New office tower, apartment projects in works at Dallas’ Victory Park
Wednesday February 15, 2012
Dallas Morning News – by Steve Brown
Investors who control Dallas’ Victory Park have teamed up with developers to reboot the project.
KDC, a commercial builder and investor that specializes in corporate office facilities, is joining with Victory Park sponsor Estein & Associates to build an office tower in the heart of the development.
The proposed 23-story office building and a 378-unit apartment building would be the first construction in Victory Park in more than five years.
The addition of thousands of office workers and residential renters will give Victory Park the increased population needed to make its retail space a success, the German real estate investment fund that owns much of the project hopes.
“The new office tower, along with the addition of more retail, restaurants and apartments, will provide the Victory Park workforce and residents an even more vibrant urban environment,” said Lance Fair, chief operating officer of Estein & Associates and vice president of Victory Park.
“We know that things have to happen in the right order and at the right time for Victory to be successful long term,” Fair said. “We are excited about the new apartment project and now this office building.”
Started in the late 1990s, the 75-acre Victory development is on the northwest edge of downtown Dallas . The project was planned by original developer Hillwood as a mostly high-rise community that would surround American Airlines Center.
But after early success, Victory ran into problems during the recession when demand for its high-priced condominiums and specialty retail space fell.
In 2009, the German investors who had funded large portions of the project took control.
The office tower planned by KDC and Estein will be the largest project at Victory since some of the original construction.
The 400,000-square-foot tower will be built on what is now a block of parking at Victory Avenue and Museum Way, southwest of the W Hotel.
The office high-rise will be the first close-in Dallas development by KDC, which built the new Blue Cross Blue Shield of Texas headquarters in Richardson, the Encana Oil & Gas tower in Plano and other big corporate office projects in North Texas and elsewhere.
“We looked at various sites in the Uptown area and determined Victory would be the best site for us,” said KDC president Toby Grove. “This will be the first deal we have done in the city of Dallas.”
KDC is talking to prospective tenants for the office tower and hopes to start construction this fall. The building was designed by architect BOKA Powell with ground-floor retail and commercial space and eight levels of parking.
‘A ton’ of leases
“There are a ton of office deals looking at a late 2014 and into 2015 occupancy window,” said John Brownlee, KDC senior vice president. “There are a lot of leases rolling over in the central business district in that time frame.
“We think this is the best development option in Uptown,” Brownlee said.
The office building would be just across the street from where developer Mill Creek Residential Trust has contracted with Estein to buy a vacant block adjacent to DART’s Victory light-rail station. The Dallas-based apartment developer plans to construct a five-story rental building on the property, which is between Victory Avenue and Stemmons Freeway.
Fair said Victory Park’s owners are also working on new retail deals.
“We’ve had the opportunity in the last year to open three new retail venues,” Fair said. “In the next week or two we will sign a couple more leases.”
One new tenant will be an apparel merchant and the other a salon, he said.
‘We are committed’
“Our company has been investing in real estate for over 30 years,” Fair said. “We are committed to Victory Park in the long term.”
The German investors have put more than $185 million into the project.
The current office space in Victory is 95 percent leased, with major tenants including Ernst & Young , Haynes & Boone, Plains Capital Bank, Cumulus Media and TM Advertising. The Vista and Cirque apartment buildings are also almost fully leased.
But Victory’s condominiums have not fared as well. While only one finished condo unit remains for sale by the owners of the W Hotel, the 28-story House condo tower was sold at foreclosure last week to lenders.
Fair said that now that the German banks that own the House tower have written its value down by more than 50 percent he is optimistic the building can be repositioned.
Estein still has three large development sites available in Victory, not counting the block where KDC will build its office tower.
Most of those development tracts will probably be used for office construction, Fair said.
The plans in the works for Victory Park are good news for central Dallas, said John Crawford, who heads the Downtown Dallas Inc. economic development group.
“I’m very pleased to see Victory Park’s owners restrategize and seize the market opportunities that are available,” Crawford said. “It is wise of them to start a development process that ultimately will bring retail back into the mix.
“If we get more residential and office, it will be able to support more retail.”
Longtime Dallas retail broker Bob Young agrees that building more offices and apartments will boost Victory’s struggling retail.
“Any additional daytime density in population can’t do anything but help — that’s obvious,” said Young, managing director of the Weitzman Group.
“But they are going to have to have a pretty significant increase in overall density to truly bring a groundswell of additional merchants.
“I think they will whittle away at it.”