Cityplace: Tower at Cityplace + Cityplace Urban Resort

[RobertB]

This just in. I didn't see a separate thread for what happens to the old 7-11 headquarters, so I'll start a new one. Let me know if it needs to be combined with another thread.

NY investor buys Cityplace tower
12:28 PM CDT on Tuesday, May 1, 2007
By STEVE BROWN / The Dallas Morning News
http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/050207dnbuscityplacesold.280cd1e5.html

A New York investor has purchased Dallas' Cityplace Tower and is preparing new plans for the building.

Ashkenazy Acquisition Corp. bought the 42-story building on North Central Expressway after several months of negotiation. The 19-year-old granite skyscraper was expected to fetch more than $130 million.

Investment sales firm Holliday Fenoglio Fowler L.P. has been marketing the building to potential buyer since last year.

Ashkenazy, a private investor which has retail buildings in Arlington and Plano, acquired the Cityplace Tower from Pennsylvania real estate investor Brandywine Realty Trust.

Officials with the new owner said it will be a couple of weeks before they are ready to talk about their plans for the building.

"I don't have a release for you yet about what we are going to do," Rick Greenberg, an executive vice president with Askenazy, said Tuesday.

One scheme the new owners have considered is turning part of the 1.3 million-square-foot office tower into residential units, real estate brokers say. Vacant corporate space in the building could also be remodeled into multi-tenant offices space.

The purchase includes the 9-acre building site, which can accommodate additional construction.

The Cityplace Tower opened in 1988 as the headquarters of retailer 7-Eleven Inc., which had about 500,000 square feet of the building. 7-Eleven is moving its offices to the new One Arts Plaza building in downtown Dallas.

Ashkenazy Acquisition Corp. - headed by investor Ben Ashkenazy - owns more than 10 million square feet of office, retail and residential properties in the U.S. and Canada. It's portfolio includes high-profile real estate including the Barney's retail buildings in New York, Chicago and Beverly Hills. The company also owns the River Center Mall in San Antonio.

The investor recently purchased the historic Union Station complex in Washington, D.C.

[Rob]

Wow.

[Milkman Dan]

I can't imagine the nightmare that would be created in trying to convert that building into residential. I also think the high-rise market will look reeeeal soft in a couple years when such a conversion would begin.

[AZDallasite]

I can't imagine the conversion to residential. All of the conversions to date have been Class B & C commercial but never before Class A. Also, I'm a little skeptical as to how much more high-rise residential can be added to the market over the next few years. As 1999 Mckinney eluded to in another thread, it's unkown how many of the reserved units currently under construction will actually close when it comes time to. Demand is lagging at The House and I wouldn't be surprised if the new owners of the Ashton try to sell those units.

[dfwcre8tive]

Maybe they should keep the tower as office and construct the other buildings on the site surrounding the tower as residential.

[vman]

Is 7-11 leaving the building so empty that the instead of leasing out the office space a residential conversion comes to mind. I ain't buyin it!!

[clipper]

Word on the street is that the residential section was presold to an Arab buyer who would convert as an investment. We'll see.

[rantanamo]

Perfect opportunity to start the "East Village" surrounding this building. Could possibly lead to a redevelopment of the suburban style strip next door(keeping those retailers of course)

[freewaytincan]

Perfect opportunity to start the "East Village" surrounding this building. Could possibly lead to a redevelopment of the suburban style strip next door(keeping those retailers of course)

exactly what i was thinking. i just don't see the feasibility of making cityplace into a residential tower (though oddly enough, i've actually entertained the notion before.) it'd be cool but it seems a bit unrealistic. either way, i'd like to see some surrounding structures be built and see the area improve in density (and maybe even height.)

[monogodo]

I can't imagine the nightmare that would be created in trying to convert that building into residential.

i just don't see the feasibility of making cityplace into a residential tower (though oddly enough, i've actually entertained the notion before.) it'd be cool but it seems a bit unrealistic.

What problems do you foresee that would preclude conversion to residential?

[freewaytincan]

What problems do you foresee that would preclude conversion to residential?

the saturation of the high-rise residential market?

[LH_Newbie]

...or atleast the high-end market...

[monogodo]

And potential saturation would preclude the conversion?

