, companies would implement workarounds. Businesses would adapt to an interim normal for a short period of time, then go back to the way things were before.

FA L L 2 0 2 0


F FEATURE

“We cannot wait for stability to arrive to start making important business decisions.” — Brad Selner

This was the mindset for many companies during the early part of 2020. The general consensus was that life would go back to normal after several months. The thought was, “Let’s hunker down and then slowly re-enter on a linear upward trajectory back to the ‘old normal,’ until our workforce is back to 100-percent capacity.” As companies return to the office, each will experience different impacts on their team’s engagement and business. Determining solutions will be different for each organization based upon their business, team, job functions, existing work environment, and geographic location.

How do you see office design changing?

In a post-pandemic world, organizations have an unprecedented opportunity to redefine how their spaces evolve to keep the health and well-being of people as a priority in the next normal. Employee mobility programs, inclusive design, and collaboration technology will be critical in preparing for the next generation workplace. A greater focus on spaces that emphasize face-to-face interaction is likely as office space is redesigned or repurposed.

Has the pandemic driven increased technology adoption at JLL?

JLL has been on a significant technology journey over the past several years. Current events have accelerated the adoption of these technologies, which will uniquely position JLL to serve clients in a much more efficient way. In the past few years, JLL has made technology investments a priority. JLL created a $100 million global venture fund, JLL Spark, in 2017, and a new division, JLL Technologies, in 2019. JLL Technologies (JLLT) is the first business of its kind to bring together a comprehensive technology portfolio under one umbrella, from business intelligence platforms to smart office solutions to leading-edge proptech start-ups. JLL has also acquired technology companies over the years, including foundational investments in facilities management with the acquisition of Corrigo, as well as technology implementation and consulting firms, making us a leader in IWMS solutions and services. Our technology-driven approach aligns our clients’ business objectives with their real estate needs. Before and during the pandemic, we’ve helped our clients quantify how to best support their people, tour market options virtually, and design and budget the perfect space for the next normal.

HIGH TECH

How should companies prepare for the future of the office market and CRE in the region?

What opportunities and challenges do you see in CRE for the high-tech industry in the coming year?

Every organization must examine the priority areas of their business and begin to “reimagine” certain aspects of their business in the context of the new normal. We’re on a three- to five-year journey. Reimagining is not a one-anddone exercise—to continuously reimagine will be part of our next normal. We can’t wait for stability to arrive to start making important business decisions. We’re entering an era of “always-on transformation” and “always-on resiliency.”

FA L L 2 0 2 0

SUSAN ARLEDGE Executive Managing Director, Site Selection ESRP

AS 2020 BEGAN, HIGH-TECH COMPANIES had busy, vibrant offices with e-scooters buzzing between the desks. Then COVID-19 hit: buildings emptied, and a new paradigm began. That may not completely change after the pandemic ends, Arledge says. So her firm is exploring how CRE can be transformed, through everything from repurposing space to robotics to businessfriendly tax and regulatory environments.

Risk mitigation will be the driver for the next few years. All companies are reevaluating their business models and operations searching for ways to mitigate future risk, not only in real estate but for labor costs. Large tech companies in Continued on page 20

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 1 9


F FEATURE “Virtual tours and other technologies will continue to be used to address challenges presented by social distancing.” — SUSAN ARLEDGE Continued from page 19

areas with high costs of living such as California, New York, New Jersey, and Illinois will be critically evaluating operations in the event there is another or similar pandemic.

How has the pandemic driving change in your business?

It’s likely that many businesses will continue to have employees working remotely even after the coronavirus pandemic ends. This can be particularly impactful for large tech companies located in Northern California and on the east coast, as companies look to depart these high-cost areas for more aff ordable communities. Unfortunately, commercial real estate could end up being the big loser as a result of more remote workforces, which is going to drive change in office development.

How is your firm handling the uncertainty?

ESRP, like most brokerage firms, will be continually focused for our clients on how to repurpose real estate that has been impacted by the pandemic. Former retail mall space could be used for lastmile fulfillment centers. Shuttered big-box stores may be prime opportunities for large employee/ dense back office or shared service center operations, due to the large amount of parking.

What current projects related to CRE for the high-tech industry are you excited about?

There are four. HVAC and air quality: COVID-19 has brought increased scrutiny to improving indoor air quality and cleansing to decrease pathogen spread by recirculating the air. Virtual tours: Virtual tours and other technologies will continue to be used to address challenges presented by social distancing requirements. This will extend to touchless entry, social distancing tools, telework communication software, and smart HVAC systems. E-commerce: There is a need to diversify every company’s supply chain, lower operating costs, and seek more business-friendly tax and regulatory environments. E-commerce companies can reduce operating costs by as much as 20 percent through robotics and automation, which reduces the peoplewalking-around time that is so costly. China strategy: China is still the world’s second largest economy with more than 100 cities with a population of more than one million. It’s home to seven of the world’s 10 largest ports. It’s also a very low-cost market, where the average hourly pay for a machine tool operator is around $5/hr compared to $26/hr in the U.S. Firms are now looking at automation in the US as well as looking to Mexico to help offset higher wage costs.

2 0 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

TENANT EXPERIENCE

TORREY LITTLEJOHN Executive Vice President JLL

OFFICE TENANTS HAVE USED technology to manage the pandemic’s impact on 2020. As they look forward, they’re weighing changes in space needs and design. But most employees just want to come back to the office, according to JLL’s global survey that shows more than half of office workers miss their office, and nearly twothirds of millennials can’t wait to return, says Littlejohn. While some tenants are reducing office space due to the pandemic, she believes that will be off set by job creation and de-densification—minimizing the aggregate impact. How has the pandemic changed the needs of office tenants? Will those changes last long term?

Accelerated trends in remote working/ flexibility, office design, and technology may impact the overall design of office space. Yet, these changing needs are unlikely to have a considerable impact on the aggregate level of space required, although the function and design may change. In JLL’s global survey of 3,000 office workers, 58 percent of employees said they miss the office, and 64 percent of millennials are eager to return. To me this means the traditional office is not going anywhere, because people want and need to maintain the intangible connection to their jobs. In my opinion, in the short term some companies may reduce space requirements as a knee-jerk reaction, but job creation and de-densification is likely to balance this out. So at the aggregate level the impact is minimal.

wellness initiatives. Therefore, reduced demand for lower-quality assets seems likely over the longer term. One silver lining throughout the pandemic has been the accelerated adoption of new technology. Companies off ering video conferencing and collaboration have experienced a boom in popularity that may have taken years to achieve otherwise. A huge benefi t is that colleagues are more accessible now. The most junior person in an organization is now more digitally equipped to get ideas and thinking to senior decision makers, which is making the exchange of ideas more circular, less hierarchical, and more frequent. From a personal perspective, technology has become a more embedded part of my flexible worklife. It has provided mobility, accessibility, and productivity for me remotely that I didn’t realize would be possible just one year ago.

What other trends do you see in terms of tenant needs across sectors? Flexibility is key. As companies begin and continue the re-entry process, we’re seeing more flexible work schedules to accommodate employees’ personal obligations and social distancing with office spaces.

What do you anticipate for DFW in terms of expansions and relocation?

I think Dallas will be the beneficiary of expansions and relocation. Our economy has a large, diverse, educated workforce. Our cost of living is still relatively low, we’re centrally located, and our tax structure is attractive to companies. We’ll continue to be at the top of the list for companies looking to reduce their cost structure and provide a great quality of life to employees.

How is technology shaping the new normal for commercial real estate?

Over the short term, the adoption of new technologies will both facilitate remote working and ensure workers’ well-being and efficiency on their return to office buildings. Over the longer term, demand is expected to gravitate toward technology-heavy smart office buildings, reflecting their ability to support companies’ environmental, sustainability, and health and

FA L L 2 0 2 0


F FEATURE

Market Matters

Capital Markets Update

Our virtual fall programming continues with a look at the state of office, industrial, multifamily, and retail and what the future holds for 2021, featuring insights from Mark Gibson, CEO of JLL Capital Markets, Americas. Series Sponsor

Event Sponsor

Media Sponsor

DETAILS: Thursday, November 5, 2020 8:30 a.m. to 9:30 a.m. A meeting link will be sent to registrants

Imagine. Empower. Impact. FA L L 2 0 2 0

REGISTER NOW AT RECOUNCIL.COM/EVENTS 214.692.3600Â PHONE

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 1


F FEATURE What’s the outlook for the DFW industrial market into 2021?

You’re going to have ebbs in certain markets. Food, as far as grocery, has been really hot. Is it going to stay at that high level? I suspect it will stay elevated, but as restaurants become more popular again, that will mitigate somewhat. Online is what everybody’s talking about and dealing with as a significant part of the economy that’s here to stay. And it’s having a significant impact on industrial demand, not just in DFW but across the country. I was on a call earlier this week with a forum I’m in—it has developers from Northern and Southern California, Chicago, Virginia, Columbus, New York, and Atlanta—and everybody is basically saying the same thing: They’re experiencing the same sort of activity across the board. The industrial market has been steady. There are some industries that have been heavily impacted on a negative basis, like aerospace and hospitality, but consumer products, e-commerce, and electronics have been very, very strong. We’re still seeing a lot of in-migration into the region. There’s a direct correlation between internet or e-commerce sales and warehouse demand. It could have negative implications for some retail, but there’s a correlation of population and warehouse demand. At Hillwood, we’re seeing an astounding volume of products moving in and out, but I don’t think that’s unique. It’s going on across the region. As more people come, there are more requirements for products, and that means more warehouse space.

What important trends do you see rising?

INDUSTRIAL..

Bill Burton

Executive Vice President, Hillwood Development Co. WHILE OTHER SECTORS SLOWED TO A CRAWL IN 2020, ONE THING’S been positively booming: industrial, and the real estate required for it. That’s led to big trends, and a jump in the push toward autonomous trucking. At Hillwood, Burton has seen an “astounding volume of products” moving in and out as more and more people migrate into our region. More people means more demand, which means the need for even more warehouse space. The biggest game-changer, according to Burton: the rapid onrush of autonomous movement—on highways, around warehouses, and throughout the industrial supply chain. Since North Texas is a leader in autonomous R&D, it’s already happening here—and happening fast.

2 2 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

If you look at supply chain, real estate is about 10 percent of the cost; the rest is transportation and labor. So to the extent you can check those numbers, you really put yourself in a better place. We’ve increased our clearance heights, increased truck spaces, and employee parking. Where the real impact is going to be is in labor and transportation. If you look at the BNSF intermodal, rail is the most cost-effective means of moving goods across the country. You have the flexibility to move containers across the ocean and onto trucks and move them across the country on a train. Once you get inside the yard, there’s the autonomous movement. It’s coming pretty rapidly. The autonomous movement of goods in the intermodal yard—and from intermodal to warehouse, as long as they’re close—you’re going to

FA L L 2 0 2 0


F FEATURE

“I think online is what everybody’s talking about and dealing with as a significant part of the economy that is here to stay. And it’s having a significant impact on industrial demand, not just in DFW but across the country.” — Bill Burton

see significant movement in that area, and it’ll be a significant advantage. North Texas is already a leader in the research and development of autonomous long-haul trucking. That’s where you see the activity right now, because there’s less interaction with other traffic and humans and other things that can get in the way. You have a lot of trucks moving up and down the highway right now, and somebody’s sitting in the seat, but they’re not driving. It’s being driven autonomously. North Texas is a leader for a number of different reasons: the large freeway system and a government that’s willing to work with companies to move this kind of technology forward. BNSF is a clear leader in the area with their activity and volumes at the intermodal. A couple of years ago we were the 52nd largest port in the world—today we might be 50th—and we have no water. We’re seeing great volume, and we’re going to increase those volumes with technology. We’re also going to reduce costs and increase reliability with technology. And that’s going to manifest in the autonomous movement of these goods to the warehouses coming in. Autonomous activity is coming. It’s going to grow rapidly, and it’s going to have an impact on us, and we’re well suited to benefit from it. It’s here.

Talk about the convergence of industrial and retail spaces.

There’s a lot of discussion about retail to industrial. I think that may happen, but only on a limited basis. The interaction of people and trucks is not a good interaction. There’s got to be a clear delineation, and then the use has to be right for the community. You’re going to see that more in densely constrained markets without availability of land, like New York, less so here in DFW. What you will see is retailers utilizing brick and mortar footprints as an asset in their supply chain. You’re already seeing it with Walmart and Target and Costco, with online orders and in-person pickups.

How has the industrial market changed in the pandemic?

I wouldn’t call them way up, but renewals are active. We’ve seen less moving around. If renewals are up, that means they’re getting done. For those entering the market, there’s a lot less tire kicking and more moving on deals at a good pace.

FA L L 2 0 2 0

DATA CENTERS

Anthony Bolner EVP and Partner Stream Data Centers

WITH MILLIONS working from home in 2020—and many never going back—there’s been a surge in the need for faster speeds, storage, and device support. Bolner looks at how his industry is responding to this ever-growing demand, and how Stream is building new centers to meet it. What’s been the impact on data centers of so many employees working from home? Working from home has grown many facets of infrastructure and connectivity demand. More home users have driven the need for faster connectivity, more storage, and the need to support additional devices—globally.

What opportunities and challenges do you see in the data center sector for the coming year? Cloud is definitely growing and will continue. Regulated enterprise users continue to demand control of certain elements across their infrastructure, as the enterprise colocation market is still experiencing good demand in major markets.

What changes do you expect to remain long term, and how are you handling those changes and uncertainty in your business?

These changes really come down to speed and capacity of connectivity services. So, bigger pipes will be required to create easier access to larger amounts of data and storage.

What current or upcoming projects in DFW are you excited about?

Stream Data Centers is excited about our new data center in the Dallas market, DFW VII in Garland. It already has 3 MW of commissioned capacity available with expandable growth to 30 MW.

“Working from home has grown many facets of infrastructure and connectivity demand.” — Anthony Bolner D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 3


F FEATURE

“Anyone involved in these transactions will tell you that labor analytics plays a major factor, far more important than the tax incentives that used to be a driving factor.” — Allen Gump

What opportunities and challenges do you see in logistics in 2021?

LOGISTICS

Allen Gump EVP, Colliers International

SOUTH TO MIDLOTHIAN, EAST TO FORNEY, north to McKinney, all over Fort Worth: Wherever you turn, logistics operations are growing in size, complexity, and sophistication. As activity on new projects begins returning to pre-pandemic levels, Gump says “it’s fun to work in a market with pros.” The EVP of Colliers International watches the future arrive daily from his home office window—as UPS, FedEx, Amazon, and unmarked white vans roll up like clockwork.

2 4 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

Logistics is an industry that’s consolidated over the last 20 years from being local warehousing businesses to very large multi-market corporations leasing millions of square feet. The sophistication level is far beyond the public warehouse of old. Most large warehouses today are either leased by, or internally operated by, logistics companies that have brought a new level of sophistication to the business of warehousing, trucking, and delivery of goods. What was considered accepted practices such as “ just-in-time delivery” is now being rethought as logistics providers are realizing the new realities of inventory management. Logistics companies and their customers have seen what can happen when you don’t build in some growth and other contingencies. As these logistics companies operate 200,000 to more than a million square foot warehouses, DFW developers have provided the required high-quality buildings to lease. Also, many developers have smartly purchased land sites and done the upfront work getting their sites ready for immediate development. DFW is well positioned to make available the buildings these logistics companies need as their requirements get larger and larger each year. The buildings and sites are south to Midlothian, east to Forney, north to McKinney and all over Fort Worth. The challenge is always labor and finding the best locations. Anyone involved in these transactions will tell you that labor analytics plays a major factor—far more important than the tax incentives that used to be a driving factor. One opportunity might be that developers who planned to build a speculative building on a site chose to hold off because of COVID-19. That site is now available as a build-to-suit site. Pricing under a build-to-suit structure can have definite cost benefi ts to the logistics companies and their customers. The tremendous availability of financing at low rates, land in all directions, and the hyper-friendly business environment that exists in Dallas-Fort Worth’s 13 counties gives you what you need to get deals done.

What changes in the logistics sector have you seen during the pandemic? The national logistics companies have continued to lease space. However, decisionmaking by industrial warehouse users was much more careful in the early months. We’ve seen that loosen up in the last few months. Amazon has continued to lease millions of square feet, and we’ve seen other companies lease or sign build-to-suit deals for millions of square feet. My developer friends tell me their activity level on new projects is back to prepandemic levels. Industrial is the new retail. That’s why, as I work from home sitting in my home office, I’m used to looking out my front window seeing deliveries by UPS, FedEx, Amazon, and miscellaneous white vans arriving all day long at my house. If you can click it, you can buy it!

