RICHARDSON, TX-KDC and State Farm Insurance generated media headlines the week of Dec. 10 when the former announced a $1.5 billion development on 186 acres purchased from Bush/75 Partners, and the latter struck a deal for space in the mixed-use property. But there are additional themes with this story: One of which was a successful land play on the part of Bush/75 Partners, and the other involving the fact that developers are buying land once again.
This story started in 2009, when Bush/75 Partners, consisting of Dallas firms Stratford Land and Parliament Group, acquired land on the southeast quadrant of North Central Expressway (US 75) and President George Bush Turnpike (SH 190). Though much of the CRE sector was in a slump (as was the entire economy), Stratford Land’s Senior Investment Manager for Texas Steve Sanders tells GlobeSt.com that it was the right time to buy land.
“A fund like ours is opportunistic, meaning we buy at the bottom of the negative cycle,” he explains. “Land, in many cases, is not just a leading indicator, sometimes it’s a pioneering indicator.” In this particular case, Stratford and Parliament noted a few trends that would likely work in the parcel’s favor; most notably that the property was located along the very busy and heavily traveled North Central Expressway, and the Dallas Area Rapid Transit-planned light rail station nearby.
“We thought what would work really well was not necessarily a new urbanism plan with a transit-oriented development structure, but one that would take advantage of the fact that you have a transportation hub here,” Sanders explains. “Perhaps if a walkable community for multifamily could be created, maybe offices could be located across the street.”
To that end, the partners envisioned completing horizontal development and entitlements, then selling 20-acre plots to different users once the market became more active. Sanders says that Parliament and KDC had, in fact, struck a deal to option 20 acres for a build-to-suit, with the idea that once that initial acreage was sold and development begun, another 20 could go through the same process. “Then they came back to us and said ‘how about we do a couple million square feet?’” Sanders says. “We said yes. KDC is great in the corporate build-to-suit world.”
Sanders says there is a deeper issue at play here. The KDC story is huge and, in his words, comes along maybe once in a decade. But just as relevant is that Stratford was very busy in 2012. “We had more than $100 million in sales in 2012, and I think 2013 will be better,” Sanders comments. The uptick in land sales, he points out, means that end-users are interested in developing once again.
“When we’re not selling land, no one is doing anything,” Sanders says. “But in every market we’re in (Austin, Dallas, Houston and San Antonio), we’re seeing significant sales activities, and that’s good. Users won’t buy unless they’re ready to develop.”