JaRyCo Developing 102K SF Office Building In Allen

Kerri Panchuck, Bisnow Dallas- Fort Worth

Developer JaRyCo announced plans to construct 102K SF of office as part of The Farm in Allen mixed-use development off Sam Rayburn Tollway

The Class-A space, known as FarmWORK One, will take up three stories inside a building situated across from The Farm’s Central District. Future office tenants will be within walking distance of retail, entertainment, a hotel and West Lake Park. 

JaRyCo, an Allen-based developer, will develop the 102K SF office asset as part of the Farm in Allen mixed-use development at the southeast corner of the Sam Rayburn Tollway and Alma Drive. It is expected to deliver in mid-2022.

The office space is expected to include touchless features throughout the building, including hands-free, oversized elevators; HVAC systems with high-efficiency air filtration; ionization treatment and electronically monitored air circulation as well as outdoor and indoor ground-level workspaces and balconies for air on every floor. 

The Farm in Allen is a development project JaRyCo announced last summer with the land’s owner, the Johnson family of Allen.

The final mixed-use project will offer 1.6M SF of office, 142K SF of retail, a 150-key hotel, 60K SF of restaurants, and apartments and townhome units. 

For the past year, office brokers and developers have cited the need for more office development in Allen to accommodate the growing demand for space near the 121 Corridor. 

“Corporate office is the primary driver for Allen’s growth on SH 121 and exemplifies our strategy to bring quality jobs to residents,” Allen Economic Development Corp. CEO Dan Bowman said in a statement for the new project. 

The Richardson/Plano office market, which includes most of Allen and McKinney, has 12M SF in net rentable Class-A office space, compared to 22.2M SF in Class-A office space in the Dallas Central Business District alone, according to CBRE‘s Q2 2020 report.

JaRyCo hired Avison Young to assist with leasing efforts of the new office building. 

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How Biden’s First Executive Orders Will Impact CRE

Newly inaugurated President Joe Biden signed 17 executive orders, memorandums and proclamations on Wednesday afternoon, aiming to set the direction of his administration as well as undo various policies of the previous one. 

Two will have particular ramifications in commercial real estate — the extension of the federal eviction moratorium and the U.S.’ re-entry into the Paris Agreement on Climate Change.

Biden further extended the multifamily eviction moratorium, which was enacted by the Centers for Disease Control and Prevention in early fall at the direction of the Trump administration. The original order expired at the end of 2020, but was extended by the second stimulus bill until the end of January. The new order extends the moratoriums on evictions for nonpayment of rent or mortgages until March 31.

The eviction moratorium is aimed at addressing the increasingly serious matter of tenants who cannot pay their rents. More than a quarter — 28% — of U.S. renters are starting the year with unpaid rent bills from previous months, according to a new survey by Apartment List. Rent debt is concentrated among minority renters, and 53% of Black renters are now burdened with unpaid housing bills, according to Apartment List.

“Extending the moratoriums on evictions will not only protect families, but will avoid harm to the housing markets until families can once again resume housing payments,” said Joseph Lynyak, a partner at the law firm Dorsey & Whitney and an expert in regulatory reform.

Not everyone agrees.

“As an attorney representing people in the industry and being an owner of a substantial number of apartment units I find it somewhat unfair — and I understand very well the risk of being thrown out of your apartment — that this government and none of the other [global] governments are asking anyone other than landlords to contribute to the support of their customers,” said Alan Hammer, an attorney and member of the real estate practice at Brach Eichler in New Jersey.

The National Multifamily Housing Council and National Apartment Association issued a joint statement Wednesday night calling the executive order “well-intended” but saying they have “serious concerns” about the eviction moratorium being extended without additional rental relief or other financial assistance. 

In September, the NAA joined a lawsuit filed by the New Civil Liberties Alliance challenging the CDC order and the agency’s authority to issue it. The organization had been lobbying for direct rental assistance for months, some of which was eventually included in the second stimulus bill in December. Biden has proposed the American Rescue Plan, which would include further rental assistance as well as unemployment assistance and more stimulus checks. NMHC and NAA’s statement supported that proposal but said even it does not sufficiently address the outstanding rent debt.

Biden will also direct the Departments of Agriculture, Housing and Urban Development, and Veterans Affairs to extend their foreclosure moratoriums for their federally backed mortgages. 

“These emergency measures are important,” Biden’s top economic adviser, Brian Deese, said on a call with reporters, as reported by CBS on Wednesday. “There are more than 11 million mortgages guaranteed by the VA, Department of Agriculture and HUD that would be extended.”

Dees Stribling and Christie Moffat

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Eight Ways the Pandemic Changed Commercial Real Estate

The Big Question Now: Which Trends Stick?