How has Colliers dealt with the uncertainty this year? Colliers’ staff has kept us up and running the entire time. Staff has stayed engaged to get us what we need to service our clients. Tour books, market options surveys, whoever was available pitched in to make it happen. Our IT guys and gals have done a tremendous job keeping our computers running throughout all the challenges of working remotely. We’ve been one of the fortunate few that have stayed open,

FA L L 2 0 2 0


allowing us to go to the office to put together needed packages and use office equipment we can’t replicate at home. I know this hasn’t been the case everywhere.

E-COMMERCE

Reid Goetz Vice President, Hillwood

What projects are you excited about? My partner Allyson Yost and I have been lucky enough to be part of one of the largest build-to-suits this year, and we have a couple more in the pipeline. Over the last several years, we’ve been part of other large transactions and build-to-suits that I would have never dreamed would be possible early in my career (starting in 1984). I’m just so grateful to be in the Dallas-Fort Worth market where these deals are possible. Even though we mostly represent corporate users and logistics companies, we have the best developers and landlords in the country here in our market. The level of professionalism and competition in DFW is unparalleled in any other market in the U.S. It’s fun to work in a market with pros.

Dallas has been called the truck stop of the future because of the autonomous trucking companies coming here. How will that impact CRE in the region? Dallas-Fort Worth has always been a major trucking hub, for both LTL (less than truckload—think Yellow/Roadway, RL Carriers, Averitt) and truckload (Schneider, Swift). We’re a “break-bulk” location due to our central location, interstate highways, I-20, I-35, I-45 and major intermodal facilities, such as BNSF and UP. It’s only natural that autonomous trucking would be here in a big way. As for its impact on the region’s commercial real estate, I would suspect that for those companies that are already here, which is most of them, it would have minimal impact. They’ll have to still come to their existing locations to load and unload and perform truck maintenance. Those who don’t have facilities here will be looking for locations for “drop yards,” which I doubt will have a major impact.

Explain how logistics and Industrial real estate are connected. There’s a diff erence between simply industrial and logistics. I’m never sure the vernacular is understood by the public. We happen to work with true logistics companies which is the basis for my answers. However, industrial warehouse leasing is a broader category than “logistics” which is a narrower focus. Especially the local businesses that lease smaller warehouses—say 20,000 to 200,000 square feet—are still part of the logistics network. Those that are local businesses have been more severely impacted by COVID-19. We’ve seen some of those companies “stall” in their response to the pandemic, due to the unknown. We’ve also seen national companies choose to permanently close locations, but this is anecdotal and not a major shift.

FA L L 2 0 2 0

IN THE 10 YEARS BEFORE COVID-19, national and DFW logistics real estate had already seen 10 years of positive absorption. That’s accelerated in 2020, as companies like Hillwood race to meet the demand for more. Goetz looks at how philosophies have changed, how inventories are building up domestically, and how his company is moving to meet demand, with millions of new square feet in modern logistics facilities within AllianceTexas. What opportunities and challenges do you see in e-commerce as it relates to CRE for the coming year?

I think it’s fair to say that 2020 has brought a unique set of challenges to everyone, on multiple levels. From a purely CRE viewpoint, the logistics real estate sector, specifically the e-commerce segment of the space, has performed extremely well since the pandemic started. For perspective, both the national and DFW logistics real estate sectors experienced almost 10 years of positive absorption prior to the pandemic. This was driven by a broad-based retooling of the global supply chain in order to meet the demands of the e-commerce economy and consumer. That trend has continued and accelerated through the first half of 2020. We’ve seen an explosion in consumerdriven online sales during that same period. In addition, our customers have described a growing philosophy change in inventory management. The “ just-in-time” model, based on lean inventory warehousing relying upon highly efficient transportation channels, is proving to be highly susceptible to unexpected changes and risks in global supply chains. This change could lead to building up inventories domestically, which can supply chain risk for companies by placing product closer to the populations they serve, and drive even more demand in the logistics real estate sector for the foreseeable future.

What changes in e-commerce brought on by the pandemic do you expect to be long term?

The speed at which consumers accelerated the adoption of online purchasing during the pandemic has been staggering. During the pandemic, U.S. e-commerce sales grew more than 30 percent (from Q1 to Q2 2020), compared to a 2.4 percent rate between Q4 2019 and Q1 2020. E-commerce now accounts for 16.1 percent of all U.S. sales, up from 11.8 percent in the first quarter of 2020. The consumer is moving much faster than the infrastructure (i.e., modern logistics real estate). While we don’t expect that level of quarterly growth to continue, we do expect this shift to last for the long term and continue to drive demand for modern logistics facilities. In addition, Hillwood is at the forefront of a rapid change in the mobility and transportation sectors. We recently established the AllianceTexas Mobility Innovation Zone, which will help advance long-lasting shifts in mobility—from automation on roadways to drone delivery—all within AllianceTexas.

How are you handling the pandemic changes and economic uncertainty with your e-commerce tenants? We’re constantly working and communicating with our customers in an eff ort to understand and anticipate the needs of their businesses. It’s become even more evident that customers need to move faster than before. In AllianceTexas, we’re focused on providing speed and flexibility to both new and existing customers. To accommodate customers with the fastest and most immediate timelines, we’ve just completed over 2.7 million square feet in fi ve spec buildings within AllianceTexas, ranging from 1 million square feet to 225,000. We’re focused, as we have been for the past 30 years, on our build-to-suit strategy of providing speed-to-market, development-ready sites throughout the remaining 6,000 acres in AllianceTexas.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 5


F FEATURE base and growth, job growth, centralized geographic location, and above-average disposable incomes due to the low cost of living here. Dallas-Fort Worth certainly has a leg up on the rest of the United States due to these factors. The DFW unemployment rate is currently 7.1 percent versus the national rate of 8.4 percent. That’s the lowest of the 10 largest MSAs in the U.S. DFW is projected to grow by approximately 139,000 people annually from 2020-2029, again leading the nation. We’re confident that retail growth will surge in DFW and Texas post-pandemic, outpacing the rest of the country.

What long-term changes do you anticipate in the retail industry?

RETAIL.

Alan Shor President The Retail Connection

REMEMBER RESTAURANTS SO LOUD YOU COULDN’T HEAR YOUR friend across the table? Or lines at store counters so long, you put the sweater back? If those seem like distant memories, they’re mirrored by the damage COVID has done. 25,000 stores are predicted to close in 2020, with a record number of retail bankruptcies continuing into 2021. For a post-pandemic comeback, transformation will be key. The pandemic requires retail and restaurants to evolve not just for this crisis, but long term, says Shor. Still, he’s “very bullish” on the eventual emergence of retail and entertainment—and sees DFW as well-positioned to outpace the country.

What’s the outlook for DFW retail into 2021? Historically, DFW has fared better than other areas of the country during economic disruptions. We remain very well positioned as one of the best markets for retail for 2021 and beyond, as DFW has all of the fundamentals that retailers require: pro-business policies, a well-educated consumer base, strong population

2 6 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

For the past several years, retailers have been working toward an efficient integration of their physical stores and e-commerce operations. For the retail and restaurant industries, COVID-19 has been a great accelerator for these trends and other strategic initiatives that were started pre-pandemic. Physical footprints will continue to get smaller and more accommodating to the online shopper, as retailers integrate omni-channel into their brick-and-mortar footprints. Given the necessity to embrace omnichannel retailing, initiatives such as BOPIS (buy online, pickup in-store), curbside pickup, and customer delivery are of the utmost importance. Physical stores will continue to update their design and layout, both inside and outside the store, to better serve their customers using these contact points.

How do you expect tenant needs to evolve next year and longer term? COVID-19 resulted in a massive number of requests by retail tenants for both financial and non-financial lease accommodations. Many tenants requested multiple months of rent relief in the form of rent abatements and deferrals. For those who received rent deferrals, the financial obligations were pushed to 2021 and beyond. Hopefully any anticipated retail recovery will allow the tenant to repay these rent obligations, therefore resulting in any requested needs in 2021 to be more operational than financial. For example, tenants are looking for shorter term leases, flat or decreased rents, and enhanced customer experience changes such as additional customer pick-up parking, drive-thru pick-up/drop off areas, and upgraded

FA L L 2 0 2 0


F FEATURE

“The superb execution of omni-channel retailing, curbside pickup and customer delivery are the longterm requirements of a successful retailer.” — ALAN SHOR wi-fi. In exchange, tenants are giving back certain rights such as exclusivity and co-tenancy.

What trends do you see rising? This pandemic has triggered a number of trends, some positive and some negative, most of which were preexisting trends that have been greatly accelerated by COVID-19. First the negative: The pandemic has resulted in a record number of retail bankruptcies so far this year. Through August, 29 major retailers have filed for bankruptcy with over 10,000 stores closing. Unfortunately, this trend will continue. We expect 2020 to set a record for retail failures, surpassing the number filed during 2010 (the back end of the Great Recession), and this will continue into 2021. Total store closings for 2020 are predicted to be approximately 25,000. Consumers have been stuck at home for seven months now and are buying more online than ever before. Consumer confidence has fallen to its lowest level in six years. Now the positive: Fast-rising internet sales will continue and offset—at least partially—lower sales in the physical stores. Customers shopping online during the pandemic have found the exercise to be easy and efficient, so this trend will continue post pandemic. In terms of trends, retailers that are able to give the customer both superior in-store service and the convenience and efficiency of online shopping will not only survive but will be extremely successful. Finally, we’ve seen a trend of large landlords such as Simon Property and Brookfield buying certain troubled retailers, in part, to keep them as tenants. This trend will continue.

FA L L 2 0 2 0

REDEVELOPMENT

TAMELA THORNTON President & CEO ESmith Communities

RETAIL IS A BIG PART OF DALLAS’ DNA. THAT’S MADE US RESILIENT, AND we’ll need to be: With 10,000 stores closing nationwide as of August, retail has faced unprecedented challenges. But bright spots have stood out, and a renewed focus on quality and service is turning the tide for many. Brand familiarity and customer loyalty are really important right now, says Thornton. Moving forward, building a solid tech platform is a must for retailers—and growth in the next few years must be based on real, analytically validated demand.

What lies ahead for retail redevelopment in DFW for 2021? Retailers have had to innovate. A report from BDO said more than 10,000 stores had closed by August 2020. Those retailers with the ability to support offsite consumption either via online ordering and delivery or curbside pickup were able to sustain their businesses. Retailers who focus on basic needs—grocery stores, home goods, and more—were impacted but are rebounding. Tenants who already had a solid online platform were also in a better position to react. However, when your job and your health are in jeopardy, shopping for nonessential items really isn’t your priority. Apparel stores are trying to shift, but if you’re still working remotely from home, buying new clothes isn’t important. It’s been interesting to watch grocery stores. People are coming back in, but online ordering and prepared meals are gaining market share. Many people still have kids at home from school, so how we’re managing our time is different and the changes are designed to help us keep up. I think the trend to blend online and in-store consumption is going to continue. Building a solid tech platform will be a must for retailers.

What impact has the pandemic had on retail redevelopment? The market will likely see some restaurants and home-based services (grocery stores, home improvements, and value-oriented uses) do well. Brand familiarity and customer loyalty are really important right now. Many of the larger chains are struggling as sales are not rebounding post the shutdown earlier this year, and the old model of forcing demand simply by bringing in new seasonal stock isn’t sustainable. Landlords are trying to adjust with renegotiated leases, but they also can’t give away the farm, especially to retailers who seem to be negotiating simply to improve their cash position. In the next few years, growth is going to have to be based on real, analytically validated demand. Additionally, a number of retailers are evaluating their portfolio of stores and consolidating points of distribution. It’s given some the opportunity to shed low-performing or high-cost assets. While this is freeing up some great sites for redevelopment, without a clear plan I think we’re going to be moving more slowly on new projects.

What new trends are you seeing in regional retail redevelopment? Online retailing that was precipitated by the shutdown continues to grow, and consumers are even buying essentials online. Because consumer feedback is everywhere, retailers who can quickly deliver products in a safe way are doing best, and in many cases, the new requirements will be about making the digital and in-store experiences as seamless as possible. From a design standpoint, incorporating patios with good outside seating and easy access for curbside pickup or delivery is increasingly important. Spaces are getting smaller—it’s not unusual to see retail and other services sharing spaces.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 7


F FEATURE

MULTIFAMILY..

Tom Bakewell President of Development and Co-founder Streetlights Residential

BEFORE 2020, EVERY CORNER YOU TURNED in Dallas-Fort Worth seemed to have a crane on it, with another multifamily project rising skyward. Since COVID hit, the corners have been a lot quieter. But DFW’s dynamic market, comparative job growth, population growth, and low taxes have us poised for a 2021 rebound. When new projects bounce back in 2021, buildings will be diff erent, says Bakewell. Get ready for a touchless, filtered, sanitized lifestyle.

What’s the outlook for DFW multifamily into 2021?

Dallas-Fort Worth has maintained its top spot nationally for apartment supply over the last few years, and fortunately we’ve also had some of the top job growth numbers to absorb that supply. With the current pandemic our job creation has decreased; however, compared to the rest of the country, DFW and Texas as a whole still lead the country. Apartment starts in DFW the second half of 2020 and in 2021 will decrease significantly from the frantic building pace of the last few years. That will allow

“The projects that are able to attract capital should find success in a stronger leasing market in years ahead.” — ToM BAKEWELL occupancies to tighten back up and rent growth to come back into the market in late 2021.

What long-term changes do you anticipate in the sector?

We don’t believe the move to the suburbs will be a long-term change in the market. After the pandemic subsides, we see millennials coming back into the urban core for the restaurant and entertainment scene, as well as proximity to numerous jobs that fill so many of the newly constructed office buildings in Uptown and surrounding urban neighborhoods. A more lasting change we do anticipate is the demand for “healthier buildings” in terms of things like touchless entry doors and elevators, better air and water filtration, and a change in expectations for daily cleaning and sanitization of common areas.

What opportunities and challenges do you see in the coming year?

All of our markets have seen some occupancy and rent softness since the beginning of the pandemic. Early on, everyone was anticipating a significant reduction in construction costs, which has never really materialized, making new development even more difficult to pencil. This will result in lower supply, so the projects that are able to attract capital should find success in a stronger leasing market in years ahead.

What’s the biggest deal you’ve closed in the pandemic?

StreetLights closed and started construction on a $120 million project in Atlanta in July, which has been our only construction start since the beginning of the pandemic. But the capital markets are getting back to some sense of normalcy, and we anticipate starting construction on a Florida project in 4Q 2020 and two more Texas projects in 1Q 2021.

Has the pandemic driven increased technology adoption at StreetLights?

The pandemic definitely increased our reliance on web-based conference calls and cloud-based file sharing when our associates worked remotely. Now that we’re back in the office, we’ll continue to use a lot of those newly adapted technologies. The effectiveness and cost efficiencies of these technologies have proven out so much, I don’t see our travel ramping back up for quite some time.

What’s next for your firm that you’re excited about?

StreetLights took advantage of the slowdown during the pandemic to work on several internal company initiatives that we had continually put off when we were too busy. We believe these significant internal changes as to how we approach the development process will allow us to more effectively execute the complicated mixed-use projects we love. They’ll also help us be better stewards of the neighborhoods and cities in which we build.

