Shea Identifies New Office Target; Starts With $20M Uptown Plan

For now, Shea's focus is 2525 McKinnon, an eight-story, 109,000-sf building with a parking ratio of three spaces per 1,000 sf. Peter Meyer, Shea's principal in Dallas, tells GlobeSt.com that building owner, Warner Stone of Dallas, and Wilcox Realty Services came to him to discuss the idea after two years of leasing produced three tenants for a two-year-old asset viewed as a prime candidate for office condos. Not only is the building situated in the heart of Uptown, one of the city's most in-demand pockets, but it's probably the only "for sale" office condo product in the 6.1-million-sf inventory of class A space.

Meyer says he's received numerous calls as word got out about the plan. In the coming weeks, the team will begin to market the space at $220 per sf and a 2,500-sf minimum buy-in. "If the space goes as quickly as we believe it will, I think you'll see that price go up a little bit," he says, adding expected condo finish-outs will run from $30 per sf to $40 per sf.

The Retail Connection, which has its headquarters on the building's sixth floor, along with Sterling Bank and Seneca Investments, with offices on the first and third floors respectively, will have the option to replace leases with deeds or Shea will market their spaces to investment circles, Meyer says. He predicts the building will be sold out within a year, perhaps sooner. The office building sits on slightly less than an acre, right across the street from the 1.1-million-sf Crescent, the future Ritz-Carlton Residences and within walking distance of American Airlines Center, anchor to the $100-million, mixed-use plan for Hillwood's Victory redevelopment.

Meyer says talks are now underway with three other building owners in Uptown to expand the plan. If the plans come to fruition, there will be close to another 300,000 sf partitioned for sale in the prestigious submarket. "It's just a location that nobody's been able to offer before," he says. Shea is building about 800,000 sf of office condos in Dallas/Fort Worth, but it's all single- and two-story product so the plan is to cross-market 2525 McKinnon with the rest of the portfolio.

Meanwhile, Shea will deploy the mid-rise strategy to gain market inroads in Chicago and New York City. The team will head to the Big Apple in 10 days to continue talks for sites in Brooklyn and the Bronx, according to Meyer. The plan's been gelling for nearly six months as the team targets markets with strong demand "and not a lot of opportunity to purchase," he says. "We believe that converting existing buildings in desirable urban locations into office condos is the ideal solution for businesses that want the benefits of ownership, but only require limited space."