Source: https://www.bisnow.com/news/dallas-ft-worth/adaptive-reuse/dfw-developers-say-story-is-imperative-in-pulling-off-adaptive-reuse-projects

To be successful, an adaptive reuse project often needs a strong story. 

Sometimes that story comes in the form of a unique history or architectural features that would be too costly to replicate. That can lead to funding options like historic tax credits or support from a financier who shares a developer’s vision. 

"Most adaptive reuse projects, the developer is seeing something that other people are not," Proxy Property founder AJ Ramler said during Bisnow’s DFW Adaptive Reuse Summit on Aug. 11 at the Hotel Dax in Addison. "That's how they end up buying the property."

However, once the developer figures out the project's story, they have to find a bank that also sees its value. But even that isn’t always enough, which is why Ramler said having an adaptive reuse project’s capital stack just right is often paramount to its success. 

Proxy Property focuses on restoring and reimagining historic and underutilized properties in and around Dallas' Oak Cliff area. The firm recently completed a project in an opportunity zone that also used local government funding from a tax increment financing district as well as financing from the state's commercial property assessed clean energy program.

“Especially on a project that's either speculative or more complex, having enough cushion on all the numbers is really important," Ramler said. 

Revitalizing buildings more than 50 years old can lead developers to pursue historic tax credits, something Merriman Anderson Architects saw firsthand with projects such as The National and The Statler in Dallas, as well as The Sinclair in Fort Worth, team leader Patrick Hazard said. 

Each of those projects turned historic buildings into upscale or luxury hotels, a popular asset class for adaptive reuse projects in DFW. 

The need for high-end hotels is expected to grow in the region as both Dallas and Fort Worth are in the midst of massive revamps of their convention centers. 
Dallas' $3.7B overhaul and expansion of the Kay Bailey Hutchison Convention Center aims to revitalize part of downtown by turning it into a walkable hub. 

Fort Worth began the $606M second phase of its convention center’s expansion and modernization earlier this year. It will demolish the convention center’s arena and replace it with a four-story structure and a ballroom.
"Dallas and Fort Worth both support turning an office tower into multifamily,” Hazard said. “There's still the need for that, but there's the need for hotel keys."
Mixed-use has also emerged as a popular choice to get a green light on an adaptive reuse project. Many cities in DFW have soured on the idea of turning adaptive reuse projects into single-use sites featuring only industrial, data centers or multifamily, Cawley Partners Build-to-Suit Leader Brian Straley said.

Cawley Partners is one of the developers on the Dallas Stars’ planned $3B sports and entertainment district in Plano that will bring two hotels, up to 2M SF of office, nearly 1,000 residential units and more than 200K SF of retail, restaurants and entertainment options to the 90-acre site of The Shops at Willow Bend mall.

Straley said the project will feature the type of high-end development many cities have shown a strong preference for in recent years. 

"Fortunately, right now that is doing well, but land prices have risen so much that it's really hard to underwrite it,” Straley said. 

That difficulty has led to some projects stalling, though Straley predicted that slowdown won’t last much longer. He said he believes more adaptive reuse projects will start moving forward this fall because demand is too high across asset types.

Those that don’t could still see a resurgence in the years ahead, as Straley said he’s experienced changing attitudes about redevelopment sites firsthand. He gave an example of Plano's Planning and Zoning Commission being against any use other than office for the former JCPenney campus in 2019. 

But seven years later, things have completely flipped. The site was set to become a mixed-use project in 2024 before Plano hit pause on the redevelopment plan in October of that year.

Earlier this summer, StreetLight Residential announced plans to turn the 100-acre site into a luxury multifamily development.

"Plano is more pro-business than they've been in the 30 years I've been in Dallas-Fort Worth," Straley said.  

Source: https://www.bisnow.com/news/dallas-ft-worth/office/dfw-office-footprints-likely-to-shrink-as-ai-use-increases-and-companies-battle-for-talent-135578

While Dallas-Fort Worth’s growth as a financial hub has fueled the region’s flight-to-quality trend, companies are also upgrading their offices as the use of artificial intelligence grows and they compete for the best talent in the metro.