2 8 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

FA L L 2 0 2 0


F FEATURE

SENIOR LIVING

Narayan Patel and Anand Patel Co-Founders Journey Capital

THEY’RE NOT RELATED—THEY MET AT SMU on their first day of orientation in 2010. But Journey Capital’s Anand Patel and Narayan Patel are in sync about the future of senior living: It’s all about creating places where people can engage with purpose and live their best lives. Their keys to success? Synergy between senior living developerowners and operators throughout development, acquisition, and hands-on operations—and partnerships like one they recently forged with SilverPoint Senior Living. PHOTO: JOURNEY CAPITAL

What opportunities and challenges do you see in the senior living market next year? Anand Patel: The No. 1 challenge right now for senior living communities is that families cannot visit their loved ones due to state restrictions for the safety of our residents. The State of Texas recently rolled out a Phase 1 Visitation program,

FA L L 2 0 2 0

and our communities have submitted both our visitation booth construction elements as well as our policies and procedures for actual visitation. Once this is approved, we can begin safely scheduling visits for family members. In May, we opened an assisted living and memory care community that was well over 35 percent preleased. However, due to the COVID-19 restrictions put in place, many family members have decided to hold off on moving in their loved ones, primarily due to the uncertainty of when they will be able to visit their family members. With the senior population being the most vulnerable to COVID-19, many lenders have taken a “wait-and-see approach,” holding off on lending to this asset class as it is seen as a riskier asset class next to hotels. This will lead to planned developments taking much longer than expected to get off the ground, if they aren’t canceled altogether. Narayan Patel: In light of COVID-19, we believe safety, security, and purpose have taken on new meanings in the world of senior living. Strong operators physically and programmatically design to create a supportive, safe environment that helps residents engage with purpose and age better longer, especially during these challenging times. Having the right operating partner today is more important than ever—and our recent partnership with SilverPoint Senior Living has proved it, as we’ve yet to have a single resident contract COVID-19 due to the strict policies and procedures put in place. As to opportunities, we believe we’ll see an influx of acquisition opportunities of distressed assets—composed from overbuilt markets and large institution operators—giving local owner-operators an opportunity to repurpose the asset with new management. You’ll see new faces, new attitude, and new owners.

Has the pandemic resulted in any changes in the way you design or equip senior living communities?

Anand: Coming out of COVID-19, we see a motivated element to the design aspects to promote resident health and wellness. We believe residents will only consider moving into a community if they see the opportunity to be their best selves, live their best life, and be capable and engaged as long as possible. The focus now can be driven into three primary dimensions of wellness that aff ect a resident’s quality of life: physical, social-emotional, and intellectual wellness. Narayan: The link between operations and design is crucial right now. If a building’s design and operations are mismatched, it just never feels comfortable. Our new designs strive to promote patterns of movement, feelings of home, and access to natural light and outdoor spaces.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 2 9


F FEATURE What’s the outlook for the DFW hospitality sector into 2021? How does it compare nationally?

Since 2020 has been one of the worst years ever in the hospitality sector, 2021 performance can only go up. The best measure of impact is revenue per available room, or RevPAR, which incorporates both occupancy and rate. In Dallas, RevPAR is forecasted to drop a total of 54.7 percent in 2020 from the previous year, and bounce back 35.4 percent in 2021. In any other year, such an increase would be phenomenal. By comparison, RevPAR is projected to decline 52.5 percent nationally in 2020, rebounding 41.1 percent in 2021. To that extent, one could say Dallas was impacted worse and may take a longer time to fully recover. But the fact is, Dallas achieved a higher occupancy in 2019 than the rest of the nation, so it had a bit further to fall.

What long-term changes do you anticipate?

The industry has been changed forever by the pandemic. Expect to see some slowing of new hotel openings and some hotels closing, both on a temporary and permanent basis. Operationally, most hotels have much stricter procedures throughout the hotel, from checking in with kiosks and front desks behind plexiglass, to cleaning and sanitizing guest rooms, meeting rooms, and food and beverage outlets. From a design standard perspective, expect spaces to be changed to allow social distancing. From a technological perspective, we’ll likely see more touchless features and more voice-activated features from unlocking doors and changing TV channels to controlling air temperature and window coverings. New hotel developments will be able to incorporate all of these changes into their developments.

What important trends do you see rising?

HOSPITALITY..

Jeffrey Binford Managing Director, Hotels Advisory CBRE

IN EARLY 2020, COVID HIT HOTELS IN A FLASH: Empty rooms. Cancelled conventions. Idle bars, shops, and restaurants. With a full recovery likely years away, what are owners and investors to do? While Dallas hotel business fell harder than the national average, it had higher occupancy to begin with. The relative bright spots? Smaller, select-service hotels and extended-stays on highways and in the suburbs. But some larger hotels may never recover—and are looking for a new business to be in. Business may not return to pre-pandemic levels until 2023 or 2024, Binford says. So some hotels may pivot to senior living, multi-family, and reverse office conversions.

3 0 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

With some hotels closing, we’re seeing repurposing of the buildings. Hotels which may have been office conversions are being considered for a return to their original use. Other hotels are evaluating multi-family uses, senior living, and other residential conversions. In most cases, this should help other hotels by removing some inventory and allowing market occupancies to rise more quickly.

What’s the biggest challenge you see ahead for hospitality and hotels in 2021?

The single largest challenge is trying to determine when group travel will return. Leisure travelers were the first to travel due to the “cabin fever” of working from home. Traveling together, primarily by car, many leisure travelers have been active since late May. As expected, individual business travelers will be the next to return. Groups are much more difficult because travel decisions are made by the individuals within the groups, not meeting planners.

What else should the real estate community know about the hospitality sector in Dallas-Fort Worth?

Depending on what’s being measured, we project business should recover to preCOVID-19 levels between 2023 and 2024. Resorts and large, full-service hotels with expansive meeting spaces—typically located in urban areas—have been hurt the most, primarily due to the lack of group and business travel. Smaller select-service hotels and extended-stay hotels in highway and suburban locations have had the least impact. Much like before the pandemic, hotel room rates will continue to be pressured, due primarily to short-term rentals. I’m still bullish for North Texas. The economy was strong and performing well before the pandemic and should have all the pieces in place for a solid recovery.

FA L L 2 0 2 0


F FEATURE

VALUATIONS

Chris Gomes Senior Managing Director Investments Marcus & Millichap

COVID-19 HAS BATTERED businesses through much of 2020, hitting the hospitality industry particularly hard. As hotels experience historically unprecedented losses, investors are looking for opportunities. Gomes is helping these investors navigate the uncertainty. The biggest challenges: asset valuations, incentive deadlines, and a divided Congress. And, of course, the continuing coronavirus crisis. How are you handling economic uncertainty and changes in the hospitality market?

What pandemic -related changes in hotel properties could last? Elevated hygiene and sanitation procedures are likely here to stay. Contact-free and touchless features, such as online check-in and check-out and keyless entry, will largely become

FA L L 2 0 2 0

What current or upcoming projects are you excited about?

In the last two weeks my team helped investors close nearly a half-dozen hotel transactions, enabling buyers to capitalize on an impending SBA incentive deadline. This has been our most exciting two weeks since April. Although we supported several clients in September, the sector will face a very challenging fourth quarter if Congress fails to provide additional relief to the industry. Without additional help, hotel assets will face severe financing and liquidity hurdles that could restrain investors’ ability to buy or sell hotels for the rest of the year and into 2021. Our team also is actively engaging in conversations and preparing BOVs [broker opinion of value] for special servicers, lenders and some debt funds.

CHICAGO DALLAS LOS ANGELES NEW YORK SAN FRANCISCO WASHINGTON, DC

INTRODUCING OUR NEWEST OFFICE

Howdy, Dallas! Clune Construction’s Dallas-Fort Worth location has been providing world-class construction services in the area for more than 5 years. It’s time to make it official!

CLUNEGC.COM

The extreme uncertainty faced by hospitality investors has reiterated the importance of information, insight, and communication. In my interaction with hundreds of investors across Texas, I’ve been able to share information and best practices to help my clients grapple with the numerous headwinds. One particular area of challenge for owners has been asset valuations. Never in the history of the hotel industry, even the multiyear Great Recession, has there been a period where hotels were completely empty or even close to empty. Due to the pandemic, some owners have been forced to shutter their assets for several weeks in a row. Valuations are further complicated by the unknowns of when a medical solution will come into play and when the market will return to more normal operating levels. To help investors assess valuations and make better informed decisions, my team has developed several models based on a variety of market recovery scenarios and the limited number of postCOVID transactions that have taken place. Still, there is considerable uncertainty and many factors that can radically shift valuation in the current climate.

the standard across all franchises. Other measures taken by the industry to ensure customer safety during the pandemic— including the closure or scale down of complimentary breakfast, evening social and happy hours, in-room mini-bars, turndown service, and even room service—will be eased in due course as those services return.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 3 1


F FEATURE

“The long-term outlook remains very positive, as healthcare was one of the industries showing the quickest and strongest recovery.” — Lance Hardenburg

HEALTHCARE.

Lance Hardenburg Managing Partner and CEO Caddis Healthcare Real Estate

YOU’D THINK A PANDEMIC WOULD KEEP HOSPITALS HOPPING. BUT FEARS of infection postponed both elective and routine procedures, keeping beds empty nationwide. PPE and safety procedures raised operating costs. Then the rent came due. Despite all those challenges, Hardenburg sees a cure at the end of the tunnel. As healthcare rebounds, his company’s medical office acquisition fund is poised to seize opportunities.

What opportunities and challenges do you see in healthcare real estate?

Financial pressure is expected to continue through 2020 for physician groups, health systems, and other healthcare real estate tenants as a result of the COVID-19 pandemic. Patient numbers are down due to patients’ safety concerns and also the impact of government shutdowns at the local and state level. Government shutdowns impacted routine examinations and procedures, along with “elective” surgeries for any condition not deemed life threatening. In short,

3 2 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

our healthcare tenants were dealt a significant blow to their normal revenue stream. In addition, healthcare tenants saw their operating costs increase, including costs from outsourcing care providers hired to address staffing shortages and higher patient care costs for PPE and other safety procedures implemented in response to the virus. Given those headwinds affecting our tenants, owners of healthcare real estate received numerous requests for rent relief, especially in the early stages of the shutdown. As federal assistance began being distributed, the number of requests decreased, however short term cash flow has been impacted, as Caddis and many other owners agreed to defer rent to later this year or even the following year. The combination of government assistance and some level of landlord relief certainly helped healthcare tenants address shortterm impacts on their business. The long-term outlook remains very positive, as healthcare was one of the industries showing the quickest and strongest recovery. Tenancy remained strong in our medical office portfolio, and we experienced positive absorption even during periods when many of our healthcare tenants were closed due to local or state shutdowns.

What changes in the healthcare industry brought on by the pandemic do you expect to last long term?

Many changes that started prior to this year have been accelerated by the impacts of the pandemic and are likely here to stay. Facility

FA L L 2 0 2 0


F FEATURE design changes will be seen in the forms of enhanced telemedicine technology and usage, improved air-quality advances, increasingly adaptable space design to handle critical patient overflow, and additional outpatient facilities to reduce hospital patient density. We predict that the healthcare employment sector will experience positive gains and also that new policy and delivery model changes will influence strategic and capital plans.

How are you handling those changes and uncertainty in your business?

Despite the multiple changes put into motion, healthcare continues to benefit from demographic-supported demand and the priority that the population places on receiving excellent healthcare. As a developer, acquirer, and operator of healthcare real estate, Caddis continues to seek opportunities to partner with physician groups and health systems, whether through acquiring existing medical office buildings or developing buildings in coordination with our physician and health system partners. We can offer liquidity to physician groups and health systems by way of sale-leasebacks and/or development capital and expertise for groups in need of new assets to broaden their footprint.

What current or upcoming projects are you excited about?

We launched our first medical office acquisition fund, Caddis Acquisition Fund I LP, in late 2017 as part of Caddis’ overall strategy of focusing on long-term ownership and capitalizing on the many opportunities available in a robust medical office market. We’ve been pleased to see that our medical office portfolio has been resilient in the face of pressures from the impact of the pandemic on our tenants and the severe impacts to the economy resulting from government shutdowns. This has confirmed Caddis’ expectations and prior experience as to the reliability of medical office investments, which continue to perform well in difficult economic times. We expect the fund to be fully deployed early in the fourth quarter of this year, having approximately 30 medical office assets. As we complete our first fund portfolio, we plan to move our focus to planning and fundraising efforts for our next medical office acquisition fund later this year.

FA L L 2 0 2 0

LIFE SCIENCES

John Huff

National Managing Director, Transwestern

THE PANDEMIC HAS SHOWN HOW IMPORTANT LIFE SCIENCES are to America’s health and economic security. Now life science startup ventures are attracting investments across the region, as pharma and medical device manufacturing return to the U.S. Huff explains why Dallas-Fort Worth is a growing center for startups, academic research, and clinical and technical commercialization opportunities. How is the pandemic driving the future of life sciences?

Clearly it has elevated the importance of continued government and commercial funding in this sector. It’s also evident that the U.S. was caught flat-footed by outsourcing key components of our pharma and medical device manufacturing abroad. The pandemic has exposed several weaknesses in that strategy. Our politicians and large U.S. companies are mobilizing to bring these key components back home. DFW’s central location and large industrial infrastructure is a natural fi t to play a major role in capturing this demand.

What opportunities and challenges do you see in the region’s life sciences sector for the coming year?

North Texas is uniquely positioned with the size and diversity of our economy for success in the life sciences sector. The region’s growth, highly educated workforce, and entrepreneurial spirit make Dallas-Fort Worth a natural fi t for recruitment and retainment of top talent within this space. We’re off to a great start with more than eight million square feet being used in DFW by life sciences companies. This is supplemented by a large presence of existing pharmaceutical companies that have chosen to relocate here. We have the largest concentration of venture capital companies in Texas combined with the $6 billion of capital allocated for the funding and recruitment of life science companies and research personnel by the State of Texas CPRIT Fund. We’ll need to continue to invest in the acceleration and incubation of life science startup ventures operationally and in real estate infrastructure. One of the main ingredients is the creation of “knowledge clusters,” which are just now starting to take shape to attract top life science research professionals and companies. Academic research can interface and collide with entrepreneurial startup firms to facilitate commercialization opportunities for both clinical and technical discoveries. It’s clearly something that wants to grow here, with all the NIH grant funding and top academic research institutions rooted in our community.

How would you advise life sciences clients on how to handle change and uncertainty in the market? The market fundamentals within the life sciences sector are very stable during this time of disruption and uncertainty within the broader economy. That bodes well with investors as to the resiliency of its tenant base. Protocols and best practices have been adapted to ensure the safety of its workforce and our industry is leading this change.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 3 3


F FEATURE

“Mixed-use is interesting because it is a catch-all sector; there is always one market driving the development. What we have to ask ourselves now is, ‘What is the mix that works?’” — Fred Perpall

MIXED-USE..

Fred Perpall CEO The Beck Group

WITH THE TRIPLE COVID WHAMMY OF WFH, restricted entertainment options, and e-commerce, mixed-use developers are rethinking how we socialize with enhanced safety measures and outdoor spaces. Perpall says that designing unique spaces that handle a variety of uses—like Klyde Warren Park and Sundance Square —will succeed going forward because gathering together matters.

What’s the outlook in 2021 for mixeduse development in the Dallas-Fort Worth region? How does that compare to a national outlook? We don’t have a clear read of the future of mixed-use development in DFW or across the nation. The effects of COVID-19 have put the market sector in limbo. Mixed-use was strong leading up to 2020. In North Texas, the big mixed-use developments were mainly office driven because many major tenants were corporate relocations. Today, we have to consider the impact of working from home and how companies adapt. For example, will corporations permanently

3 4 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

shift to a decentralized system where its employees work from home postCOVID? Trends like these are critical because offices must have a certain percentage leased before being built. As companies look for the right solution for them and their people, the impact on the office sector will be one to watch closely.

What opportunities and challenges do you see in mixed-use development in North Texas for 2021?

Mixed-use is interesting because it’s a catch-all sector; there’s always one market driving the development. What we have to ask ourselves now is, “What is the mix that works?” As mentioned before, office space is a challenge because some aspects of the work-from-home movement will be permanent. Restaurants, bars, and indoor entertainment are at an impasse until a vaccine or cure for COVID is found. However, there is optimism that food and beverage will eventually recover because we’ve seen people flock back to them as soon as restrictions lift. The most significant opportunity in mixed-use is rethinking how we socialize by focusing on outdoor spaces and incorporating enhanced safety measures into design.

What changes brought on by the COVID-19 pandemic have you seen in the mixed-use market, and which of them do you expect to last?

Developers are rethinking their spaces in real-time. Shopping has been moving from physical stores to online, and non-retail uses are beginning to occupy more and more space in shopping centers. This change was gradual, but COVID became the accelerator.

What new trends in mixed-use are you excited about?

The mix of uses revolves around creating unique, well-designed communities where people look forward to gathering. We know places with green space and areas for community gatherings thrive. New York wouldn’t be New York without Central Park. In the Metroplex, we have Klyde Warren Park in Dallas and Sundance Square in Fort Worth. The uses in these places may fluctuate depending on the market, but people want to spend time there because they are well-designed and can handle a range of uses.