By Katie Burke
CoStar NewsDecember 31, 2020

The coronavirus pandemic has forced the commercial real estate market into a series of seismic shifts, accelerating some trends and bringing others to a complete halt. 

It wasn’t so long ago that everyone talked about the importance of shared workspaces, community amenities in apartments and how modern-day consumers preferred experiences over stuff. Those concepts look much different in a world where social distancing is a health imperative.

The public health crisis sparked renewed interest in the suburbs, rendered in-person entertainment and travel businesses impractical and created hot commodities out of dull industrial buildings, now the nerve centers for seemingly anything that can be delivered to a doorstep. 

With 2020 now in the rearview mirror, it would be difficult to overstate how surreal this past year has been. It may, however, have a very real influence on the future.

Here are eight trends of the past year that could have lasting effects on where and how people use space:

8. Telework Accelerates As Employers, Led by the Tech Giants, Shift Workforces Out of the Office

Large technology companies including Facebook and Google emptied their offices long before any shelter-in-place orders were issued, sending employees home. As cases spread, the companies were first to extend their work-from-home policies. They began by pushing deadlines through summer 2021 and, in some cases, indefinitely. 

San Francisco-based Twitter and Square both decided in May that employees would have the chance to permanently work remotely, a shift that triggered a series of smaller companies to follow suit. 

According to CoStar data, most major U.S. cities still report less than 20% physical occupancy of office space as employees remain at home.

The bet among real estate experts is that many employers will retain flexible work-from-home policies even after workers return to the office.

7. Global Tourism Shutdown Strangles Hotel Industry

Travel bans, canceled flights, shelter-in-place orders and strict capacity limits gave the hotel industry little to celebrate in 2020. 

CoStar’s hotel research and analytics company, STR, estimates it could take up to five years for the hospitality sector to fully recover. Revenue per available room, a key metric for hotels, bottomed out after an 80% drop this spring, and average daily rates are estimated to be down by about 21% compared to last year for the remainder of 2020 for hotel properties across the country. 

While recent developments for a COVID vaccine have provided a glimmer of hope for operators, the recent surge in cases across the United States means the industry is far from any semblance of a recovery. Many expect leisure travel to boom once the virus is brought under control and people are freed from their homes but businesses could be slower to send workers back on the road now that many have become accustomed to video and online meeting options. 

6. Nation’s Most Expensive Housing Markets See Renter Exodus 

The country’s multifamily market was suddenly split between expensive urban areas and quiet suburban towns at the onset of the pandemic. As work-from-home trends evolved and renters looked to move out of costly and cramped spaces, crowded downtowns faced a drain in occupancy. 

In the nation’s most expensive apartment housing market, San Francisco, the fallout from the pandemic’s outbreak drove the multifamily vacancy rate up to a historical high of more than 11.5%, according to CoStar data. Comparatively, the national vacancy rate is 6.8%. 

Rents, especially for those among some of the high-end apartment properties, nosedived by as much as 18.3% in the tech-heavy bay city. Landlords have had to respond by offering steep concessions, with some property owners touting perks including as many as three months in free rent, internet credits, personal training sessions and allowances toward moving expenses.

Many will be watching to see if renters re-embrace downtowns once the pandemic subsides or whether the move to less crowded spaces becomes a more durable trend.

5. Companies Pause Development, Expansion Plans 

Search engine giant Google, one of the largest occupants of office space in the country, hit the pause button on operations including data centers, hiring, marketing, travel and real estate investments as pandemic-related uncertainty climbed early this year.

The move was emblematic of a slowdown in the tech industry’s rapid acceleration and leasing activity. As the healthcare and financial crises wore on, companies became increasingly prudent about their future space needs, and many decided to shrink their office footprints, put their space up for sublease or shift entirely to a remote-work model in an effort to curb costs. 

Like other tech companies, Google has started to put its foot back on the gas for development, though the new activity is still below its pre-pandemic level.

4. Biotech Growth Fuels Shift to Life Science Development 

The COVID-19 pandemic has driven historical gains in the biotech sector, pushing fast-growing companies to gobble up space and drive most of the leasing activity for markets across the country. Throughout 2020, rents for lab space rose, vacancies plunged and employment figures climbed. 

The phenomena inspired big-name developers such as Boston Properties to say they would pivotoffice development plans into new life science projects, as leasing from most office users dwindles.

According to a recent report from brokerage CBRE Group, about 14 million square feet of lab space is under construction nationally, but demand among biotech tenants outpaces what’s in the pipeline by almost 2 million square feet. 

In the nation’s top life science markets such as Boston or South San Francisco, lab space vacancy is at a historic low of less than 8%, which has given landlords the chance to drive rental rates even higher. 