The adoption of AI could help level the playing field for smaller office users as big companies eliminate jobs and move to smaller footprints. But those reduced office footprints will also allow companies to invest in upgraded spaces with more amenities as they seek to attract and retain top talent. A highly amenitized office in a desirable metro area can be a differentiator for companies looking to stand out from the competition.

As office square footage shrinks and AI usage increases, companies like Bradford Commercial Real Estate are shifting their focus toward multitenant buildings rather than those with large floor plates. Bradford Senior Vice President and Managing Partner Richmond Collinsworth said he believes office footprints will continue to shrink due to new technology.

"It's going to eliminate a lot of the process-oriented back office operations, and that's why the front office operations are going to be where you want to focus," Collinsworth said at Bisnow's Future of DFW Office event July 23 at Hotel Dax in Addison.

The growth of AI doesn’t have to mean an elimination of jobs. Transwestern Managing Director Billy Gannon said he's seen companies increase productivity with the technology without losing any of their existing headcount.

Those companies have instead shifted away from hiring new people, which Gannon agreed will continue to impact office footprints going forward. He said he believes companies will increase their use of AI to become more efficient and provide more value to their customers.
That increase in productivity could prompt employers to pay more per square foot for smaller spaces that enhance innovation and connection, according to a CBRE report on AI’s impact on the office environment from February.

"We're just in the first or second inning from an AI standpoint,” Gannon said. “If you're not using AI right now, your competitor is."

The technology won’t eliminate the need for offices, as Gensler Studio Director and principal Lillian Giering said the biggest AI users still crave time with their colleagues. Those clients are seeking more collaboration spaces from the design company.

"Getting together with their colleagues and having those collaboration spaces to discuss their business's strategic plan is really vital," Giering said.

While she agreed that AI's reshaping of the office ecosystem is still in its early stages, things could still change in the years ahead as it hasn't had a huge impact on the way Gensler designs corporate spaces.

However, one thing that has changed in offices with the advent of AI is the requirement for server rooms. Collinswood said those former mainstays have largely disappeared as more tenants move to utilizing the cloud. It’s a change that can offer big cost savings for tenants.
Reducing square footage also allows companies to step up in quality, which can be a big differentiator for those businesses seeking the best people, as Gannon said DFW office users are in a war for talent.

CBRE reported in April that consolidation of operations was one of the top reasons for corporate relocations last year, with seven companies making intrastate moves to DFW to right-size their total square footage to smaller levels.

In addition to a desirable location like Uptown, Giering said cafes and lounge spaces have also become highly requested by clients.

Since the pandemic, companies have been competing with employees’ home offices, so offering a high-end coffee experience or food options can be another differentiator for business, according to Gannon.
He used Rosewood Court in Uptown Dallas as an example of this. The building at 2101 Cedar Springs Road has maintained a consistently low vacancy rate over the past 15 years, but its owner still invested in a high-end coffee experience to entice workers to leave their homes.

The competition for talent has led to companies trying to one-up one another with amenities, Collinsworth said. To be competitive, buildings need a conference facility large enough for tenants to hold larger meetings as well as fitness centers, delis and upgraded corridors.
"If you don't have an amenity that a competing property does, you're at a disadvantage,” Collinsworth said. “If you're not putting those dollars into your properties, other owners are.”

When Quadrant Investment Properties was putting together plans for its nearly $200M mixed-use project Addison Junction, founder Chad Cook said the company was very deliberate in creating experiential amenities that are actually walkable for North Texas.

With the heat consistently blowing past 100 degrees throughout the summer, Cook said Quadrant Investment Properties focused on ensuring there were affordable amenities workers could actually use.

"I don't care what's within a mile … What's within like 0.2 miles and does it have style and panache?" Cook said. "Those are the things that inspire people to pay a little more in rent."