FA L L 2 0 2 0


F FEATURE AEC..

DARREN JAMES President KAI Enterprises

WHEN A CRISIS HITS, THE ABILITY TO change a design to fit the “new normal” is critical. In 2020, design-build firms have had to tweak plans to include features like better ventilation, more safety features, and spaces that allow for social distancing. James says that pivoting quickly is more important than ever—and having architects, engineers, and builders all in one firm makes adjusting plans a speedy process. And, even more important, the president of KAI Enterprises believes that adapting to include input from surrounding communities makes development better for everyone.

What challenges and opportunities are you seeing in the AEC industry for 2021?

One of the challenges I see is the hybrid workforce. Architects and engineers are collaborative by nature, as well as education, training, and practice. With some people working from home and others in the office, there’s an equilibrium that’s still to be determined. Virtual work interfaces close some of that gap, but communication is the core of collaboration—and body language is a huge part of that collaborative communication. All design firms are working through to find our new-now and new-immediate future. Combination/hybrid working environments will only accelerate. Office environments will continue to adapt to address social distancing and this remote interface. Another challenge is the uncertainty our clients are facing and the impact that’s having on the decision-making process regarding project starts, stops, or holds. As for opportunities: I believe the research going on now in response to the pandemic will lead to more efficient and effective practices across the architecture, engineering, and construction arenas.

How has the pandemic affected AEC?

The pandemic has required practice adjustments from virtual meetings to hybrid work environments and little to no workrelated travel, among many other small things

FA L L 2 0 2 0

that make up a workday. The adoption of PPE now includes face coverings and the gentle and not-so-gentle reminders to wear your face covering while on the job site or in close proximity to others. Some of the things that make team camaraderie and human interaction work are being rewoven because of the nature and responses to the COVID. The other immediate impact is the loss of so many restaurants and small businesses. This need reduction will negatively impact design pipelines, which in turn affects construction opportunities. Designers and contractors solely focused on retail and food service verticals will have an adjustment period.

What changes in design/build have you observed with the pandemic? What changes may stick?

Modular, panelized construction and remote fabrication are being adopted by owners and clients at a faster pace.

What do you consider the most important trends in AEC right now?

There’s increased emphasis on research, focusing on changing the physical environments in response to the new distancing recommendations and requirements. Design in response to COVID has been garnering a lot more attention. One of our local clients asked us early on to provide a comprehensive list of architectural and HVAC recommendations, as well as associated costs. KAI is a multi-disciplinary firm with architects and engineers, and we turned the list around in 24 hours. Out of those recommendations, our client adopted many and we implemented these changes during construction. This was a client reacting to the external influencers, and one who was adept at making the changes during the construction process. We have since presented further research to other clients, both proactively and at their requests, and have experienced adjustments in documents and current facilities.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 3 5


F FEATURE

“We’ve seen increased interest in using real estate as an alternative source of liquidity for companies.” — Maureen Kelly Cooper

will be designed to support and enhance these attributes. Companies will be more willing to provide flexible work schedules of two to three days in the office and two to three days working from home. However, when employees are in the office, it will be important for culture and relationship building to be absorbed in a limited time period. Therefore, the office will include larger teaming rooms and areas where a company’s culture can be absorbed.

How are you addressing the uncertainty in the economy with investors?

CAPITAL MARKETS..

Maureen Kelly Cooper Executive Director Cushman & Wakefield

THE DFW REAL ESTATE MARKET IS WELLpositioned to recover from the pandemic, says Kelly Cooper. But changes will remain—including reimagined work spaces and flexible work-from-home schedules. Meanwhile, the demand for industrial product remains strong from both a leasing and capital markets perspective. And, she says, the increasing shift to online retail is driving demand for distribution space, ensuring strong investor interest.

What long-term changes do you see coming out of the pandemic?

I believe office space will be reimagined. We’ve spent the last 10-plus years densifying office space—and having most employees in the office Monday through Friday. Office space will very much be in demand, but will look somewhat different than it does today. The importance of mentoring, exposure to culture, and teaming can be accomplished so much better in an office environment than remotely. Therefore, offices

3 6 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

As the majority of our clients are corporate in nature, I’ll address this question from the perspective of a corporation that occupies real estate. As businesses look for alternative forms of financing and methods of raising cash, many with owned real estate have explored sale-leasebacks, synthetic leases, vacant building sales, and selling excess land. Whether the product is office, industrial, surplus land, we’ve seen increased interest in using real estate as an alternative source of liquidity for companies. My team is advising clients on their financing and capital-raising options, keeping them informed on the state of the capital markets and assisting them on executing transactions that meet their timing and financial goals.

What opportunities and challenges do you see ahead in 2021?

The single-tenant net leased asset sector will continue to be a strong asset class in the next year for those companies that have good underlying financials. In addition, investment grade companies will look to execute synthetic leases to achieve a low cost of capital as well as minimal balance sheet impact. However, companies that are struggling financially and are located in tertiary real estate markets will not be able to capitalize on the strong investor demand for the single-tenant net lease asset market.

What asset classes do you see emerging strongly from the pandemic? Which will lag?

Despite the recession, the demand for industrial product, from both a leasing and capital markets perspective, remains strong. The shift to online retail has been accelerated during the pandemic, driving demand for distribution space and ensuring that investor interest in this product type remains strong—especially for long-term, net leased assets. Certain sectors of retail were struggling before the pandemic and will continue to lag post pandemic.

What’s the biggest deal you’ve closed in the pandemic?

Representing Lewisville Independent School District in selling a large portfolio of land parcels.

Looking ahead, what should folks know about CRE in Dallas-Fort Worth?

The DFW real estate market is well-positioned to recover after the pandemic with its diverse economy, central U.S. location, predicted job growth, and low income tax rate.

FA L L 2 0 2 0


F FEATURE LAND..

Robert Grunnah Land Broker Younger Partners

URBAN/SUBURBAN DEVELOPMENT

Derrick Evers

Managing Partner and CEO, Kaizen Development Partners

ON THE SURFACE, COVID APPEARS TO BE DRIVING MORE SUBURBAN development of workplaces as companies aim for more socially distanced spaces. But urban environments still hold appeal if they focus on providing excellent features for tenants. Whether urban or suburban, one area, in particular, helps developments stand out: providing unique outdoor spaces, says Evers. What key trends do you believe will impact development in 2021?

We believe there will be many similarities in the desires between urban and suburban that will be somewhat consistent. What we’re seeing routinely is the higher sensitivity to safety for the workforce and a greater emphasis on the technological backbone.

What shift of urban/suburban focus might we see in DFW?

Seemingly the shift between the two will depend on the profile of the organizations considering either solution. We’ve seen large corporate organizations that typically would never consider the suburbs, and we’ve seen other organizations we thought were suburban want to go urban. It’s turning into the “Wild West,” and it’s anybody’s guess on where they may land. It creates a very compelling reason as to why, more than ever, you should understand your clients’ needs authentically and craft a solution to accommodate accordingly.

How is COVID-19 driving property development changes in DFW?

We’re seeing greater value being placed on creating unique outdoor spaces for social as well as alternate work environments. Clearly, suburban locations lend a greater ability to achieve that objective than urban locations, but therein lies the unique opportunities, in our view. Urban doesn’t have to be in opposition to the concept of open and inviting. We’re also investing in our HVAC systems for greater air quality and in technology for greater connectivity for our tenants.

THEY’RE NOT MAKING MORE OF IT. MAYBE THAT’S why land sales have held up, for the most part, in North Texas this year. With single family sizzling and large, zoned industrial rocking, it’s all about demand. Still, many big-pocket investors are waiting—and hoping—for values to shift sharply downward. Grunnah, a veteran land broker at Younger Partners, thinks they may be wasting their time.

What’s ahead for land sales in 2021?

The most active demand land product in order: large, zoned industrial; any size zoned single family (or can be reasonably zoned) square footage with utilities almost in any direction; any infill high-density multifamily; and attractive, market-priced large vacant investment tracts north. The least active: peripheral office sites; any retail land except smaller infill and or in Uptown; mixed use dominated by non-residential.

Has the pandemic impacted the value of land?

It’s all been relative to demand for product as set out above. The in-demand tract values are up, the non-demand down, but prices have been less affected than anticipated.

Are buyers’ priorities changing in terms of sites?

Again, there seems to be no apprehension about paying top price for in-demand product, and little interest in product not in demand. There exists an enormous amount of investment cash stalking the market for a pending, serious “readjustment.” I think they’ll be disappointed, get bored, and start buying—thus stabilizing the land market. Texas should be greatly pleased by the issues that make this state a wonderful place to live, work, and invest.

What types of developments will be the most attractive to tenants?

We are firm believers that “perspective drives performance.” We recognize every organization holds a diff erent view on the world and will value them uniquely. Some will place a higher emphasis on location, while others emphasize rent rate and amenities. In our view, the common thread will be a flight to quality.

Where do you see the best opportunities ahead in CRE?

Optionality: That’s our word for 2020 and beyond. We think the winners in uncertain times are those that can adapt the quickest. True to the meaning of Kaizen, “continuous improvement” allows us to stay innovative, aggressive, and consistent.

FA L L 2 0 2 0

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 3 7


A ANATOMY OF A DEAL

With land donated by the City of Frisco and located next to a future city park, the UNT Frisco campus will begin construction on the south end of the property with a single building designed for about 3,500 students. The campus master plan shows more than 20 buildings that will host more than 20,000 students over the next 25 to 30 years. The plan came from Baltimore-based Ayers Saint Gross which specializes in university design. The firm also designed a 172,000 square-foot building at UNT Health Science Center in Fort Worth.

3 8 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

FA L L 2 0 2 0


A ANATOMY OF A DEAL

FUTURE

READY

UNT at Frisco will be a $100 million campus on donated land where students will prepare for the ‘Fourth Industrial Revolution.’ BY L ANCE MURR AY

The University of North Texas was founded in September 1890 in a rented space above a hardware store as the Texas Normal College and Teacher Training Institute to produce educators for the industrial revolution coming at the turn of the 20th century. Now, 130 years later, the Denton-based university system is preparing to build a new campus in the Collin County city of Frisco that is aimed at educating a workforce for the “fourth industrial revolution,” a time of technological advances and societal growth that needs the resources of UNT, a prestigious Carnegie R-1 research university. Ground will be broken soon on the UNT at Frisco campus, a $100 million investment that will start with roughly 3,500 students in classes in 2023 and reach a potential of 25,000 students in 25 to 30 years. UNT said it’s working on the plans, which will be reviewed by the Board of Regents in November. The new campus will focus on achieving the university’s goal of work-ready graduates and the city of Frisco’s goal of having a university that can help it attract new corporations and businesses to the city. “You’ve got a group of folks who have envisioned that we want to bring high-value jobs to our city,” said Wesley Randall, Ph.D., dean of UNT at Frisco. “What they realized is the one thing they were missing is a four-year university in Frisco. And if you look deeper into what they’re doing, they

FA L L 2 0 2 0

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 3 9


A ANATOMY OF A DEAL

WITH CONSTRUCTION BEGINNING ON THE RIDGE OF THE PROPERTY AT THE SOUTHERN END OF RIDGE MALL, THE FIRST PHASE OF THE $100 MILLION PROJECT CALLS FOR A LOOP DRIVE WITH BOTH ENDS ON PRESTON ROAD, A BUILDING BETWEEN 110,000 AND 148,000 SQUARE FEET, A LANDMARK BELL TOWER, AND A NATURE PAVILION, WHICH WILL BE AVAILABLE FOR CAMPUS AND COMMUNITY EVENTS.

Master Plan Team MASTER PLANNING & ARCHITECT: AYERS SAINT GROSS MECHANICAL, ELECTRICAL, AND PLUMBING CONSULTANT: SHAH SMITH & ASSOCIATES TECHNOLOGY CONSULTANT: DATACOM DESIGN GROUP LANDSCAPE CONSULTANT: SWA GROUP ASSOCIATE ARCHITECT: TREANORHL CIVIL & STRUCTURAL CONSULTANT: JQ INFRASTRUCTURE WAYFINDING & SIGNAGE CONSULTANT: FOCUSEDG TRANSPORTATION CONSULTANT: WALTER P. MOORE

4 0 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

also realized they needed to have an educational partner that could be there with them to educate workforce at the undergraduate level and the graduate level.” Randall cites what he calls new literacies that students will need to compete for the best jobs: Digital, creative, quantitative, connection, and commerce. “So in all of the studies that we’ve done, we’ve come up with these new literacies for the fourth industrial revolution,” Randall said. “We think just like reading and writing, we need to make sure that all of our students comprehend digital, because it’s becoming the backbone for all human interaction and exchange.” In the creative literacy, Randall said, “We know that to be successful, whether you’re running a nonprofit, a for-profit, or working in government, you need to use the knowledge and ability you have to make changes so that tomorrow, you’re able to provide a product that isn’t the identical capability of your competitor, it’s 5 percent more.” UNT has a lot of expertise in creativity. Its music program has produced 14 Grammy winners, for example. “The next thing we want all of our students to do is understand quantitative,” Randall said. “This doesn’t mean they all need to be modelers, but they must be able to measure the impact of change.” Students must master connection by being good communicators. “All of our students need to understand communication. They need to understand human-to-human connection,” Randall said. “They need to have storytelling. Why? Because they need to have the ability to inspire change or to advocate where change is needed.” It’s about articulating an important message, Randall added. “I need students who are in governmental or non-governmental or charitable organizations who are able to articulate the need for healthcare in an underserved neighborhood,” he said. “They must have the ability to inspire change either by explaining desperate need or by explaining new value propositions.”

FA L L 2 0 2 0


A ANATOMY OF A DEAL

“ALL OF OUR STUDENTS NEED TO UNDERSTAND COMMUNICATION. THEY NEED TO UNDERSTAND HUMAN-TO-HUMAN CONNECTION”

UNT’s Collin County Connection While the new UNT at Frisco campus is near breaking ground, the University of North Texas already has a major presence in Frisco and Collin County.

— WESLEY RANDALL

The fifth literacy is commerce, Randall said. “They must have solid business and analytical acumen,” Randall said. “That doesn’t mean they need to be out there as an aggressive capitalist, but they have to understand what capital does and what profit and loss is. They have to understand that you know focusing on return on revenue is not as enabling or sustaining as return on investment.” he said. Randall said he has faith that UNT at Frisco will produce the kind of students that businesses will look for as interns and as employees. UNT plays a critical role in the state and in North Texas, ensuring that the promise of higher education is there for those students who otherwise might not have access to it, Randall said. To accomplish these new literacies, UNT at Frisco will offer classes designed to give its students career success with hands-on learning. It will be built on the southwest corner of Preston Road and Panther Creek Parkway on 100 acres of land that was donated in 2018 by the city of Frisco. Planners will utilize the natural features of the land as part of the campus’ design, Randall said. For instance, a ridge on the site—the second highest point in Collin County— will be a location to attract industry collaborators, and Panther Creek will provide a water feature on the edge of the property. UNT at Frisco will be the university’s third campus in Frisco. It spent $8.5 million on a research building owned by the Frisco Economic Development Corp. to open its Inspire Park business incubator in 2018, and its HALL Park research location has been open since 2016. The Texas Higher Education Coordinating Board approved the Frisco campus in January to provide upper-level and graduate courses. “Our collaboration on this branch campus with the city of Frisco, Collin County, and Collin Community College will have a positive impact on students in the eastern part of our area,” said Bob Brown, UNT’s senior vice president of finance and administration. Randall said programs at the new campus will help students achieve internships with companies in the area that are likely to lead to full-time employment. For example, the UNT branch is collaborating with the Frisco-headquartered Dallas Cowboys in its graduate program, giving students what UNT calls “unequaled access to the most valuable sports franchise in the world,” by offering a Sport Entertainment Management MBA degree. Numerous undergraduate degrees and graduate programs will be offered at the campus. UNT said it will seek accreditation approval from the Southern Association of Colleges and Schools Commission on Colleges for the branch campus roughly six months prior to opening.