[RobertB]

I'm curious what the technical issues would be in a residential conversion. Leaving aside the market concerns, does Cityplace's newness help or hurt the conversion?

[Milkman Dan]

mono: The cost would likely be prohibitive. A retrofit from office to residential would just be really, really costly. That, combined with the lackluster high-rise market (as others said) would really make it tough to pull off. It would make the Merc conversion look relatively simple by contrast (abatement aside).

Building on the other open areas of land is more likely, IMO.

[Milkman Dan]

Robert, I believe it hurts it. It is always easier to start with a clean slate than to re-run all the MEP, etc. There is so much that would need to be re-engineered and removed before being built-out. It's actually making my head hurt thinking about it and I'm not even an MEP engineer.

[tamtagon]

Dallas Business Journal: (http://dallas.bizjournals.com/dallas/stories/2007/04/30/daily14.html)


Cityplace Tower in Dallas has been sold, and the new owners say they have big plans for the office building.

Miami-based commercial real estate company Ashkenazy & Agus Ventures and Barrow Street Capital, a real estate investment manager based in Stamford, Conn., bought Cityplace and its surrounding acreage from Brandywine Realty Trust (NYSE: BDN) for an undisclosed amount.

The new owners are planning a major redevelopment for Cityplace Tower, the former headquarters for Dallas-based 7-Eleven Inc. The new owners are planning to bring in high-end restaurants, a spa, fitness center, retail boutiques and other amenities.

Cityplace is housed on 10 acres in Uptown Dallas.

Good luck to these guys if they want to turn Cityplace East into a high-end reflection of Cityplace West. I dont think that would take hold. Volume rather than high profit margin will be the key to successful retail, residential and dining ventures which may redevelop the 9/10 acers.

Thinking big and living large, the existing tower should continue as office space, while its twin tower is built as residential.

[Mballar]

This building should remain primarily office property. I wouldn't suggest converting more than 8 - 10 floors into residential, if any at all.

[RobertB]

Nobody has mentioned Cityplace Station, the only subway station in the Southwest. Does that unique amenity make the tower more marketable as a residential redevelopment?

Mind you, I think the consensus on this forum is correct -- that the high-end high-rise residential bubble is about to burst in a very messy way. But someone has to be the last one through as the door slams shut...

(Question: what is "MEP"? I'm sure I'll go :2doh: when you tell me...)

[clipper]

If you remember, they no longer allow public access from the Dart station to the Cityplace tower lobby.

[Milkman Dan]

Any redevelopment and capital improvements to that site, whether it be a makeover with some new upper-ish end retail or a major development, would be welcome. That area needs some major money thrown at it in order to bring about some momentum for residential redevelopment in those SF7.5 and MF-x neighborhoods directly to the east.

Robert: MEP = mechanical, electrical, plumbing. Most builidng systems fall under this - HVAC, fire supression, security....

[rantanamo]

Perhaps they are wanting to do this by finally finishing out the complex. The green lawns remain. I don't think apartments with retail would do all that bad in this spot. Lots of amenities around. I'd like to see the surrounding suburban retail and theater redeveloped. Lots of potential for that immediate area, not to mention linking it with already developing areas just to the south at the terminus of Lemmon Ave.

[jsoto3]

The depth of the floor plates (from atrium to exterior wall) and its atriums make residential redevelopment problematic. It would be easier to convert to hotel.

[EastDallasLonghorn]

An excerpt from GlobeSt.com:

http://www.globest.com/news/897_897/dallas/160292-1.html

"An Agus Ventures team is in Dallas right now to weigh the redevelopment options for the 19-year-old high rise, which dipped to 60% occupancy this week when 7-Eleven Inc. finished its move to the Billingsley Co.'s One Arts Plaza in the Arts District. The sale included a nine-acre tract already entitled for multifamily development. The more immediate decision, though, will be whether to convert part of the Cityplace floors into condos. Askenazy & Agus has an affiliate, CondoMax USA, led by Michael Ashkenazy, so it's a strong possibility that the market rumor will pan out.

