Excerpt from Bisnow’s preview of the “Strategic Approaches to Infill Development” session at NAIOP’s CRE.Converge 2017 by Travis Gonzalez
When Courtland Development CEO Jon Napper found an opportunity in the Dallas neighborhood of Deep Ellum to convert a brick-and-timber warehouse into a loft-style office, he had no idea what was beneath the foundation. Located in what was an industrial area in the 1930s, the property’s parking lot was the site of an old icehouse and an environmental disaster, Napper said.
Hundreds of thousands of dollars' worth of cleanup later, the redeveloped office would become Yahoo's regional headquarters while the rest of Deep Ellum transitioned from empty warehouses and graffiti into Dallas’ version of Williamsburg, Brooklyn.
Infill development, while expensive, unpredictable and often hard to find, could provide developers with a golden opportunity to capitalize on gentrifying neighborhoods and appeal to a growing wave of urbanism throughout the country.
Dallas is a case study for the surge of young professionals moving into urban cores. Downtown and Uptown Dallas added 29,209 residents from 2015 to 2016. The swelling population creates greater demand for the city’s nearby residential and office stock. In popular neighborhoods like Uptown and Oak Lawn, office vacancy was at 8.7% in Q1 while multifamily vacancy was at 5.7% across Dallas in Q1.
Dallas has followed the trend of developers across U.S. cities converting older office buildings into loft apartments and turn-of-the-century multistory warehouses into creative office. In Chicago, the old post office is undergoing a $500M mixed-use redevelopment, and in Atlanta, the 2.1M SF Ponce City Market project transformed a former factory into 259 residences, 550K SF of office and 300K SF of retail.
“The buildings that are winning are ones that have access to great transportation, public or otherwise, and amenities like retail and hotels,” Granite Properties President and Chief Operating Officer Greg Fuller said. “If you can find an infill location that has all of these amenities nearby, tenants are generally willing to pay more.”
Fuller found an opportunity in Dallas’ historic West End to convert an abandoned multistory warehouse near restaurants, shopping and hotels into 215K SF of office and ground-floor retail. Factory Six03 will offer brick-and-timber authenticity with open office plans, lounge space and outdoor terraces, features that appeal to millennial workers, Fuller said.
Read the full article on Bisnow and register today for CRE.Converge 2017.