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Colonnade Renovation Plan Slide Show

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DALLAS-CB Richard Ellis Investors will begin work in January on a $3-million upgrade package for the 1.03-million-sf Colonnade, three class AA office towers that it bought in July for roughly $176 million. The Los Angeles-based owner is planting the seed for a rent increase down the road if the North Dallas market cooperates.

May 1 is penciled as the completion date. CBREI is following true to form, hiring Dallas-based Staffelbach Design Associates Inc. to craft interior changes and putting Bill Lokey, CBRE’s first vice president, on the ground to lead the leasing drive to lift the 75% occupancy for the 292,490-sf Colonnade I at 15301 Dallas Pkwy., 314,125-sf Colonnade II at 15303 Dallas Pkwy. and 377,639-sf Colonnade III at 15305 Dallas Pkwy.

CBREI almost always puts CBRE brokers in place, but Lokey’s track record with its assets in Las Colinas underwrote the mandate that he’d be leading the Colonnade leasing team. At Lokey’s side will be CBRE vice president John Fancher, senior associate Allison Fannin and associate Susannah Wallace. Ironically, Lokey started his leasing career at the Colonnade in 1996-97 when he worked for MEPC American Properties Inc., a British company with the Colonnade as its only US asset.

The upcoming changes for the Colonnade include CBREI’s signature amenity, a 5-Star Worldwide service center. Also coming is a 10,000-sf management office in the 70-story, barrel-vaulted atrium linking the three towers. Part of the atrium space will be converted to the Colonnade Club, a lounge with WiFI and Happy Hour hours for client meetings and after-work functions. The club is patterned after CBREI’s Library in 190 S. LaSalle in Chicago. The existing fitness center will be relocated to 5,000 sf of the lower level of Colonnade III and the conference center will be reconfigured and overhauled. The plan includes chasing LEED certification for the Energy Star-designated trio.

“The biggest challenge traditionally is having the existing tenant base see the future,” Lokey says, “in that we will have a complete 5-Star service center and understand the value.” He says the completed project makes it “a lot easier to convert them from below-market rental rates to the market rate that’s proposed.”

Today’s quoted rate is $29 per sf plus electric and 50-cent annual bumps and $20 per sf for the tenant-improvement allowance on a five-year lease and $30 per sf for 10-year deals. “We don’t present ourselves as the cheapest option,” Lokey tells GlobeSt.com, “but we do present ourselves as the best option. We won’t fire sale rates. We present it as a lifestyle center in an office building.”

Lokey says the team has 10 leases, totaling 73,000 sf, rolling in 2009. “We are aggressively pursuing our renewals in 2009 today,” he stresses, adding CBREI has a 90% tenant retention rate.

The office trio is favored by national and regional headquarters office tenants. The 50,000-sf and over roster includes Palm Harbor Homes, Systemware, Vector ISG, HQ Global and Bank of America.

The largest block of contiguous space is 100,000 sf on floors four, five, six and seven in Colonnade III. “With CBREI’s approach to real estate and the value proposition that we propose to our tenants and partners that lease-up we expect will be fairly quick,” Lokey contends. “The Colonnade has always proved itself to be a destination asset.”

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