Holliday Fenoglio Fowler LP brought the asset to market in fourth quarter 2006. As would be expected, Cityplace Center drew offers near and far just for the value-add opportunity that it presented for redevelopment into mixed-use. And given the buyer's US portfolio, Cityplace Center is destined to play out that way too in a transition from office, conference center and a spattering of retail to a full-blown mixed-use condo development."
__________

Nobody makes a $125 Million buy without knowing exactly what they want to do with the property, so I'm sure we will hear more from Agus Ventures soon. It definitely "looks" like they are going to convert at least a portion of the tower to residential condo...

I just took a quick look at CondoMax's webpage and they describe themselves as being "created to fill the growing void for quality, affordable residences by developing realistically-priced, sophisticated condominimum-conversion projects that are within the means of most Americans."

If they do a partial conversion of the Cityplace Tower to affordable condo's (I would guess affordable would mean 2 bedrooms for less than 200K, one bedrooms for a bit less than 150K) with incredible views and direct access to mass-transit I bet they would sell like hot cakes...

http://www.condomaxusa.com/

[AZDallasite]

^somehow, I think their idea of affordable may not be the same as yours.

[RobertB]

http://www.condomaxusa.com/
Please pardon my giggles over "CondomAxUSA.com". It sounds like an anti-contraception website. "Grow your family to the Max... with CondomAx!" :2orbit:

[Lakewooder]

Some of us really want to see that stone put to use on the twin tower!

[Rob]

If they do a partial conversion of the Cityplace Tower to affordable condo's (I would guess affordable would mean 2 bedrooms for less than 200K, one bedrooms for a bit less than 150K) with incredible views and direct access to mass-transit I bet they would sell like hot cakes...

More than anything else - middle class high rise living is exactly what the city needs to promote a genuine, lively urban center and sustain the current growth trends beyond the diminishing luxury high rise market

[rosewood]

Word on the street is that the residential section was presold to an Arab buyer who would convert as an investment. We'll see.
His Highness Sheikh Mohammed bin Rashid Al Maktoum is a perfectly lovely man. Hardly worthy of racist "Arab" labels.

This building is a cinch to convert to luxury condos. It will of course be for the rich, the fabulously rich. The building is divided into atriums with separate elevator cores for each set of five floors. There can easily be at least 20 huge apartments per floor. That's over a hundred super luxury pads for just the top two atriums! The tower is actually two very thin towers with a sky atrium lobby separating the two towers every few floors.

I think this is a splendid idea. The views are utterly fantastic, and unobstructed, and the floor to floor heights would afford 12 foot ceilings with plenty of room left over for recessed low voltage par 36 accents and low voltage cove lighting! Gosh, maybe even a sought after double cove! I often wished I could live in the building when I was visiting the Penthouse (which is set up for an executive apartment for the CEO) and the views sipping cocktails were fabulous. There is PLENTY of wealthy people left and more arriving every day to snatch up these apartments. Reading the comments of some of you, one would think there are only twenty rich people in the whole town. Completely unique, unfettered views, world class architecture, Class AA Commercial quality construction, please, they'd be gone in moments. Many of the apartments would have both City Views and Atrium Views.

I'd cancel my MODALLAS pad for this premium idea. By the way, for all you youngsters out there, the tower was originally designed to not only have a twin tower across Central, but each Tower was to have three 15 story office towers flanking them in a triangular shape. The parking structure and foundation work is all ready built and in place for these three shorter towers and ready to go (similar to the Lone Stare site) and there is no reason they can't go up there, too. As for the sadly unrealized twin tower. The city ruined that with the street redesign and trolly extension to the subway. That ship has sailed. All in all, a fabulous investment and residential apartments would be a stunning addition to the Luxe apartment market.

As for all you that love to whine about how every thing is for the rich, try changing your thought process and be thankful that all these rich people are giving you these pretty buildings for you to admire from your charming one and two story bungalows and rental flats. That should cheer you up!

Rosewood.

[LH_Newbie]

As for all you that love to whine about how every thing is for the rich, try changing your thought process and be thankful that all these rich people are giving you these pretty buildings for you to admire from your charming one and two story bungalows and rental flats. That should cheer you up!

Rosewood.
I think everyone appreciates the gorgeous buildings going up in Dallas. The concern is that it takes a mix of people to support an economy. We need more people in DTD... period. If we only build for the rich, we limit our growth potential.

