DALLAS—A whopping amount of office space in Midtown is in the works. It is part of a transformational project that will create a live-work-play environment featuring luxury residences and shopping, dining and entertainment areas within a walkable community.
The development, which will feature two class-A office towers with anchor retail and entertainment space of up to 1 million square feet, is part of Seritage's planned 23-acre mixed-use project within the 430-acre Dallas Midtown Redevelopment Zone. Seritage Growth Properties, a national owner and developer of retail and mixed-use projects, and KDC, a developer of corporate office campuses, are partnering to develop the project. Seritage is also considering adding a hotel attraction and other community amenities.
The site of this creative mixed-use project is the former Sears store at Valley View Mall, which is in the well-known Galleria area. The new development will be situated at the intersection of the LBJ Freeway and Preston Road, providing convenient access to the area's major thoroughfares. The project will stand out as a landmark while still blending into the surrounding community, says Bill Guthrey, senior vice president and partner at KDC.
“Preston Road and LBJ Freeway frontage road is an iconic address in Dallas/Fort Worth,” Guthrey tells GlobeSt.com. “The city of Dallas has done a great job of reimagining what this area can be with its master plan for Preston Road all the way to the Galleria. In this project, there is a hyper-focus on softening the hard edges. It has an urban design and feel, but it is greener urban with green rooftops and spaces. That's the beauty of starting from scratch to create the street grid, looking inward to the 18-acre park. The park will be three times the size of Clyde Warren Park.”
Dallas Midtown is a 40-block 430-acre mixed-use development surrounding the former Valley View Mall. This large-scale development will be constructed in three phases with the initial phase anticipated to be fully operational by the beginning of 2021. Seritage owns the former Sears store at the mall and is working with KDC on a site plan application that will be filed shortly with the city of Dallas.
“Seritage's plans are going to be a transformational project that converts the Sears site into a highly productive office and first-class retail, dining and entertainment destination,” said James Bry, executive vice president of development and construction at Seritage. “Together with KDC, we look forward to working in close collaboration with the city of Dallas to bring our vision for this innovative mixed-use development to life.”
Seritage Growth Properties is a publicly traded self-administered and self-managed retail REIT with 230 wholly owned properties and 28 JV properties totaling more than 40 million square feet of space across 49 states and Puerto Rico. Pursuant to a master lease, 175 of the company's wholly owned properties are leased to Sears Holdings and are operated under either the Sears or Kmart brand. The master lease provides the company with the right to recapture certain space from Sears Holdings at each property for re-tenanting or redevelopment purposes. At 83 properties, third-party tenants under direct leases occupy a portion of leasable space alongside Sears and Kmart, and 37 properties are leased only to third parties. The company also owns 50% interests in 28 properties through JV investments with GGP Inc., Simon Property Group Inc. and The Macerich Company. A substantial majority of the space at Seritage's JV properties is also leased to Sears Holdings under master lease agreements that provide for similar recapture rights as the master lease governing the company's wholly owned properties.
Within the last 28 years, Dallas-based KDC has produced approximately 33 million square feet valued at more than $7 billion. KDC's portfolio includes developments for Toyota North America, Liberty Mutual, State Farm (Dallas and Atlanta offices), FedEx, Raytheon and JP Morgan Chase.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
