554,000-SF Sleeping Industrial Giant Stirs

Planned as a long-term investment hold, the buyers have set aside more than $500,000 to awaken a sleeping giant in the middle of one of Dallas' oldest industrial submarkets. Still, there's room to speculate since the lead player is well-known in Dallas circles for sports-connected land plays such as the proposed 220-acre, mixed-use development around the Ballpark in Arlington, a 65-acre sports complex in Frisco, TX and its co-ownership in Hillwood's Victory, a mixed-use development with American Airlines Center as the anchor. The buy also comes as Dallas awaits a final decision from Cowboys' owner Jerry Jones about the location of a new football stadium.

Texas' old guard, Thomas O. Hicks, is the principal with the clout for Southwest Sports Realty, a subsidiary of his Southwest Sports Group, a Dallas-based entertainment company with major stakes in the Texas Rangers, NHL Dallas Stars and Mesquite Championship Rodeo. The Hicks line-up is not usually associated with the repositioning of older product nor a buyer of industrial product.

While speculation is fun, the reality is the buyers intend to fix and reposition the eight-building Dallas Commerce Center in the Brookhollow Industrial District. The deed transfer took leasing and management from its longtime holder, the Robert Lynn Co., and put it into the hands of Ken Wesson of the Bradford Cos.

"I had identified it over three years ago as a candidate for a value-added investment opportunity," Wesson tells GlobeSt.com. The under-the-radar closing took place about a month ago, jumpstarting work on a 60,000-sf building vacated in recent months. The sprucing up was unveiled to tenants yesterday along with promises of more polishing to come for an asset that is strategically positioned at the intersection of Mockingbird Lane and Irving Boulevard.

Dallas Commerce Center is battling a low 70% occupancy, with the most recent move-outs coming from NCH Chemsearch, 60,000 sf, and Otis Spunkmeyer Foods, 49,000 sf. Since the property traded, a 25,000-sf renewal has been struck and proposals are out for 75,000 sf of new deals, Wesson says. There is no lead tenant per se in a mix with leases ranging from 3,000 sf to 60,000 sf.

Wesson's goal is to exceed 90% occupancy as quickly as possible. The buildings, regardless of their age, are functional designs that put them into the top 5% of the 20-million-sf submarket, he says.

In Wesson's opinion, the property's occupancy was hampered by a chain of command that had property management in Dallas with Kennedy-Wilson, leasing in Dallas with Robert Lynn Co. and asset management and execution ricocheting between Heitman's San Francisco and Chicago offices. The streamlined leasing process and response time for a decision will translate into a higher occupancy, Wesson says.

The Heitman listing was held by Cushman & Wakefield of Texas Inc.'s former investment sales team of Jack Fraker, Randy Baird and Jon Robinson, all now with CB Richard Ellis Inc. Wesson and Bradford's Larry McCorkle had "the responsibility on the buy side.