FA L L 2 0 2 0

HALL PARK UNT at Frisco opened in January 2016 in Hall Park at 2811 Internet Blvd, Suite 100, a space that features classrooms that are driven by the latest technology, UNT says. The university says that students at Hall Park can collaborate, share data, and communicate on platforms being used by leading companies—including a dynamic, multi-wall canvas capable of immersing students in live video, applications, and document sharing. Hall Park sits in the heart of the Frisco business community, and its undergraduate and graduate courses off er opportunities for engagement with nearby business partners.

INSPIRE PARK UNT opened Inspire Park at 6170 Research Road in Frisco in October 2018 as a business incubator space. Inspire Park off ers partnership-based educational opportunities for the business community. It features classroom and laboratory spaces designed to enhance collaborative learning, UNT says.

COLLIN HIGHER EDUCATION CENTER IN MCKINNEY The center, at the northeast corner of State Highway 121 and U.S. 75/Central Expressway, is a campus of Collin College that off ers classes from the University of North Texas, Texas A&M UniversityCommerce, Texas Tech University, Texas Woman’s University, and The University of Texas at Dallas.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 4 1


I INNOVATIVE SPACES

TOUCHLESS TOWER

The Stack in Deep Ellum will offer a ‘frictionless path from your car to the office,’ developer Hines says. DETAILS The Stack LOCATION Dallas’ Deep Ellum 2700 Commerce St. DEVELOPERS Hines, Westdale Real Estate Investment and Management, and Ivanhoé Cambridge ARCHITECT 5G Studio Collaborative

RENDERING: HINES

BUILDING The Class AA 16-story mixed-use building is nearly 200,000 square feet with 15,000 square feet of street-front retail.

BY GLORIA SALINAS

INTERNATIONAL DEVELOPER HINES CONTINUES TO EXPAND ITS INNOVATIVE offerings with The Stack Deep Ellum, the first Dallas-area office development with touchless access from parking garage to office space. The project is the latest in a series of additions to its Dallas-Fort Worth portfolio, complementing Hines’ residential and industrial developments. The Stack, a Class AA 16-story creative office development, is expected to be completed in the second quarter of 2021. The building includes nearly 200,000 square feet of office space, 15,000 square feet of retail space, and 641 structured parking spaces. “The Stack offers a frictionless path from your car into the office,” said Ben Brewer, Hines managing director. “The building is equipped with touchless features starting at the garage and into the elevators, all the way to the office space and amenity levels.” In late April, as concrete was being poured for floors and the pandemic closed offices, Brewer and his team took The Stack back to the drawing board to enhance the building’s touchless offerings. “It’s really important to have sophisticated capital partners like Westdale and Ivanhoé Cambridge,” Brewer said. “The Stack is extremely innovative, and it sets a new international standard for office development with a more efficient design.”

4 2 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

The project also has unique elements, like a roll-up door feature in the 10th floor fitness center that offers five times the amount of natural air required by City of Dallas code. Hines, founded in 1957, is a privately owned global real estate investment, management, and development firm with its Dallas-area headquarters in Chase Tower in Downtown Dallas. Hines plans to relocate its own headquarters to 10,000 square feet of office at The Stack in 2021. “The DFW staff could not be more excited about the new space,” Brewer said. “In addition to the office itself, Deep Ellum offers a spirited, creative community for our team to join.” Hines employees started trickling back into offices in mid-September. Brewer said

FA L L 2 0 2 0


I INNOVATIVE SPACES

Next-Level Wellness Next-Level Wellness NEXT-LEVEL And SafetyWELLNESS And Safety AND SAFETY A Frictionless Journey To Your Office A Frictionless Journey To Your Office Fresh air exchange at 30% above code Fresh air exchange at 30% above code

Antimicrobial UV lights in air conditioning Antimicrobial UV lights equipment in air conditioning equipment Touchless entries/exits Touchless entries/exits

Open-air balconies on all typical floors Open-air balconies on all typical floors

Roll up glass door fitness center (5X the Roll up door code airglass requirement) fitness center (5X the code air requirement)

Roll up glass door lounge areas (3X the code Rollair uprequirement) glass door lounge areas (3X the code air requirement)

Touchless vehicular entry/ exit via toll tag readers Touchless vehicular entry/ exit via toll tag readers

RENDERING: RENDERING: WESTDALE/HINES/IVANHOÉ CAMBRIDGE

Touchless elevator lobby entries/exits Touchless elevator lobby entries/exits

Touchless entries/exits Touchless entries/exits

Touchless main building entries/exits Touchless main building entries/exits

it’s been a challenge for creative teams to produce and brainstorm in a Zoom environment compared to in-person interaction. Hines is betting the DFW market will be a beneficiary of companies in other markets that are looking to return to work in

FA L L 2 0 2 0

Personalized touchless RFID elevator access Personalized touchless RFID elevator access

innovative spaces. “While a company might consolidate different sectors, the office is still a great environment to create long-term company culture,” Brewer said. “Companies have invested a lot in building teams and keeping

them effective, so corporate culture nationwide is still really important. Many companies stepped up and made it priority, and they do not want to lose that edge.” Salinas is the managing director of economic development at the Dallas Regional Chamber.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 4 3


DALLAS NEXT Announcing Dallas Innovates 2021: The Resilience Issue, publishing this fall. Our annual magazine is a double edition featuring stories of grit, transformation, and yes, opportunity in these extraordinary times. This special issue looks at the people and companies surviving, thriving, and shaping our very future—and why Dallas-Fort Worth is the place for what’s next. To be a part of it, and support Dallas Innovates’ much-needed coverage of our region. Email the Dallas Innovates team: dallasinnovates@dmagazine.com

Subscribe to our email newsletter: DALLAS INNOVATES EVERY DAY

dallasinnovates.com/signup


THE ASSEMBLY, A MIXED-USE PROJECT WITH TWO OFFICE TOWERS IN DEEP ELLUM, IS DESIGNED BY HKS. CHICAGO-BASED STERLING BAY ANTICIPATES DELIVERY IN 2023.

THE CRANE REPORT

Fall 2020

Industrial development activity has been very resilient during the last 6 months, but development in other commercial product types “has not fared nearly as well,” says Hunt Southwest’s Preston Herold. Looking to 2021, he thinks smaller tenant requirements will start to come back, while larger 1-million-square-foot e-commerce projects will begin to taper a bit later in the year. In the commercial office sector, BOKAPowell architecture principal Don Powell is seeing activity ahead: the firm has five new commercial office buildings totaling 845,000 square feet being completed in 2021—with 1.1 million square feet of new projects in the queue to begin, pending pre-leasing. INFORMATION COMPILED BY QUINCY PRESTON AND SANDRA ENGELLAND | DATA FOR CRANE REPORT MAPS PROVIDED BY JLL

ON-TH E-G RO U N D I N SI G H TS

OFFICE

INDUSTRIAL

MULTIFAMILY

DON POWELL

DERRICK EVERS

PRESTON HEROLD

ALEX JOHN

Partner and Principal-in-Charge BOKAPowell

Managing Partner and CEO Kaizen Development Partners

President Hunt Southwest

Vice President HKS

Some of the most interesting design trends in the market include “mass-timber office building frames, amenity-rich mixed use office districts, and serious consideration for futureproofing parking structures. If we can’t stop the overparking, [we can] find a way to use the structural frames for a future use.”

“Generally speaking things have slowed down, but it’s just recently threatening to rally. We have to keep in mind that what is currently happening with the pandemic is unprecedented, so allowing some grace for organizations to assess the pulse of the company seems fair. That being said, we’re largely hearing that going back to the office is a foregone conclusion.”

“The most interesting trend I’ve seen in the local market is the acceleration of the shift from brick and mortar sales to e-commerce sales—and the effect that’s having on industrial leasing and development. The buildings and tenant requirements are growing in size from a footprint and height standpoint in order to adapt to the changing demand.”

“We recognize prospective tenants have new ‘musthaves’ when evaluating where they want to live. Renters will predictably demand more flexibility of their apartments in new developments, but affordability will remain a top concern for them. Developers also must account for their own budgets and operational constraints.”

FA L L 2 0 2 0

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 4 5


THE CRANE REPORT:

OFFICE ANNOUNCED + UNDER CONSTRUCTION

RIVER WALK MEDICAL PARK IV

OAK

LAKESIDE CORPORATE OFFICE CENTER

ANNOUNCED DEVELOPMENTS

CHARLES SCHWAB CAMPUS

SOUTH TOWER, BUILT-TO-SUIT

IVY ROOM OFFICE AND VENUE

CARILLON COURT

T

THE POINT SILVERLAKE CROSSINGS

PAYCOM

FREEPOR COMMONS

SOUTHLAKE ONEFOURTEEN DISTRICT 114

THE ON B

NT OFFICES

HILLWOOD COMMONS II

PROJECT BLUE S LAS COL CORPO CENT

HERITAGE GLEN MEDICAL CENTER

SL WALNU

VIRIDIAN TOWN CENTER THE OFFICES AT HAMPDEN WOODS MUSEUM PLACE III

1

THE ASSEMBLY

TRIUNE CENTRE

SIZE: 470,000 square feet LOCATION: Dallas DEVELOPER: Sterling Bay DETAILS: Sterling Bay is planning The Assembly at 301 N. Crowdus, which will feature two 7-story office towers above an amenity deck on the seventh floor, as well as a 70,000-square-foot “super floor,” two ground level lobbies, and retail spaces. The architect is HKS.

CLEARFORK C2 MAYFIELD GROVES

WATERSIDE OVERTON CENTRE TOWER III

BARDIN ROAD CENTER PHASE II

CHISHOLM TRAIL PROFESSIONAL PLAZA

GAMMA AEROSPACE EXPANSION

2

HARWOOD NO. 14

SIZE: 313,000 square feet LOCATION: Dallas DEVELOPER: Harwood DETAILS: Harwood No. 14, located in the Harwood District of Uptown, already has a pre-leasing agreement with Haynes and Boone. The law firm plans to take up more than a third of the available space and relocate from One Victory Park in 2023. The 27-story office tower’s general contractor is Manhattan, and architect/desigers are HDF, Corgan, and Kengo Kuma and Associates.

4 6 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

3

DISTRICT 121

SIZE: 200,000 square feet LOCATION: McKinney DEVELOPER: Kaizen Develpment Partners DETAILS: Kaizen is moving forward with the build-out of a 200,000-square-foot speculative office building in Craig International’s District 121 mixeduse development at Highway 121 and Alma Drive. Perkins + Will is the architect and JLL will oversee leasing on the project that has an estimated completion of Q2 2022.

FA L L 2 0 2 0


UNDER CONSTRUCTION COBB FARM WEST OFFICE PARK

MONARCH CITY OFFICE 3 FREEWAY

STONEBROOK OFFICES AT THE GATE - PHASE III KEURIG DR PEPPER

COPE TOWER

3

6

ALLEN CITY CENTER WATTERS BILLINGS PRODUCTIONS CREEK NORTH ONE BETHANY CENTRAL ALLEN TECH HUB LEGACY CENTRAL 5 THE HERITAGE AT SPRING CREEK THE PARKWOOD THE OFFICES AT WILLOW BEND HERITAGE CREEKSIDE TOWERS PLANO THE DISTRICT MEDICAL PLAZA THE EXCHANGE THE POINTS AT AT CITY LINE THE GRID WATERVIEW WELLPOINT

LEGACY WEST TOWER TWO LEGACY WEST LEGACY UNION TWO

TRINITY MILLS STATION

POINT WEST II BRAUN BELT LINE

LH UT HILL

FRISCO MEDICAL VILLAGE

STEWART CREEK OFFICE CENTER V

THE RIDGE AT 121 PHASE II

STAR LINAS ORATE TER III

MCKINNEY RANCH PROFESSIONAL CENTER

COBB OFFICE CONDOS

KBEND CENTRE

RT S

380 TOWNE CENTER

THE PGA OF AMERICA HQ

5 4

GRANITE PARK PARKWOOD 121 VILLAGE

VILLAGE ON THE PARKWAY

FOURTEEN555 THREE HICKORY CENTRE

PARK HERITAGE I

SPR OFFICE EXPANSION

THE INWOOD AT ALPHA WEST PAVILION III KE ANDREWS

PINNACLE TOWER II HIDDEN RIDGE TOWER VERIZON CAMPUS

SUMMIT OFFICE CAMPUS

THE TOWER AT PRESTON HOLLOW VILLAGE

MEADOW GREEN MEDICAL CENTER

FOUR ENERGY SQUARE/ ENERGY SQUARE 4 WEIR’S PLAZA THE TERMINAL AT KATY TRAIL MCKINNEY & LEMMON THE FAIRMOUNT BUILDING 2727 TURTLE CREEK PARKSIDE TERRACES TWO ARTS PLAZA HARWOOD XII THE STACK DEEP ELLUM BAYLOR, SCOTT VICTORY COMMONS SOLA ON & WHITE HEALTH LAMAR THE LINK WEST LOVE

FREEMAN

THE QUAD

2

1

5

6

● ANNOUNCED ● UNDER CONSTRUCTION

MAP DATA COURTESY OF JLL

THE PARKWOOD

SIZE: 120,000 square feet LOCATION: Plano DEVELOPERS: Cawley Partners, First United Mortgage, and the landowners, the Haggard family DETAILS: The Parkwood, a four-story office building near the corner of Parkwood Boulevard and Whittingdon Place in Plano, will be home to the new headquarters of First United Mortgage Co., which will take half the building. Designed by Gensler and set for completion in Q4 2021, the building also will include a First United Bank branch on the ground floor. The space not used by First United will be marketed and leased by Cawley Partners.

THE FARM IN ALLEN

SIZE: 135 acres LOCATION: Allen DEVELOPER: JaRyCo Development DETAILS: With architecture help from OMNIPLAN, JaRyCo plans to bring a town square to this booming Collin County suburb. The mixed-use development, located at the southeast corner of the Sam Rayburn Tollway and Alma Drive, will include office, retail, entertainment, dining, residential areas, and a hotel. Infrastructure construction is slated to begin later this year.

COMMUNITY NATIONAL BLANK PLAZA

4

PARKSIDE PHASE III

SIZE: 200,000 to 500,000 square feet LOCATION: Plano DEVELOPER: KDC DETAILS: KDC teamed up with landowner JBP Properties to develop Parkside Phase III, a build-to-suit corporate campus on 16 acres near the intersection of Legacy and Windcrest drives, with options ranging from 200,000 to 500,000 square feet. Three buildings have already been constructed in the Parkside on Legacy campus. Corgan is the architect on the project and designed the proposed buildings. Myers Commercial is marketing the property.

FA L L 2 0 2 0

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 4 7


THE CRANE REPORT:

INDUSTRIAL

TYSON FOODS DENTON CROSSING @ I-35

ANNOUNCED + UNDER CONSTRUCTION

GATEWAY BUSINESS PARK

F

ANNOUNCED PROJECTS

SPEEDWAY LOGISTICS CROSSING

NORTHLINK

1

STANLEY BLACK & DECKER

THE TRADE GROUP

MUSTANG PARK

AMERICAN MEATS

CAYENNE KITCHEN

3 LOGISTICS CENTER

PASSPORT PARK

INTERNATIONAL AVIATION COMPOSITES

1

WILDLIFE 8

INTERMODAL COMMERCE PARK

SIZE: 1.4 million square feet LOCATION: Haslet DEVELOPERS: JLL, Gruene Real Estate Partners, and Weber & Co. DETAILS: Intermodal Commerce Park will be constructed on an 82acre plot located at the southern end of Intermodal Parkway, just southeast of the BNSF intermodal facility and southwest of Alliance Airport. It will include three buildings, one front-load and two cross-deck buildings, and 186 dock doors, 10 ramp doors and 313 trailer stalls.

2

PARK TWENTY THREESIXTY BUILDING 8

FIRST ARLINGTON COMMERCE CENTER III

● ANNOUNCED ● UNDER CONSTRUCTION

KLEIN TOOLS EXPANSION

UNDER CONSTRUCTION

DSV WAREHOUSE

SIZE: 1,060,742 square feet LOCATION: Lancaster DEVELOPER: EMJ Corp ARCHITECT: O’Brien Architects DETAILS: Danish logistics company DSV plans to build a 1 million-square-foot warehouse, with another 60,000 square feet for a regional headquarters and satellite offices, on a 55.6-acre site at the northwest corner of E. Telephone Road and N. Dallas Avenue. The project is expected to break ground in November, with an estimated completion by the end of 2021.