3. Trophy Skyscrapers Sell At a Discount

The clearest sign of how some of the leading office sales got done in premier markets this year is the delayed and discounted sale of the Transamerica Pyramid in San Francisco, the nation’s most expensive office market. 

After years of growth driven by the city’s tech sector, San Francisco’s office market was in for a rude awakening as the pandemic spread a wet blanket over previously white-hot demand for space among both tenants and investors. In a sign of the times, the anticipated sale of the Transamerica Pyramidoffice complex was delayed by several months and eventually sold in late October for $650 million, the priciest workspace sale in the city for the year. 

While the price tag was high, it represented 10% off the $711 million purchase price that was originally agreed upon in February. Debate has now begun over whether demand will ever reach as high as it once did for space accessible only by elevator. 

One sign of hope: Facebook’s surprise decision to sign New York City’s largest office lease of the year. The social media giant agreed to move into all 730,000 square feet of office space in the Farley Building at 390 Ninth Ave., which is located in Vornado Realty Trust’s Penn District redevelopment in Manhattan next to the nation’s busiest transportation hub — this after it said in May it would transition its workforce to a remote-work model. 

2. Landlords and Tenants Spar Over Who Should Pay, And How Much

The pandemic split the brick-and-mortar retail world, showing the durability of businesses that provide essential goods such as groceries and pharmaceuticals and rendering uncertain those who products and services could be delivered online or to the home. 

Some sectors found themselves on both sides of the divide: Starbucks and many fast food establishments found their footing by focusing on takeout food while many mom-and-pop restaurants struggled to adapt to ever-changing restrictions.

The crisis left many to reevaluate their real estate footprints, sparking growing tension between landlords. Some decided to take the matter to court as part of attempts to recoup unpaid rent, fight over lease negotiations or break rental agreements entirely. 

One of the more closely watched battles involved the nation’s largest mall property owner, Simon Property Group, who sued the nation’s largest retailer, Gap Inc., over $66 million in unpaid rentstemming from forced store closures across the country. 

The legal tussle escalated with Gap later suing the landlord over failed attempts to renegotiate leases, setting the stage for similar lawsuits among struggling landlords and retailers fighting to protect their businesses in the face of massive drops in business. The pandemic is likely to lead to new lease language in the future.

1. Amazon Expands Mammoth Footprint Even Further With New Leases, Acquisitions

If e-commerce conglomerate Amazon was already on the fast track to growth at the start of this year, the pandemic strapped a rocket pack to its ambitious plans and fueled millions of square feet of new leases and commercial real estate acquisitions. 

According to CoStar analysis, the retailer was on track to expand its fulfillment capacity by 50%, or 300 million square feet, before the end of 2020, a massive spike that drove it to snap up swaths of available industrial space across the country. 

In this year’s second quarter, other retailers were facing steep revenue declines and serious headwinds. However, Amazon invested more than $9 billion in fulfillment, transportation and Amazon Web Services capital projects in that period, according to company SEC filings. 

The company is even willing to throw serious money at plans to open in premier markets including Los Angeles. The strategy is marked by its recent $200 million purchase for the site of a future e-commerce center in San Francisco.

Link to CoStar Article

3D Development To Bring $22M Hotel To Richardson Mixed-Use Project

Roughly 5 acres designated for mixed-use development in Richardson are about to undergo a major facelift that includes the creation of a $22M Element by Westin hotel.

The new hotel, which will be located at 2205 North Glenville Ave., is expected to open in 2021. 3D Development is behind the mixed-use project, while Midas Hospitality is developing and managing the 123-suite hotel.

The general contractor on the project is MW Builders. 

“3D Development is pleased to continue our partnership with Midas Hospitality on the development of the Element Hotel,” 3D Development co-founder Frank Durst IV said in a statement. “We believe the Element and future development of the residual property will be a great attribute to the Richardson community.” 

The mixed-use site will eventually feature a 25K SF fast-casual restaurant, rounding out development at the site. 

by: Kerry Panchuck, Bisnow Dallas – Fort Worth

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DFW Dominating The U.S. Net Lease Transaction Market

The Dallas-Fort Worth area leads the U.S. in net lease commercial real estate sales for the fiscal year ending in Q3, logging $3.2B in transactions, an increase of 6.4% from the previous year, according to CBRE. 

It ranks second in the nation for the third quarter of 2020 alone, booking $670M in CRE net lease sales volume during Q3, CBRE reported. 

Net lease deals involve assets with long-term leases and consistent cash flow and are defined by an expectation of tenants paying rent, taxes, insurance and maintenance, leaving minimal expenses for landlords.

While the market’s total Q3 2020 net lease investment volume plummeted 38.6% from pre-pandemic levels a year ago, DFW still remains a top spot for investors deploying capital into commercial real estate.

By: Kerri Panchuck, Bisnow Dallas – Forth Worth

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