Are there any residential places near downtown that you can get a 2 bedroom for under $200-225K besides Live Oak Lofts? Anything taller than LoL? Guess I don't know that market...

[RobertB]

His Highness Sheikh Mohammed bin Rashid Al Maktoum is a perfectly lovely man. Hardly worthy of racist "Arab" labels.
Don't stress -- we're just jealous that he'll need apartments for both his wives.

http://en.wikipedia.org/wiki/Mohammed_bin_Rashid_Al_Maktoum
He is the third of Sheikh Rashid bin Saeed Al Maktoum's four sons. From the age of four, Sheikh Mohammed was privately tutored in Arabic and Islamic Studies. In 1955, he began his formal education at Al Ahmedia School. At the age of 10, he moved to Al Shaab School, and two years later, he went to Dubai Secondary School. In August 1966, he and his cousin, Sheikh Mohammed bin Khalifa Al-Maktoum, attended the Bell Educational Trust's English Language School in the United Kingdom.

His senior wife is Sheikha Hind bint Maktoum bin Juma Al Maktoum, whom he married in 1979. His junior wife is Princess Haya bint Al-Hussein, daughter of Hussein of Jordan and half-sister of current king Abdullah II of Jordan, whom he married on April 10, 2004.[1][2] Sheikh Mohammed has 16 children: seven sons and nine daughters.

Al Maktoum and his sons are known to be avid in the art of traditional arabic poems, arts, taking part in projects to help develop developing countries such as Jordan, Egypt, Palestine and Yemen as well as being horse and camel racing enthusiasts.
I wonder if he'll buy a box at the track (http://www.lonestarpark.com/)?

[Kelley USA]

Cityplace Buyer Planning 1M-SF Island Resort
By Connie Gore

AgusDALLAS-Ashkenazy & Agus Ventures LLC, with its new deed in hand, is planning to create an "island resort" to awaken a 1.3-million-sf sleeping beauty in the heart of the city. The team will be ready to unveil the plan in 45 to 60 days for Cityplace Center's re-branding as "the Tower at Cityplace."

Jonathan Agus, president of the Boca Raton, FL-based investment group, tells GlobeSt.com that construction will get under way this year on the 2711 N. Haskell Ave. landmark. In "executing the vision," he stresses "we're going to do the right thing." The acquisition partnership includes Barrow Street Capital, a real estate investment opportunistic fund manager based in Stamford, CT.

The Tower is being sized up for a boutique hotel component in addition to condos, retail, spa and restaurants. Agus says a significant portion of the landmark space will be kept for offices and conference areas.

"This building will be a product that the highest end consumer will be impressed with," Agus promises. "We want to be different. We are going to be different. There's a 'wow' factor we're creating here. In our minds, what we are creating is an island resort in the heart of Dallas."

Part of the vision calls for using three of the nine extra acres, now multifamily zoned, to add to the ambiance and amenities for a 43-story high rise positioned on 10 acres with a DART light-rail station on its doorstep and North Central Expressway at its back door. The land will be seeded with tennis courts, swimming pools and restaurants and retail and the balance banked for future development.

Cityplace Center was built in 1988 as 7-Eleven Inc.'s headquarters. Plymouth Meeting, PA-based Brandywine Realty Trust inherited it with the acquisition of Prentiss Properties Inc. With 7-Eleven moving its HQ from Uptown to the Arts District, the structure became the largest value-add prize in the region.

"This is an opportunity you don't find every day," Agus acknowledges, adding that the Tower could end up as a prototype for the firm's new company. "We'd love to find assets and properties that have this kind of presence in other cities. We'd love to roll out other Towers in other US cities, but the question is can we find other opportunities."

Agus and his father-in-law, Izzy Ashkenazy, pushed into the residential market about four years ago. The inroad led to the founding of CondoMax USA by Michael Ashkenazy. The next step in the evolution will be to merge CondoMax into the newly created Tower Development Co.

Agus says the Tower is envisioned as a live, work and play environment yet integrated into the community through initiatives like fund raisers for nonprofit organizations and foundations. An architect already is designing a signature entrance for the residential component. The redevelopment cost and details like condo prices and sizes will be finalized within 60 days, with each component branded in some fashion with the Tower label.

