foreclosure, will undergo renovations
and benefit from an aggressive lease plan.
FARMERS BRANCH, TX-In early November, DFW Integrity Group Ltd., operating under the name 2711 LBJ Partners, acquired Meridian Tower, a 228,500-square-foot office building, from foreclosure. The buyer, now ready to move forward, has tapped Stream Realty Partners LP to lease up and manage the 1980s-built property.
The first step for the building at 2711 Lyndon B. Johnson Fwy. (Interstate 635) will be renovations – the lobby will be upgraded, as will tenants’ conference rooms. Spec suites will also added. Although the “pardon our dust” signs haven’t yet been posted, “we’re starting to see some positive momentum on the leasing side, now that there is more clarity to the ownership picture,” comments Stream Realty’s Tim O. Terrell who, with colleague Kendall Cramer, is leading the marketing efforts on behalf of DFW Integrity Group.
Terrell tells GlobeSt.com that, during the past 30 days, he and Cramer have completed approximately 20,000 square feet of lease renewals and expansions. “The existing tenants made the decision to stay, seeing a strong, well-capitalized owner moving forward,” he says.
But marketing and positioning this building won’t be easy. Though in a prime location at the intersection of Interstate 635 and Interstate 35, the office building has had its share of distress for a long while. In 2004, Younan Properties LLC of Woodland Hills, CA, paid $12.6 million for the office building, which had been in foreclosure trouble at the time. The Woodland Hills, CA buyer had planned to invest money in upgrading the building, but it ended up in trouble again in late 2011, and at that time, Bank of America foreclosed on the property. According to the Dallas Morning News, Keith Fisher with Stream Realty Partners brokered the most recent sale, with Bank of America having an $11.6 million loan on the office building. The property currently stands at 30% occupancy.
If previous and recent financial woes weren’t enough, the building is located at the edge of a massive construction project on Interstate 635. The project is developing managed toll lanes and has an expected delivery date during 2014-2015. The construction has impacted vacancies along the freeway – Cramer tells GlobeSt.com that the submarket is experiencing 65% occupancy, a trend that’s likely to continue for the foreseeable future.
Terrell says that, to counteract the issue, Stream has developed a plan that targets lease expirations in nearby buildings and includes aggressive pricing at the front end of lease terms. “We want to reward the tenants that will endure until completion of construction,” he explains.
As to space size, Cramer says the spec suites are geared toward tenants whose requirements aren’t much larger than 2,000 square feet. On the other side of the coin, “we can put together two floors of 40,000 square feet or four floors at 80,000 square feet,” she explains.