Dallas Debates Republic Center's Fate

More than one office broker around town is saying today's closing has been delayed, but make no mistake...it will close before the month's out. Brokers are more concerned about the rumored price of less than $10 million for 325 N. St. Paul St. "It sounds like an awesome deal, but I know it looked like an awfully good deal when CSFB bought it," P. Michael Hardage, director of investment services for Trammell Crow Co., tells GlobeSt.com, "and look how it turned out for them. I hope it turns out better. I think it should."

CSFB paid $24 million or $17.78 per sf in December 1997 to Dallas-based Transcontinental Realty Investors in a deal reportedly structured by CSFB's one-time rainmaker, Andy Stone. Once again, the building's sale is being handled by CSFB's New York City office, but the broker's just not talking at this time.

Just how much the building is worth is still a bone of contention between its owners and the Dallas Central Appraisal District. Last year, CSFB filed a lawsuit disputing a $34-million assessment; an accord has not been reached. This year, the appraisal district boosted the assessment to nearly $37.8 million. It's also no secret that CSFB pumped an estimated $55 million into renovations in recent years, including the cost to mothball the 275,358-sf Tower I.

An inside source says the city is poised to accept the selling price to settle the dispute. As for the buyer's identity, the word on the street is that it's an Iranian investment group, with pockets more than deep enough to support the building's overhead.

It's a safe bet that the property's assessment will change when the deal closes. "It's pretty hard to appraise it for more than someone pays for it," says Hardage. So true, says the American Property Tax Counsel's Texas member. Raymond Gray, partner for Austin-based Popp & Ikard, tells GlobeSt.com that "appraisal districts give great weight to sales. If they get it documented that it sold for $10 million, they will probably settle for that."

As Dallas waits and watches, Transwestern Commercial Service's Sheryl Pickens is wheeling and dealing for tenants. First Southwest Co., a regional investment banker, has taken the entire eighth floor and part of the ninth--74,000 sf in all--for 10 years, Pickens tells GlobeSt.com. And, she confides, "there are several deals working."

First Southwest, now at 1700 Pacific, is to get its keys Nov. 1. Finish-out is about to begin for the complex's new lead tenant, represented by Bill McClung of Cushman & Wakefield of Texas Inc.'s Dallas office. Republic Center's other lead acts are RTKL with 65,000 sf and the Dallas Convention & Visitors Bureau with 30,000 sf.

According to Pickens, CSFB was waiting for Towers II and III to reach the 50% or 60% mark before deciding whether the mothballed Tower I would end up office or residential. About 400,000 sf of office space and 40,000 sf of retail are standing empty, excluding Tower I. The asking rate ranges from $14.50 per sf for low-rise placement to $21 per sf for the top two floors. The good news is that the latest signing takes all of the large blocks off Pickens' hands. Now, she's courting the 25,000-sf and under crowd.

The prominent CBD towers were built in three phases in 1954, 1964 and 1980, taking up a full city block that's key to the revitalization plans for the Main Street project of Madison Marquette of Cincinnati and Madison Retail Group of Washington, DC.