MOUSER ELECTRONICS EXPANSION

3

GOOGLE DATA CENTER

DFW PARK 161

SIZE: 2.4 million square feet LOCATION: Irving DEVELOPERS: Invesco Real Estate and Perot Development Co. DETAILS: Work has begun on this new global e-commerce hub, designed by Halff Associates and being built by Peinado Construction, with leasing led by Cushman & Wakefield. Buildings range from 156,625 square feet to 646,190 square feet, with a build-to-suit site able to accommodate more than 1.4 million square feet. Facilities in the first phase will be ready for occupancy by early 2021.

4 8 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

FA L L 2 0 2 0

PR MOUN


RAYTHEON

MCKINNEY LOGISTICS CENTER

PRINCETON CAR WASH

CYRUSONE PHASE II SABERT CORPORATION

FIRST PARK 121

TEXAS INSTRUMENTS RFAB2

DIGITAL REALTY

35 Acre Industrial Development Over 625K SF Frontage on

.

203,193 SF and 424,280 SF COMING SOON

MERCER CORE LOGISTICS CENTER BUILDING A

HORIZON BUSINESS CENTER BUILD TO SUIT

For Sale, Lease or Build-to-Suit

100 MACARTHUR DISTRIBUTION CENTER BLDG 1 STEELWAY INTERNATIONAL INC FRITO LAY EXPANSION

ROLOGIS NTAIN CREEK

SOUTHLINK II

SOUTHFIELD PARK 35

4

KROGER/ OCADO

DUKE INTERMODAL III

ACE HARDWARE EXPANSION TEXPORT LOGISTICS CENTER DALPORT TRADE CENTER

RET AIL

2

CORE5 FIRST 20/35 LOGISTICS LOGISTICS CENTER AT CENTER BONNIE VIEW

POINTSOUTH

DFW INLAND PORT

MAP DATA COURTESY OF JLL

4

SOLD

MC #8

SOLD

Mt. Creek Bldg #8 - 100,36 SF For Sale or Lease Mt. Creek Retail - 11,400 SF

DALPARC LOGISTICS CENTER

SIZE: 1,006,880 square feet LOCATION: Lancaster DEVELOPER: VanTrust Real Estate DETAILS: VanTrust recently broke ground on a 1 million-square-foot speculative industrial building at DalParc Logistics Center, located just south of Interstate 20 at 3900 North Dallas Avenue and close to the Union Pacific Dallas Intermodal Terminal. The architect is Alliance Architects, the contractor is MYCON General Contractors, with leasing from CBRE, and an estimated completion date of July 2021.

461 Acres Multi Family / Residential Land For Sale or BTS Directly on

.

214-370-6100 FA L L 2 0 2 0

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 4 9


THE CRANE REPORT:

MULTIFAMILY

THE ENCLAVE AT DENTON

ANNOUNCED + UNDER CONSTRUCTION

TOWER BAY LOFT

ANNOUNCED DEVELOPMENTS 1

WATSON BRANCH

SIZE: 350 lifestyle apartments and 190 senior living apartments LOCATION: Mansfield DEVELOPER: Realty Capital Management DETAILS: In August, Realty Capital Management bought a 77-acre infill site in Mansfield for Watson Branch, a new mixeduse development. Located near the corner of FM 157 and Mouser Way, the development will feature apartments built by Dallasbased Trinsic Residential Group, senior living apartments built by Greystar Development, 250 single-family homes, 10,000 square feet of retail, and a 10-acre public park. Work is expected to begin in January of 2021, with delivery beginning in early 2023.

VILLAGE AT LEWISVILLE

● ANNOUNCED ● UNDER CONSTRUCTION

AVILLA RESERVE

ALEXAN THE POINT I THE HOLSTON I

THE CARTER

PRESIDIUM AT REVELSTOKE ALLEIA AT PRESIDIO

AVILLA FOSSIL CREEK

AT LA

IRON HORSE HIEGHTS HIGH POINTE I

THE MILLENNIUM AT HOMETOWN

2

26 @ CITY POINT THE JACKSON STANDARD AT RIVER DISTRICT

THE MARK AT WEATHERFORD

ENCORE PANTHER ISLAND BROADWAY CHAPTER

METRO WEST

THE ELM AT RIVER PARK

COHO

JEFFERSON RIVER EAST BURNETT LOFTS BROADSTONE SOUTHSIDE

4

JEFFERSON NORTH COLLINS

THE GEORGE

ROY GRAN

LIV CHISHOLM TRAIL RANCH

MAIN STREET LOFTS II

1 URBAN LIVING

UNDER CONSTRUCTION SHANNON CREEK I

VILLAGE CREEK

THE JULIAN AT SOUTH POINTE II

THE WAVERLY

2

CITY POINT

SIZE: Approximately 400 units LOCATION: North Richland Hills DEVELOPER: Centurion American Development Group DETAILS: City Point is a mixed-use development surrounding North Richland Hills City Hall on Boulevard 26 south of Northeast Loop 820. The 52-acre property is the former site of North Hills Mall. When completed, it will include about 400 multifamily units and 370 single-family homes, a hotel, and 70,000 square feet of commercial space. Construction began recently and is expected to take five years to reach build-out.

5 0 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

FA L L 2 0 2 0


UNDER CONSTRUCTION

AVILLA PARKWAY

MEZZO FRISCO ROCKHILL I

THE TRAVIS

CYPRESS CREEK

JEFFERSON ROCKHILL VALE FRISCO CYAN CRAIG RANCH

THE ISAAC THE MARGO

SOUTHGATE

THE GROVE PARKSIDE AT CRAIG RANCH V

BOTANIC AT STONEBRIAR

THE LUCIA

R TS

SOVEREIGN AT TWIN CREEKS

ALTA PRESTON LIVE GRANDSCAPE VALOR AT THE REALM DISCOVERY AT THE REALM II SLOANE STREET EAST

AURA OLD TOWN STATION

ALEXAN LEGACY CENTRAL II HERITAGE CREEKSIDE

4

PRESIDIUM HILL STREET

SIZE: 290 units LOCATION: Grand Prairie DEVELOPER: Presidium DETAILS: Construction recently began on the project located at 1610 Hill St., just east of Highway 161 and south of Interstate 30. Designed by O’Brien Architects, the apartments will surpass energy code requirements with Energy Star and energy-efficient systems. The $36 million community is slated for completion by mid-2022.

PLANO GATEWAY IV CUE GALATYN STATION

NORTHSIDE AT THE WOODLANDS

OLYMPUS ON BROADWAY

LENOX CROWN ALTA SPRING CREEK

MUSE AT MIDTOWN SAGE HILL

THE STATION I 3400 FIREWHEEL PARKWAY

JEFFERSON EAST BRANCH

STAR PARK AS COLINAS

ROWLETT STATION

ALTA MIDTOWN PARK

3

JEFFERSON INNOVA CEDAR AT THE BRANCH

THE RESIDENCES AT EASTLINE BROADSTONE KNOX DISTRICT

MAGNOLIA CEDARPLAZA LENOX MAPLEWOOD I R&P THE ASTER MAPLE & MAHON ATELIER

5

THE WESTERLY

4

CABELL + CARROLL THE ACADEMIC 2400 BRYAN STREET 300 PEARL THE NATIONAL

WEST COMMERCE TREEHAUS GATEWAY 888 NORTH ZANG BOULEVARD

CROSSROADS AT TERRELL

CREST AT ILLINOIS

YALTON AT ND PRAIRIE

5

PALLADIUM RED BIRD

THE MARK AT DESOTO

MAP DATA COURTESY OF JLL

3

ZANG FLATS

SIZE: 71 units LOCATION: Oak Cliff DEVELOPER: Larkspur Capital Partners DETAILS: Zang Flats is a five-story complex located on Zang Boulevard near Lake Cliff Park. It will include a coworking space and a resident bicycle repair shop. Designed by OMNIPLAN, the community has an estimated completion of April 2022.

JEFFERSON INNOVA

SIZE: 433 units LOCATION: Irving-Las Colinas DEVELOPER: JPI DETAILS: The region’s largest multifamily developer has scaled back a bit during the pandemic but is still working on a number of complexes in the area. This community, set to open in Spring 2021, will feature a rooftop pet park with a grooming station, an Uber lounge, and two outdoor kitchens. The architect for the project is Humphreys & Partners.

FA L L 2 0 2 0

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 5 1



CALIBER HOME LOANS PLANS A MOVE TO THE MIXED-USE CYPRESS WATERS DEVELOPMENT AT 3401 OLYMPUS BLVD.

SCORECARD

Fall 2020

While DFW industrial leasing was “certainly down from late February to late May, it’s now recovered to previously forecasted levels, if not even better,” says CBRE’s Jack Fraker, who expects the sector to be very strong next year. “Not only do we expect record leasing activity, new supply will continue to be carefully controlled. Net absorption will continue the positive trend of the previous 40 quarters that will result in rental rate growth,” he says. In terms of office leasing, Transwestern’s Kim Brooks thinks the region could “come back as one of the healthiest markets in the country” in 2021. INFORMATION COMPILED BY QUINCY PRESTON AND SANDRA ENGELLAND | DATA FOR SCORECARD MAPS PROVIDED BY JLL

ON-T H E-G RO U N D I N SI G H TS

OFFICE

JAMES COOKSEY

PHOTO: BILLINGSLEY

Vice Chairman and President of Tenant Relations Newmark Knight Frank “My advice for tenants is to breathe and evaluate what is important. The workplace is shifting in some respects while remaining unchanged in others. Assessing and monitoring wider office trends and, most importantly, information that keeps your employees and stakeholders safe, will best equip you to make well-informed decisions.” FA L L 2 0 2 0

INDUSTRIAL

KIM BROOKS Principal Transwestern

“Tour activity has picked up in the 3rd quarter, but tenants are still slow to make commitments. Many tenants are looking at “B” mid-rise buildings in light of the pandemic, while other companies are looking to upgrade as more of their employees work from home. Some feel they can get by with less space.”

JACK FRAKER

MATT DORNAK

“Resiliency in supply chain models, where most occupiers are adding safety stock in their footprint to have additional inventory in the warehouse, is evident in the event of a future supply chain interruption. We’re also seeing ‘on shore’ in Mexico and the U.S., which indirectly impacts the DFW logistics market.”

“More tenants will be entering the market toward the end of the year and early 2021 with several target operation dates pushed out to summer of 2021. Expect several large deals to sign and more portfolio/building sales to occur in 2021. More institutions are reallocating their real estate positions in product type and several groups new to industrial will target markets like DFW.”

Vice Chairman and Managing Director of Global Industrial & Logistics CBRE

Managing Director Stream Realty Partners

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 5 3


S SCORECARD

INDUSTRIAL LEASES

3 5

1 4 50029,013 SF 29,014108,235 SF 108,236256,038 SF 256,039494,238 SF

2

494,2391,044,647 SF

DATA SOURCE: JLL Research

NOTABLE INDUSTRIAL LEASES 1

2

3

4

5

ULINE

AMAZON

AMERCAREROYAL

HELLOFRESH

BRIGHTSTAR CARE

SIZE: 1,106,315 square feet LOCATION: Irving, Passport Park Building 1 LEASING REPS: Steve Trese and Stephen Koldyke with CBRE DETAILS: Uline, the leading North American distributor of shipping, industrial, and packaging materials for businesses, is moving its regional distribution center from its current warehouse in Coppell to this speculative warehouse at 2600 Rental Car Dr., just south of DFW International Airport.

SIZE: 1,044,647 square feet LOCATION: Dallas LEASING REPS: Nathan Lawrence, Krista Raymond, and Seth Kelly with CBRE DETAILS: The e-commerce giant is leasing more than 1 million square feet for a new shipping hub at 9155 Southlink Dr. in Southern Dallas. With plans designed by Stantec, they’re planning to retrofit the space that was formerly slated to be a warehouse and distribution center for California-based food industry service company Zume.

SIZE: 390,006 square feet LOCATION: Fort Worth TENANT REPS: Garrett Gibbons, Lucas Kay, and Jack Brewer with Newmark Knight Frank LEASING AGENTS: Scott Moore, Krista Raymond, Nathan Lawrence with CBRE DETAILS: AmerCareRoyal, a Pennsylvania-based provider of disposable food service and healthcare products, will open a distribution center at 2401 Petty Place just west of Texas Motor Speedway, taking occupancy before the end of 2020.

SIZE: 374,812 square feet LOCATION: Irving TENANT REPS: Trey Fricke and Reid Bassinger of Lee & Associates LEASING REP: Mark Hayes of HPI Real Estate Services & Investments DETAILS: Based in Germany, the world’s No. 1 meal kit delivery service is leasing a site at 2700 Market Street for cold storage, packing and shipping, and office space. The facility could bring with it more than 1,000 new jobs.

SIZE: 274,994 square feet LOCATION: Flower Mound TENANT REPS: Mitchell Wolff and Joe Siglin with Newmark Knight Frank LEASING AGENT: Rick Medinis, Mark D. Miller, and Randy Wood with NAI Robert Lynn DETAILS: BrightStar Care, an in-home healthcare company based in Illinois, has leased industrial space at 350 Lakeside Pkwy. The nationally franchised company includes seven locations in North Texas.

5 4 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

FA L L 2 0 2 0


S SCORECARD

OFFICE LEASES

4

1

3

2

1748,650 SF 8,65121,698 SF

5

21,69944,344 SF 44,34586,144 SF 86,145175,192 SF

DATA SOURCE: JLL Research

NOTABLE OFFICE LEASES 1

2

3

4

CALIBER HOME LOANS

HILLTOP SECURITIES

WESCO AIRCRAFT

HAYNES AND BOONE LLP

SIZE: 159,320 square feet LOCATION: Coppell LEASING REP: Billingsley Co. DETAILS: Coppell-based Caliber Home Loans, a private mortgage lender, plans a move to the mixed-use Cypress Waters development. The deal signed in September includes the first through fifth floors at 3401 Olympus Blvd.

SIZE: 95,469 square feet LOCATION: Dallas LEASING REPS: Thom Ridnour of CBRE and World Class Property Co. DETAILS: Hilltop Securities, a financial planning services company based in Dallas and currently housed in Renaissance Tower, signed a deal in July to lease four floors at 717 N. Harwood, with plans to occupy the space starting in May 2021.

SIZE: 53,236 square feet LOCATION: Fort Worth TENANT REPS: Chelby Sanders, Josh White, and Ryan Buchanan with CBRE LEASING AGENT: Andrew Ward of Mercantile Partners, LP DETAILS: Wesco Aircraft, which recently merged with Pattonair Limited to form Incora, will relocate its headquarters from California to Fort Worth. The company already has a facility in South Fort Worth. The building at 2601 Meacham Blvd. at Gourley Plaza was formerly home to the Federal Aviation Administration’s Southwest Regional Office, now located in the Alliance area.

SIZE: 29,141 square feet LOCATION: Plano LEASING REPS: David Reed and Ben Davis with CBRE DETAILS: This Dallas-based international corporate law firm leased space at 6000 Headquarters Dr. in Legacy West. Out of its 17 offices in the U.S., Mexico, and Shanghai, three are located in the Dallas-Fort Worth area. In August, the company announced a relocation of its headquarters from One Victory Park to Harwood No. 14, estimated for Q4 2023.

