Shea Buying Preston Hollow Land for $10M Office Project

The Dallas-based PRG bought the site in November 2003, striking a deal with America Medical Office Partners, with principals in Dallas and Los Angeles, to build a three-story medical office building. The partner had six months to lock in pre-sales and get the project moving. About three months ago, PRG principals Mark Robertson and Drew Peterson started a new search for a new partner. "Shea was the best positioned for that property," Robertson says of the half dozen serious contenders.

Under a contract inked just 20 days ago, Shea will pay $2.4 million for the land, spend about $7.6 million to raise the building and market the development, Preston Hollow Professional Center, as "for sale" office condos without the limitation of medical-related tenancy. PRG will retain a profit-sharing percentage in the asset.

Peter Meyer, Shea's principal in Dallas, tells GlobeSt.com that ground will break by year's end, about three months after it starts the 62,000-sf Royal Creek Office Suites, positioned five miles to the southeast and close enough for overflow condo sales. With that project 50% pre-sold, Meyer says he's already fielding interest for Preston Hollow from medical, legal and architectural firms.

"It's the location that's getting all the interest," Meyer says. Leased space in the prestigious submarket is fetching in the upper $20 per sf category. "Basically, we're putting you in the same location where you can own for basically the same rate." Meyer says the fast-paced sales at Royal Creek, tagged at $175 per sf to $185 per sf for shell space, and the project's proximity to the Preston Hollow land were the dealmakers for the PRG deal for the "bull's eye" intersection of Turtle Creek Boulevard and Northwest Highway, right on the border of the University Park neighborhood.

The five-building Royal Creek, set to rise at an all-in $12-million cost, will deliver in May 2005. Preston Hollow will trail by about three months, with larger shells and a $260 per sf price tag. Meyer predicts Royal Creek, at the corner of Royal Lane and Greenville Avenue, will be sold out in 45 days and expects the same kind of traffic for Preston Hollow. "Typically, 90% of our projects are sold out by the time construction is done on the shells," he says.

PRG's Preston Hollow plan went from the drawing board of Dallas-based GSR-Andrade Architects to Phoenix's DFD Cornoyer Hendricks, which is reviewing elevations and revising the design for a more contemporary look, but holding the three-story plan--a first for the Phoenix-based Shea Commercial, which entered the Dallas market in November 2003 and now has 400,000 sf of condos up, rising or on the drawing board. Precept Builders of Dallas will be the general contractor for Preston Hollow.