Tug of War Ends for 131,228-SF Trophy Lease

The PwC pact supposedly beds down the largest unsettled leases remaining in this year's pipeline for the Dallas CBD. Although the 10-year tenant's existing lease wasn't up until 2006 in the 1.1-million-sf trophy at 2001 Ross Ave., Crescent Real Estate Equities Co. and Hillwood have been duking it out all year.

"At the end of the day, the environment in the very heart of the Arts District would be hard to leave," Michael Lewis, Crescent's vice president of leasing, tells GlobeSt.com. "You can't reproduce buildings like Trammell Crow Center or the Crescent. …If you add the quality of Trammell Crow Center and its location, the value is not even comparable. That's what makes it a no brainer."

Still, street talk had the deal seesawing on a regular basis, with Hillwood reputed to be the financial adviser's favorite. "The real estate community's rumor mill was a little off," says Lewis, who negotiated the lease along with Kirby White, Crescent's director of leasing, and Jon McNeil and Matt Craft, Trammell Crow Co.'s senior vice president and principal, respectively. Steering talks for PWC were Carl Ewert, executive vice president for the Staubach Co., and Ann Duncan and Randall Reid with the Tampa, FL-based CLW.

"We worked long and hard on PwC," David Hicks, Hillwood's senior vice president of office development, says. "Unfortunately the timing didn't work for that tenant, who needed to be in that space by January 2007. …The only way we could have made PwC was if we could have worked out a lease extension at Trammell Crow Center."

Hicks says the loss doesn't stall the plan to deliver a 550-foot iconic tower with retail, office and residential space by mid-2007. "We're really still on the timetable we would have been on," he stresses.

The Trammell Crow Center win is a stair-stepped lease that restacks PwC's space, but essentially keeps the same bottom line. The 92%-leased high rise's quoted rent ranges from $26 per sf to $27 per sf plus electric. "We both think it's a fair deal for both parties," Craft says.

In Craft's opinion, the biggest hurdle was overcoming concerns about renovations to bring the space in line with PwC's newly adopted nationwide standards to push offices toward the interior of floors and keep windowed walls as open areas. "It's a new set of standards for their office space," he says. "Every inch of their space is going to be redone."

The retooling of floors 16, 17, 18, 21 and 22 will be done in stages and the cost, estimated to range from $6.5 million to $7.5 million, will be shared by building owner and tenant. Additional upgrades will be made to a 4,300-sf training center, which is housed in the Trammell Crow Pavilion alongside the Crow Collection of Asian Art.

Work begins in early 2005 and will take nearly a year to complete. The plan calls for vacating two floors to allow for unobstructed construction and then work begins on the other three. "Each person will only have to move once," Craft says.