FA L L 2 0 2 0

5

WADDELL SERAFINO GEARY RECHNER & JENEVEIN P.C. SIZE: 26,360 SF LOCATION: Dallas TENANT REPS: Scott Hage and Brooke Armstrong with JLL LEASING AGENT: Mike Silliman with M-M Properties DETAILS: This law firm relocated to the Comerica Bank Tower, 1717 Main Street in downtown Dallas, from Thanksgiving Tower to gain more space due to growth in its client base.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 5 5


L LEADERSHIP

ALEX JOHN:

THE HKS VP SAYS VALUING A VARIETY OF VOICES AND COMMUNITIES MAKES DALLAS-FORT WORTH BETTER FOR ALL BY SANDRA ENGELLAND

Whether he’s on a project as a senior designer at HKS or serving in the Dallas community, Alex John believes in the power of bringing people together to make something better. A vice president at HKS, John is applying that hopeful attitude in leading TREC’s effort toward diversity, equity, and inclusion in Dallas-Fort Worth’s commercial real estate community. And it didn’t just start in the spring, when protests against racial injustice swept America. “This was a conversation before so much social unrest had engulfed our country,” John said. The double blow of pandemic and protests stressed the importance of taking intentional, thoughtful steps toward equality. The idea is to hear from people across the real estate community from many different races, backgrounds, and generations. “We want to have candid conversations, not just saying the right words, but hearing the intent behind them,” he said. A diverse group of TREC leaders and members came together on a weekly call beginning in April through the summer, talking about ways to encourage

5 6 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

positive change in the real estate community. “Everything is made better when you bring differing perspectives into the room,” John said. “That’s something we feel has been lacking in a substantive way in the real estate community.” The group developed the TREC Diversity, Equity, and Inclusion Statement, which reads: The Real Estate Council believes we must utilize diverse, equitable, and inclusive practices to enrich, transform, and Build the City We Imagine. We actively seek, without bias, to eliminate racism, prejudice, and discrimination of any form within the commercial real estate industry. We are committed to creating a diverse and inclusive culture as we focus on leadership development, public policy, and community investment. Now the effort moves into an exploration phase. Over the next six months, TREC will identify actionable goals that can be implemented over the second half of 2021. John’s hope is that a year from now, there will be substantive changes in the TREC community resulting in more equality in future opportunities. “It’s important that we’re understanding the difference between equity and equality,” John said. “I look at it like this: equity is an investment in equality of the future. When things have been disproportionately distributed, they need to be actively changed.”

FA L L 2 0 2 0


“ Equity is an investment in equality of the future. When things have been disproportionately distributed, they need to be actively changed.”

C COMMUNITY

CALENDAR OF EVENTS

— ALEX JOHN

The idea of listening first is also important in John’s work, currently as a senior designer with HKS Commercial. When he begins a project, he starts by asking members of the community what they need, not by bringing his own preconceived ideas, he said. Their needs have likely changed this year, as COVID-19 exploded old ideas on how spaces should function. With many employees now working at home much of their time, both home and the office need makeovers. Those who work from home want their houses and apartments to have dedicated workspaces, while offices are becoming places for collaboration and engagement. “We want an environment that promotes people coming to the office,” John said. “Right now, we’re entertaining ideas. Our spaces need to change, knowing our world is changing.” He’s hopeful that the rapid growth of the Dallas region will continue in positive ways. When he was a student at Prairie View A&M University in the early 2000s, John came to Dallas for an internship. He liked driving all over the area to see different parts of the city. One thing he noticed then still strikes him as important and changing for the better today. “There are parts of the city that are so beautiful and have so much potential that have been ignored,” he said. “What excites me most is that spaces which have been ignored for decades seem to have the spotlight on them right now.” One example is the Trinity River corridor. John is excited by the possibilities. He thinks the land around the river linking downtown Dallas and downtown Fort Worth deserves all the attention it’s getting and more. If it had been up to him, the new Dallas Cowboys stadium would have gone to the Trinity River area in Dallas instead of AT&T Stadium’s home in Arlington. John believes the Trinity River needs a signature “high-energy” project to bring new life to the area. He’s been “a huge proponent for the Trinity Park Conservancy,” which is bringing some unique natural attractions to the area. Dallas-Fort Worth has been America’s fastest-growing metro area for several years now. But there’s still plenty of room in parts of the city that have been ignored in the last few decades. “It would be great if, while this growth is happening, we embrace the personality of all of these different spaces and all of these different areas,” John said. “Let each of them be something unto itself, because that’s only going to add to the whole.” When he first came to Dallas, a lot of the attention for commercial real estate centered on just a few spots in the region. Now he’s seeing development expanding into older neighborhoods that had been neglected—not to tear them down but to celebrate them. John is hopeful that Dallas and Fort Worth will become even more robust because “there’s a valuing of communities that really seems to have started to happen” among residents and commercial real estate professionals alike.

FA L L 2 0 2 0

NOVEMBER. NOVEMBER 5 Market Matters: Capital Markets Update 8:30 a.m. to 9:30 a.m. Virtual Event

The Real Estate Council’s annual capital markets update returns with insights from Mark Gibson, CEO of JLL Capital Markets, Americas. Register now at recouncil.com/events [TREC]

NOVEMBER 10 State of Workforce

12:00 noon - 1:30 p.m. Virtual Event State and regional leaders will discuss workforce-related issues including the impact of COVID-19, trends and economic recovery, and how to address local employment needs through innovation. [DRC]

NOVEMBER 11 TREC PAC TopGolf Fundraiser

TopGolf, 8787 Park Lane, Dallas, TX 75231 5:00 p.m. to 8:00 p.m. Put your golf game to the test and support The Real Estate Council’s Political Action Committee as our TopGolf tournament returns for 2020. The event is open to TREC members only. All individual and team tickets must be purchased using personal (non-corporate) funds. Register now at recouncil.com/events [TREC]

NOVEMBER 12 Year Ahead

12:00 noon - 1:00 p.m. Virtual Event David M. Solomon, chairman and CEO of The Goldman Sachs Group Inc., and Stacey Cunningham, president of the New York Stock Exchange will discuss the tumultuous times in our economy, what we might expect in the year ahead, and what it means for your business and our country. [DRC]

DECEMBER 8 State of the City

12:00 noon - 1:30 p.m. Virtual Event The Dallas Regional Chamber will host the annual State of the City address. [DRC]

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 5 7


L LEADERSHIP LEADERSHIP DALLAS

CitySquare is Building “a More Equitable Future” for Dallas by Creating Affordable Housing—and Showing How Real Estate Professionals Can Help Drive Change From tiny homes and modern shipping container housing to job training, healthcare services and a food pantry, CitySquare is turning poverty into hope. BY SANDRA ENGELLAND

What can real estate professionals do to help fight poverty and homelessness? A lot, says John Siburt, president and chief operating officer of CitySquare. “We recognize the significant lack of affordable housing in Dallas. We can’t really build an equitable future unless real estate professionals help tackle that,” he said. CitySquare, one of the largest non-profits providing housing in Dallas, offers subsidies to help people pay rent, and provides over 1,000 low-income units in Dallas through a number of housing programs. Along with meeting housing needs, CitySquare fights hunger through its CitySquare Food Pantry, promotes health by providing physical and mental health services, and offers hope through job training programs at its Opportunity Center. “We have a holistic approach,” Siburt said. “Poverty attacks you in a number of ways, so we’re going to fight on multiple fronts.” On the housing front, the nonprofit created a community of 50 tiny homes across the street from its Food Pantry and Opportunity Center. The Cottages at Hickory Crossing were built four years ago to help the chronically homeless. The real estate arm of the program, CitySquare Housing, has a new project adjacent to the tiny homes to provide 21 units of container housing, with architecture help from Merriman Anderson and fabrication from Falcon Structures, a company in Manor (just east of Austin) that repurposes shipping containers. CitySquare is currently interviewing general contractors to build the community. Siburt says they wanted to add more units to “help stabilize the chronically homeless.” By offering the nearby food pantry, along with mental health services, they hope to help keep residents out of

5 8 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

emergency rooms, behavioral health hospitals, and jails. “It’s permanent supportive housing for those who have been chronically homeless,” he said. “They can stay there the rest of their lives, heal from traumas, and move into a productive life.” Downtown, CitySquare Housing offers CityWalk@Akard, a 15-story building with retail and offices on the first three floors, 200 low-income affordable units on floors 4 through 14, and six market-rate condos on the 15th floor. CitySquare Housing partnered with JOHN SIBURT for-profit Lone Star Gas Lofts to provide some affordable units within market-rate housing. It also teamed up with the Bank of America Community Development Corp. in Oak Cliff ’s low-income Wynnewood Family Housing and a nearby senior living community. In addition to the locations for permanent housing, CitySquare offers transition housing for young adults aging out of foster care, and rapid rehousing for people who suddenly find themselves homeless. Siburt, a member of the Dallas Regional Chamber’s Leadership Dallas Class of 2020, says his LD experience gave him “a sense of hope.” Each year, class members select a service project to tackle as a group. This year they chose the food pantry at the CitySquare Opportunity Center, just south of Interstate 30 on Malcolm X Boulevard. Before the pandemic, the CitySquare Food Pantry operated like a grocery store for its customers, who could shop the aisles for what they needed. Since COVID-19 hit, it has switched to drive-through, serving more than 1,000 people a week. The LD Class of 2020 members raised funds, goods, and services, and spent time in a hands-on renovation of the food pantry: improving the layout, upgrading flooring, and adding new signage and equipment. Working with leaders from business, local government, and other non-profits gave Siburt an appreciation for the “servant leader” approach that Leadership Dallas cultivates. He also developed a network of friends who are “going to lead the future of Dallas.” He believes the experience changes everyone involved for the better. “I’ m grateful for the Chamber advocating for what economic development and opportunity can look like for all of Dallas, not just some of Dallas,” Siburt said. “I found that the leaders in Dallas care about the right things and are going to pursue a more equitable future for the city of Dallas.” Leadership Dallas, the flagship program of the Dallas Regional Chamber for leadership development, is aimed at increasing the leadership pool for community activities in the Dallas area. Visit dallaschamber.org for more information.

FA L L 2 0 2 0


SPECIAL ADVERTISING SECTION

ECONOMIC DEVELOPMENT DIRECTORY Located at the highest elevation in Dallas County and 20 minutes from the city center sits the beautiful, family-friendly City of Cedar Hill, where opportunities grow naturally. This bustling and diverse community of just over 45,000 people combines the best of big-city living with natural beauty and outdoor recreation found nowhere else in the Metroplex. With its low cost of doing business, ample workforce, and attractive quality of life, Cedar Hill is experiencing an influx of both startups and established companies. Growth-minded companies are gaining handsome dividends from opportunities that exist throughout the City. In addition to the growing business climate, Cedar Hill corners the market on natural beauty. The Cedar Hill State Park and Dogwood Canyon Audubon Center allow residents and visitors access to the most uniquely diverse geological area, abundant wildlife, and the most breathtaking views in North Texas. To facilitate and energize relocation and expansion, Cedar Hill offers aggressive economic development incentives.

The Colony is a growing city on the east side of Lewisville Lake, 25 minutes from downtown Dallas and 15 minutes from the Dallas Fort Worth International Airport, located along the Sam Rayburn Tollway. Home to approximately 40,000 residents with businesses and retail locating here daily, The Colony continues to maintain its “hometown” feel. Affectionately known as “the city by the lake,” The Colony features 23 miles of shoreline along Lewisville Lake and two lake parks with boat ramps, camping, and many other amenities. Golf courses within the city all provide outstanding lake views with two courses being recognized among Golf Magazine’s top five in Texas in 2010. The Colony is the proud home of the nation’s largest home furnishings store, the Nebraska Furniture Mart of Texas, anchoring the 400-acre Grandscape development. When complete, Grandscape will feature unique entertainment, dining, and retail venues.

CEDAR HILL ECONOMIC DEVELOPMENT

6800 Main St., The Colony, TX 75056-1133

972.291.5132 285 Uptown Blvd, Bldg 100, Cedar Hill, Texas 75104

FA L L 2 0 2 0

The McKinney Economic Development Corp. (MEDC) was created in 1993 to support the development, expansion, and relocation of new and existing companies. The MEDC is an organization with a mission to work to create an environment in which community-oriented businesses can thrive. PETER TOKAR III President and CEO MCKINNEY ECONOMIC DEVELOPMENT CORP. / CITY OF MCKINNEY 5900 S. Lake Forest Drive Suite 110 McKinney, TX 75070 info@mckinneyedc.com 972.547.7651 mckinneyedc.com

KERI SAMFORD, Economic Development Director THE COLONY ECONOMIC DEVELOPMENT CORPORATION

972.624.3127 edc@thecolonytx.org

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 5 9


C COMMUNITY The Dallas Regional Chamber recognizes the following companies and organizations for their membership investment at one of our top levels. Bolded companies are represented on the DRC Board of Directors. For more information about the benefits of membership at these levels call Diana Rivas-Smith at (214) 746-6744.

1820 Productions 4Front Engineered Solutions 7-Eleven, Inc. A G Hill Partners LLC Accenture Acme Brick Company Active Network AECOM AJC Global Jewish Advocacy AlixPartners LLP Alkami Technology Allegiance Title Company Alston & Bird LLP Altair Global Amegy Bank of Texas American Airlines, Inc. American Heart Association, Dallas Division American National Bank of Texas AMN Healthcare Andres Construction Services Andrews Distributing Company of North Texas Aon Arcosa Armstrong Relocation Ashford Hospitality Trust, Inc Associa At Home AT&T Atmos Energy Corporation Atos IT Solutions & Services Audi of America, LLC Austin College Austin Industries AustinCSI AvreaFoster Axxess Bain & Company, Inc. Baker & McKenzie, LLP Baker Botts L.L.P. Balfour Beatty Bank of America Bank of Texas Barnes & Thornburg Baylor Scott & White Health BBVA Bell Flight Bell Nunnally

BGSF Big 12 Conference Billingsley Company BKD LLP bkm Total Office of Texas Blackmon Mooring & BMS CAT BLNelson Group LLC Blue Cross and Blue Shield of Texas Boeing BOKA Powell Borden Dairy Company Bottle Rocket Brasfield & Gorrie Brierley+Partners Briggs Freeman Sotheby’s International Realty Brinker International, Inc. Business Jet Center Business Wise, Inc. BuzzBallz/Southern Champion Capital One Bank Carrington, Coleman, Sloman & Blumenthal, L.L.P. Cawley Partners CBRE Group, Inc. Centurion American Development Group CENTURY 21 Judge Fite Company Champion Partners Cherry Petersen Landry Albert LLP Chickasaw Nation Children’s Health CHRISTUS Health CHRO Partners Cisco Systems Citi City Electric Supply CitySquare Clark Hill Strasburger Cleaver-Brooks Sales and Service ClubCorp USA, Inc. Coca-Cola Southwest Beverages Colliers International Comerica Bank Commemorative Air Force Comprehensive Finance Inc Copart Corgan

6 0 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

Corinth Properties Corrigan Investments, Inc. CP&Y, Inc. CRIADO Crow Holdings Crowe LLP CSRS CyrusOne Dallas Baptist University Dallas Business Journal - Local Business News Dallas College Dallas Cowboys Football Club Ltd. Dallas Mavericks Dallas Stars Hockey Club Dallas Summer Musicals Dal-Tile Corporation Dannenbaum Engineering Corporation De La Vega Development DeGolyer and MacNaughton Deloitte LLP DENSO Products and Services Americas, Inc. DFW International Airport DHD Films DLR Group | Staffelbach Dorsey & Whitney LLP Dreien Opportunity Partners LLC E Smith Legacy Holdings EarthX Ebby Halliday Real Estate, Inc. Egan Nelson LLP EMR Gold Recycling LLC Eric Affeldt Ernst & Young LLP Estrada Hinojosa & Company, Inc. Ewing Automotive Group Faegre Drinker FASTSIGNS - Northeast Dallas FedEx Office Fidelity Investments Financial Additions Fluor Corporation Headquarters Foley & Lardner LLP Forest City Texas Inc Fox Sports Southwest Freeman Freese and Nichols, Inc. Frito-Lay North America Frost Bank

Frost Brown Todd LLC Furniture Marketing Group G6 Hospitality LLC Gaedeke Group George W Bush Foundation Gibson Dunn & Crutcher LLP Globe Life Goldman Sachs & Co, LLC goPuff Granite Properties Grant Thornton LLP Green Brick Partners Greenberg Traurig Gulfstream Aerospace Corporation Gupta & Associates Inc. Hall Group Harness Dickey Hawthorne Family Fund Haynes and Boone, LLP Heady Investments, Inc. H-E-B/Central Market Hill & Wilkinson General Contractors Hill+Knowlton Strategies Hillwood Development Company, LLC Hilti North America Hilton Anatole Hines Interests LP HKS Inc. HMS HNTB Corporation Hoar Program Management, LLC HOK Holdingham Group North America Holmes Murphy HOLT CAT HPI Real Estate Services & Investments/Ross Tower HSBC Bank USA HUB International Insurance Services Hudson Peters Commercial Hunt Consolidated, Inc./Hunt Oil Company IBC Bank IBM Corporation Iconic IT Imaginuity