What is important, Agus stresses, is the planning team isn't locked into any pre-set notions by the market about the redevelopment. He's not even ruling out the addition of development partners. "It's open-ended. We want to send that message out there," he says. "We are considering all options."

[Milkman Dan]

So much for affordable. How can Atlanta do so many high-rises in Buckhead that start at 150+ but Dallas can't? Dallas' ultra luxe market is headin for a beating.

[AZDallasite]

^even in Miami, there are numerous projects where one can find units in the mid to high 200's. Still not affordable for most people but much more realistic than the 400K+ for a 1 bedroom which seems to be standard now in Dallas.

[elmstreetdallas]

You can find PLENTY of high-rise living in Dallas for UNDER 200K. Instead of focusing your attention on all of the high-end properties that you can't live in, why don't you concentrate on the ones you can?

(I'm pretty sure I know why.....)

But here's a list to start you out on. ALL of these have TONS of units UNDER 200K and are in absolutely PRIME locations in Dallas:

3525 Turtle Creek
3883 Turtle Creek
SOCO Lofts
Metropolitan
1505 Elm Street
Preston Towers

That should get you started.

And for those of you predicting doom and gloom for the high-end condo market in Dallas, there are quite a few factors that you're obviously not taking into consideration that make this market VERY unique.

[vman]

And for those of you predicting doom and gloom for the high-end condo market in Dallas, there are quite a few factors that you're obviously not taking into consideration that make this market VERY unique.

Like what??

[elmstreetdallas]

To start with, the current building cycle that you're seeing is making up for a 20-year period 20 YEARS!!) of a near total halt in high-rise construction (both residential and commercial) in what is now the fourth largest metropolitan area in the country.

With the exception of Uptown of course, construction in central Dallas was DEAD for 20 years. So what you're seeing is not a boom cycle, but more a making up for a 20-year backlog.

I spoke with the developer of the Metropolitan for over 2 hours. Standing on Main St. next to the building, he looked out over downtown and said, "The construction you're seeing right now doesn't even scratch the surface of what's to come."

[TexasStar]

To start with, the current building cycle that you're seeing is making up for a 20-year period 20 YEARS!!) of a near total halt in high-rise construction (both residential and commercial) in what is now the fourth largest metropolitan area in the country.

With the exception of Uptown of course, construction in central Dallas was DEAD for 20 years. So what you're seeing is not a boom cycle, but more a making up for a 20-year backlog.

I spoke with the developer of the Metropolitan for over 2 hours. Standing on Main St. next to the building, he looked out over downtown and said, "The construction you're seeing right now doesn't even scratch the surface of what's to come."

Wow, that is pretty encouraging!!!

[AZDallasite]

^what about the tear-down craze through HP, UP Bluffview North Dallas, now Far North Dallas, Lakewood etc. I don't think there was a lull over the last 20 years. I just believe most people looking in the $1M+ range would prefer to have a traditional house with a wooded lot. That is why there are still shell units available in the Vendomme which was built years ago.

[AZDallasite]

I do agree that there is some pent up demand for luxury high rise living but the level we're seeing isn't sustainable. There simply aren't that many people who can afford these price points coupled with the $1000+/month HOA fees.

[tamtagon]

So much for affordable. How can Atlanta do so many high-rises in Buckhead that start at 150+ but Dallas can't? Dallas' ultra luxe market is headin for a beating.

... (I think) the new and volumous supply of affordable high-rise dwellings didnt and couldnt really start to show up until a couple/four years swelling the high end inventory. It's a somewhat different situation in Dallas but I still think it'll play out pretty much the same. We had a couple+ years (2000-2003-ish) of talk, speculation, and advertising for a "flood" of top-of-the-market high rise condos. And three/four years later, we're seeing 90% of that high end market positioning result with a built product - The W, Azure, Ritz, Prado, Mondrian etc. Toward the end of this year, the smart and patient shoppers will begin to really work the buyers market negotiating down the inflated million dollar price tags. At that point, we'll see a dramatic rise in proposals for affordable high rise dwellings.