FA L L 2 0 2 0


C COMMUNITY Independent Financial Interceramic International Leadership of Texas Invesco Real Estate Invitation Homes Jackson Spalding Jackson Walker LLP Jacobs Engineering Group Inc. JBJ Management JE Dunn Construction Jim Ross Law Group PC JLL Jones Day JPMorgan Chase & Co. KDC Real Estate Development & Investments Ketchum Public Relations Kilpatrick Townsend & Stockton LLP Kimberly-Clark Corporation Kimley-Horn and Associates Kirkland & Ellis KPMG LLP Kubota Tractor Corporation L.A. Fuess Partners Structural Engineers Lancaster Economic Development Corporation Prosperity Bank Linebarger Goggan Blair & Sampson, LLP Link America, Inc. Littler Mendelson, P.C. Locke Lord LLP Lockheed Martin Lockwood, Andrews & Newnam, Inc. Lyco Holdings Lynn Pinker Cox & Hurst, LLP M2 Studio MAPP Mary Kay Inc. Match Group Matthews Southwest Mbroh Engineering, Inc McCarthy Building Companies, Inc. McGinnis Lochridge McGlinchey Stafford McGough Construction McGuire, Craddock & Strother, PC McGuireWoods LLP McLarty Diversified Holdings McRight-Smith Construction Medical City Dallas Hospital/ Medical City Children’s Hospital Methodist Health System MHBT, a Marsh & McLennan Agency LLC company Microsoft Corporation FA L L 2 0 2 0

Munck Wilson Mandala LLP MV Transportation, Inc. NEC Corporation of America Nicholas Residential Northern Trust Norton Rose Fulbright NTT DATA Inc. Omni Dallas Hotel Omniplan, Inc. Omnitracs, LLC Oncor Options Clearing Corporation Origin Bank ORIX Corporation USA OYO Hotels and Homes Pacific Builders Pape-Dawson Parkland Foundation Parkland Health and Hospital System Paul Quinn College Paycom Penske Motor Group Perkins and Will Perkins Coie LLP Pierpont Communication PlainsCapital Bank PNC Polsinelli Premier Truck Group Prime 45 Development LLC PRSA Dallas - Public Relations Society of America PSA Management, Inc. PureFlow Inc. PwC Qatar Airways Raising Cane’s Raytheon Company RealCom Solutions Regions Bank Reimagine RedBird Reliant, an NRG Company Renfe of America LLC Rent-A-Center Rogge Dunn Group RSM US LLP Ryan LLC Santander Consumer USA Scheef & Stone, LLP SCHMIDT & STACY Consulting Engineers, Inc. Scovell Family Foundation Sendero Sewell Automotive Companies Shackelford, Bowen, McKinley & Norton LLP Shearman & Sterling Sheppard Mullin

Sheraton Dallas Showcall Sicily Hill, LLC. Sidley Austin LLP Silicon Valley Bank Simmons Bank Slalom Smoothie King SMU - Southern Methodist University Soniks Consulting Services Southern Glazer’s Wine and Spirits Southwest Airlines Southwest Office Systems, Inc. Spectra Spectrum Enterprise Squire Patton Boggs Stantec Steinhart Family Advised Fund Stinson Leonard Street Stout Suffolk Construction Sumitomo Mitsui Banking Corporation SMBC T.D. Jakes Foundation Talent Suite Target Headquarters TD Ameritrade TDIndustries Team One Teladoc Telios Tenet Healthcare Texans Can Academies Texas A&M University Texas A&M University Commerce Texas Capital Bank Texas Central Texas Health Aetna Texas Health Resources Texas Instruments, Inc. Texas Mutual Insurance Company Texas Scottish Rite Hospital for Children Texas Woman’s University Texas Women’s Foundation The Beck Group The Boston Consulting Group The Brierley Group LLC The Broaddus Companies The Commit Partnership The Craig + Kathryn Hall Foundation The Crowther Group The Dallas Morning News The Edelman Group

The Episcopal School of Dallas The Fairmont Hotel The Kroger Co. The Parvin Group The University of Texas at Arlington Thompson & Knight LLP Thompson Coburn Thomson Reuters TIAA T-Mobile Tom Thumb - Albertsons Topgolf Entertainment Group Town of Addison Toyota Motor North America TracyLocke Transwestern Trinity Groves, LLC Trinity Industries, Inc. Trinity Park Conservancy TruePoint Communications Truist TrustPoint Management Group Turner Construction Company TXU Energy Uber Technologies, Inc. UBS Realty Investors LLC UMB Bank N. A. UnitedHealthcare University of North Texas at Dallas University of North Texas System University of Texas at Dallas UPS USAA UT Southwestern Medical Center Vanir Construction Management Vari Veritex Holdings Verizon Wireless South Central HQ Volunteers of America Texas Vox Global Walmart Stores, Inc. Weaver Weber Shandwick Weil, Gotshal & Manges LLP Weitzman Wells Fargo West Monroe WFAA-TV Whitley Penn Willis Towers Watson Winstead PC Wipro Limited Women’s Foodservice Forum

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 6 1


C COMMUNITY

IMPACT INVESTORS

Each year, The Real Estate Council receives both financial and volunteer support from funding partners and member companies. Special thanks to each of you for contributing your time, talent, and resources to help us achieve our mission.

CHAMPION’S CIRCLE

JP Morgan/ JPMorgan Chase Foundation Bank of America Merrill Lynch/Bank of America Charitable Foundation, Inc. Bank of Texas Cawley Partners CBRE U.S Department of Treasury CDFI Fund Champion Advisory Partners Cushman & Wakefield Deloitte. JLL LegacyTexas NexBank SSB Texas Capital Bank Varidesk, LLP Wells Fargo Foundation Winstead PC

CHAIRMAN’S CIRCLE

Balfour Beatty Construction Corgan EY Frost Bank Granite Properties Holt Lunsford Commercial Invesco Real Estate Jackson Walker LLP KDC Kimley-Horn KPMG Matthews Southwest Munsch Hardt Kopf & Harr P.C. Republic Title of Texas, Inc. Stantec Stewart Title The Howard Hughes Corporation The Turner Construction Company Foundation

PRESIDENT’S CIRCLE

Alston Construction Billingsley Company BBVA Brasfield & Gorrie, LLC Compatriot Capital, Inc. Crow Holdings Capital Partners, L.L.C. DPR Construction, Inc. Grant Thornton Haynes and Boone, LLP Hill & Wilkinson Jackson-Shaw NorthMarq Capital ORIX Real Estate Americas Pacheco Koch Consulting Engineers, Inc. PUREPOINT Financial StreetLights Residential Thackeray Partners The Beck Group Todd Interests Trammell Crow Company Trammell Crow Residential Transwestern Westmount Realty Capital, LLC

BENEFACTOR’S CIRCLE 42 Real Estate, LLC Acore Capital AG&E Structural Engenuity Amegy Bank American National Bank of Texas Bank of America Plaza Bank OZK Banner Oak Capital Partners, LP BB&T Benchmark Title Berkadia Commercial Mortgage Bradford Companies

Bill Cawley, Chairman Mike Ablon, Chairman-Elect

Caddis Healthcare Real Estate CallisonRTKL Capital One Bank Capright, LLC Chicago Title, NCS Dallas Chief Partners LP Corinth Properties CoStar Group Crow Holdings Davidson & Bogel Real Estate Gables Residential Gaedeke Group LLC Gensler GFF Goldman Sachs HALL Group Hillwood Urban HKS HPI Real Estate Services & Investments HRNCIR Construction, LP Hunt Realty Investments, Inc. Integra Realty Resources Jones Day JPI Kane Russell Coleman Logan PC Kennington Commercial Lincoln Property Company Locke Lord LLP MBL Title Merriman Anderson Architects, Inc. MetLife Real Estate Investors Mill Creek Residential Trust LLC Newland Real Estate Group OMNIPLAN, Inc. Orix Foundation Perkins and Will PlainsCapital Bank

Regions Bank Rosewood Property Company Saville CPAs & Advisors Stream Realty Partners The Retail Connection TIER REIT, Inc. Trinity Groves, LLC TRT Holdings, Inc. Turner Construction Company VanTrust Real Estate, LLC VCC Construction Venture Commercial Real Estate, LLC Veritex Community Bank Walker & Dunlop Whiting-Turner Woodbine Development Corporation Younger Partners, LLC

PATRON’S CIRCLE Ace Decor & Finishes, Inc Amanda Ethridge Andrew R. Henry Balfour Beatty Construction Corgan Fauxcades Hill & Wilkinson Hilton Anatole Hotel Jones Day Kimley-Horn Mid Cities Erectors, LLC Perkins and Will Polsinelli PC Venture Mechanical, Inc.

WHO WE ARE TREC is where 2,200 commercial real estate professionals spark community transformation, influence policy, and propel careers in DFW and beyond. Only TREC provides the road map for success and the platform to Build the City You’ve Imagined. 66 2 2/ /D D AA LLA LA S S- -F O FO RR T TWW OO RR TH T HR R EA EA L LE S E TAT S TAT E ER R EV EV I EI W EW

Learn more at recouncil.com or by calling 214-692-3600. FA L L 2 0 2 0


C COMMUNITY

TREC’S 2020 DALLAS CATALYST PROJECT Though the coronavirus pandemic halted construction on TREC’s 2020 Dallas Catalyst Project partnerships with Cornerstone Baptist Church and St. Philip’s School and Community Center through most of the summer, work finally began in late August. TREC’s Associate Leadership Council Class of 2020 is partnering with Cornerstone to open the Southpoint Community Market in a shopping center along South Boulevard, while its Young Guns are working with St. Philip’s to turn the former Cowboys Lounge into the We Creation Innovation Center. Brasfield & Gorrie also held a company volunteer day to prepare the former Cornerstone church building for its renovation into a multipurpose space. BY MID-SEPTEMBER, THE ALC PROJECT TEAM HAD MADE SIGNIFICANT PROGRESS ON THE MARKET’S INTERIOR.

WHEN CONSTRUCTION ON THE SOUTHPOINT COMMUNITY MARKET BEGAN, THE FIRST STEP WAS TO COMPLETE THE WALLS AND FLOORING.

THE WE CREATION INNOVATION CENTER PROJECT TEAM VISITED THE SITE PRIOR TO THE START OF WORK IN LATE AUGUST.

THE FORTHCOMING SOUTHPOINT COMMUNITY MARKET WILL BE LOCATED NEXT TO THE CORNERSTONE COMMUNITY LAUNDROMAT AND PROVIDE FOREST DISTRICT RESIDENTS WITH ACCESS TO LOW-COST HOUSEHOLD ITEMS.

ST. PHILIP’S SCHOOL AND COMMUNITY CENTER WITH TREC’S YOUNG GUNS WILL TRANSFORM THE FORMER COWBOYS LOUNGE INTO A COMMUNITY MEETING SPACE.

ONCE WALLS WERE INSTALLED AND PAINTED, THE CORNERSTONE MARKET TEAM GOT TO WORK ON THE ELECTRICAL SYSTEM.

TREC YOUNG GUNS PROJECT CHAIRS PATRICK HENNING (BRASFIELD & GORRIE) AND TARA HARANDI (GUIDE ARCHITECTURE LLC) LOCATED NEAR THE CORNERSTONE COMMUNITY LAUNDROMAT AND THE FORTHCOMING SOUTHPOINT COMMUNITY MARKET, CORNERSTONE BAPTIST CHURCH’S FORMER CHURCH BUILDING IS BEING RENOVATED AS A MULTIPURPOSE COMMUNITY SPACE.

IN LATE AUGUST, BRASFIELD & GORRIE’S DALLAS TEAM HELPED REPAINT CORNERSTONE BAPTIST CHURCH’S FORMER CHURCH BUILDING.

FA L L 2 0 2 0

BRASFIELD & GORRIE ALSO DONATED PAPER TOWELS, TOILET PAPER, AND DETERGENT TO THE CORNERSTONE COMMUNITY LAUNDROMAT, WHICH HAS PROVIDED MORE THAN 5,000 FREE LOADS OF LAUNDRY SINCE THE COVID-19 PANDEMIC BEGAN.

D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W / 6 3


VIEW FROM THE TOP

AS TOLD TO ALEX EDWARDS

NANCY FLORES EVP/CIO/CTO, McKesson

Flores was just six weeks into a new C-suite job at McKesson and a new city—Irving—when the global pandemic hit. Like every other business, McKesson had to shift overnight. Flores and her tech teams had to address systems and infrastructure in completely new ways to tackle the unplanned activity accompanied by PPE demand and dynamic supply chain activity. Now, McKesson has a partnership with the CDC to support Operation Warp Speed as a distributor of future COVID-19 vaccines and related supplies— and a focus on serving the country in terms of that distribution. Innovation and impact is important to McKesson, and Dallas is a great city to support that, she said. The Fortune 500 company moved its headquarters to Irving in 2019. AS A NEW EMPLOYEE, WHAT ATTRACTED YOU TO NORTH TEXAS? When you step into this role, there’s typically three things you look at. First, the ability to retain great talent in terms of communities and accessibility. Then, building pipelines of diverse, solid tech talent. There’s so much diversity in Dallas. As a person of color—I’m half Hispanic and Asian, but I spent a lot of time associated to my Hispanic background—to know that you have a population that is diverse gives me the ability to help build an organization that accurately reflects the community. The last piece are the linkages to the local community. Age is liberating, and things are very different here. I’ve already gotten involved with NFTE, a foundation where they teach innovation in underserved areas, and I just spoke to Health Wildcatters about what they’re doing with investments in early stage funding. When it comes to making a difference in the community, there’s a huge opportunity here. We talk about social impact a lot internally, and Dallas is a great city to be able to do that. With a city like Dallas, if you have the right networks in the community, there’s just so much you can do—especially with healthcare. Everybody benefits from solving something in healthcare.

6 4 / D A L L A S - F O R T W O R T H R E A L E S TAT E R E V I E W

WHAT NEW PROJECTS ARE YOU WORKING ON? The big focus right now is the mass effort and investment in serving a country in terms of vaccine distribution. I had to overnight reprioritize probably about a couple hundred resources dedicated to rapidly scaling our systems.

IS YOUR SOLE FOCUS ON COVIDRELATED PROJECTS RIGHT NOW? That’s our priority. But when you look at our key strategic imperatives, it’s pretty amazing to see how McKesson can mobilize to address work in hyperdrive and still execute our key focus areas. We’re still winning in the market; we’re still growing as expected. I have 18 major programs that before COVID were critical to enabling our business. That includes everything from pricing initiatives, to how we enable our oncology practice to provide more capabilities, to how we support our medical surgical business.

HOW DOES NORTH TEXAS FIT INTO THE NEEDS OF EMPLOYEES? DO YOU HAVE ANY PLANS TO HIRE NEW TECH OR INNOVATION ROLES? Dallas has a huge talent pool. It’s been great to be able to look at not only the universities, but innovation and the broader tech talent in the city. It’s been a huge

advantage in terms of hiring talent for IT. An area we are making an investment in is building our core cybersecurity operations here in Dallas. We’ve got a number of positions that we want to hire for here, including cybersecurity, infrastructure, cloud capabilities, automation, integration, and design thinking.

LOOKING TO 2021, WHAT INNOVATIONS IN THE HEALTHCARE INDUSTRY ARE YOU MOST EXCITED ABOUT? For years, the healthcare industry has talked about shifting into more digital channels to optimize the industry. What COVID allowed us to do is force different areas that typically would be more resistant to technology. A lot of the services of healthcare—everything from pharmaceuticals to patient visits—are being rethought in terms of digital channels. The combination of mobile devices, Zoom calls, and telehealth is changing the experience for the patient. But we have to be mindful of equitable options. I think the silver lining is that this is going to change and drive digital and an inherent level of efficiency that’s going to be a good thing after COVID. Read more at DallasInnovates.com/ ViewFromTheTop

FA L L 2 0 2 0


At its core, TREC is a group of talented, dedicated, and generous At its core, TREC is amembers group of who talented, desire to be dedicated, and a driving force generous in creating members who the desire to Dallas be a driving force of tomorrow. in creating the Dallas of tomorrow.

Bill Cawley TREC CHAIRMAN CAWLEY PARTNERS

Bill Cawley

TREC CHAIRMAN CAWLEY PARTNERS

Imagine. Imagine. Empower. Empower. Impact. Impact.

Join TREC today and

Join TREC today and Build You've Imagined Build the the CityCity You've Imagined.

RECOUNCIL.COM 214.692.3600 PHONE 3100 McKinnon Street No. Dallas, TX 752 RECOUNCIL.COM 214.692.3600 PHONE 3100 McKinnon Street No. 1150, Dallas,1150, TX 75201



Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.