I think the former 7-11 HQ building is beautiful and will work great with the 'island resort' concept, but it's going to have encounter pleny of ambiance resistance in that East Dallas neighborhood.

[elmstreetdallas]

The fact that there are still shell units available at the Vendome has absolutely nothing to do with there not being enough people to afford the price point.

[RobertB]

With the exception of Uptown of course, construction in central Dallas was DEAD for 20 years. So what you're seeing is not a boom cycle, but more a making up for a 20-year backlog.
Isn't that the *definition* of a boom-bust cycle?

1. Someone identifies an unbalance of high demand and short supply. This lights a spark, and suddenly nobody can get enough. High-rise buildings, high-tech startups, savings & loans...

2. The boom overshoots, and suddenly there is more supply than demand. The market crashes, leaving nobody interested in (building, coding, lending).

3. Excess supply is gradually absorbed

4. Absorbtion eventually leads to a shortage of supply.

5. Someone identifies an unbalance of high demand and short supply. This lights a spark, and suddenly nobody can get enough. High-rise buildings, high-tech startups, savings & loans...

Lather, rinse, repeat.

[elmstreetdallas]

Try shoddy construction, promises not being kept by the builder, major HOA issues....

[elmstreetdallas]

Most boom/bust cycles don't last anywhere near 20 years.

[RobertB]

Most boom/bust cycles don't last anywhere near 20 years.
Good point. The real estate boom-bust of the '80s was brought on in part by the Savings & Loan debacle of the same period. It's a good thing there's not a banking scandal going on now.

Uh oh (http://menendez.senate.gov/newsroom/record.cfm?id=272195).

[psukhu]

As baby boomers get older, the demand for low maintenance luxury housing will increase. High end single family dwellings require a lot of maintenance. Outsourcing all the tasks required to maintain a single family dwelling may not be feasible to retired people living on a fixed income.

As a result, we are seeing an increase in retirement communities. These are luxury subdivisions with single family houses where all of the exterior maintanence is included in the HOA. The buying power of the HOA allows seniors to live in a single family luxury home without worrying about he exterior maintenance.

High rise condos are the urban equivilant of these maintenance free communities. Seniors can live on a fixed income without worrying about the costs of maintaining the exterior. High rise luxury condos are also more energy efficient compared to luxury single family houses. This is another plus for seniors on a fixed budget.

[AZDallasite]

the sub-prime mortgage meltdown is way overblown and the effect on the highend market is going to be minimal.

[mjblazin]

As baby boomers get older, the demand for low maintenance luxury housing will increase. High rise condos are the urban equivilant of these maintenance free communities. Seniors can live on a fixed income without worrying about the costs of maintaining the exterior.

Is there any hard data on this trend? I know it makes logical sense and magazines typically can find anecdotal evidence for article profiles. For a generation that spent its entire life outside the city and not having anyone else on the other side of the wall, I wonder if the personal preferences outweigh the logic. Moving into the city and multi-unit at the same time could be one step too many for many in the pool.

The retirees that could afford these units could almost live anywhere. I don't know if there is anything attractive about HOA fees to someone truly on a fixed income. Consequently personal preferences, however illogical, may have greater importance.

I wonder where the housing market is really placing its bets. Those Del Webb type communities are going up everywhere and they are the antithesis of high rise condos.

[tamtagon]

Is there any hard data on this trend?

So far, the bulk of the baby boomers are still waiting to retire, so the impact on high rise dwelling construction isnt known. One trend which is expected to continue for more than a generation is the repopulating of rural America. It was a couple years ago that our rural population stopped declining, and actually increased as it has each year since. A good percentage of the 65-70 million soon to retire baby boomers is expected to move to non metropolitian statistical areas. But, most will find something in the suburban and urban areas.

Once again, Dallas' Trinity River Park vision could play an important role to attract the retiring baby boomers with tons of disposable income. Regardless of what happens with the Trinity Parkway, the TRP has the potential to bring intown residents to Dallas from all of North America. If the 10,000 (+/-) acer park is successful to allow peace and quite for thousands of visitors at a time, in plain view of the big city, the Trinity River Park will become famous. As long as it's extremely easy to get into the park for those folks living within half a mile of the linear park, then Dallas will have it succesful park.