There is quite a bit of development activity going on in the North Plano/Frisco area where Legacy Business Park butts up to Stonebriar Centre. Developers have been taking advantage of the available land, favorable demographics, and close proximity to major employment centers. Included in this article is a demographic snapshot of the area, a synopsis of the nearby major employment centers, and a summary of the real estate development activity in the pipeline.Demographic Snapshot: The demographic profile for residents in this area is as follows:Population- As of the 2nd quarter of 2008, the population of this area was 12,336 people in a total of 5,027 households (avg. HH size of 2.4 people). This represents a population growth of 89% since census 2000.Ethnicity- 85% White, 2% Black, 5% Hispanic, 7% Asian, 1% Other.Income Level- Approximately 90% of residents within this geography fit into “High Income” categories. MarketAtlas breaks down the residents in this area into the following 8 categories: 42% are High Earners, 22% are Young Professionals, 15% are Upper Middle Families, 11% are Upper Middle Class, 3% are Middle America, 3% are Blue Collar, 3% are Lowest Income, and 2% are Lower Income.Major Employers: Several major employers make this an attractive area for real estate development. The following is a summary of the employment centers that can be seen in the MarketAtlas screen shot below.Retail- Stonebriar Centre is a regional mall and the main retail attraction in the vicinity. It is anchored by Macy’s, Sears, Nordstrom, Dillard’s, JC Penny & Dick’s Sporting Goods. The Centre at Preston Ridge is a big box retail center across Gaylord Parkway and includes retailers such as Super Target, Best Buy, Floor Expo, Staples, Marshalls, Old Navy, Ross, etc. Other retailers in the immediate area include IKEA, Office Max, Michaels, WalMart, Sam’s Club, Home Depot, LA Fitness, Sports Authority, Bed Bath & Beyond, Maytag, Circuit City, Office Depot, JoAnn and Lowe’s.Office- Legacy Business Park, on the south side of HWY 121, is a 2,655 acre business park that includes tenants such as the JC Penny Corporate Headquarters, Frito Lay Corporate Headquarters, Electronic Data Systems Corporate Headquarters, Lincoln Property Co., Ericsson, PepsiCo, Verizon, Cingular Wireless, Capital One, and many others. To the north of HWY 121, Hall Financial owns a 162-acre business park that houses tenants such as GE, Kimberly Clark and Levi Strauss. North of Warren Parkway, Duke Realty owns a 3 building office complex on a large site where they plan to build an additional 4 buildings.Real Estate Development Pipeline: There are 7 projects in differing phases of the development process within the subject area.Village 121- Lincoln Property Co. is planning to build an 80-acre mixed use project at the intersection of Preston Road & HWY 121. Plans include 500k sqft of retail, 150k sqft of office, a 250 room boutique hotel, and an unknown quantity of residential units. IPic Entertainment is also planning to build a 60k sqft movie theater, restaurant bar and bowling center on the site.High Street at Stonebriar- The Ainbinder Co. is planning to build a 550k sqft, $150MM mixed use project on as 35-acre site directly west of Village 121 (Parkwood Blvd. & HWY 121). Plans include 250k sqft of retail, 100k sqft of office, and a hotel. Construction is scheduled to start in early 2009 with completion in 2010. The Container Store has already been identified as a retailer.Hall Office Park- Hall Financial owns a 162-acre business park on the corner of Warren Parkway and the North Dallas Tollway. There are currently 14-multitenant office buildings complete on the site, but plans include adding up to 6 more. The 15th building (127k sqft) is scheduled for delivery in early 2009. Buildings 16 & 17 are currently in the planning stage.Dr. Pepper StarCenter & Deja Blue Ice Arena- The Home of the Dallas Stars & Frisco Thunder is currently undergoing a $40MM renovation that will add 1,500 seats, 4 luxury suites, a private club, a new concession area, and an additional parking garage. Completion is scheduled for June 2009.Centre at Preston Ridge Apartments- Westwood Residential is building 655 apartments and 15k sqft of commercial space on Parkwood Blvd. north of Gaylord Parkway. Completion is scheduled for March 2009.Post Frisco Bridges Apartments- Post Properties is building 269 apartments and 30k sqft of ground floor retail space on the southwest corner of Parkwood Blvd. and Warren Parkway. Completion is expected in March 2009.The District- Margaux Development owns a 91 acre site on the northwest corner of Warren Parkway and the North Dallas Tollway. As of February 2009, the project had been put on hold. The partnership was still deciding exactly what to build on the land, and when to start. Previous plans included building more than 6 million square feet of retail, hospitality, residential, and office space.
In Part 1, we pointed that the fundamental component to a successful development is money. In Part 2, we demonstrated that the single most important factor to the lender and the investor is the belief they will get paid back. The most reliable way to prove to investors that they will get paid back is to attract rent paying tenants to the project. The tenant is the most valuable asset in any commercial real estate development project. The tenant is the person or entity that will enter into a long-term agreement to pay rent, rent creates cash flow and cash flow help lenders and investors form a reasonable belief they will get paid back. Of course, investors also want to see tenants with long history of success, solid financials, well established brand and willing to sign a long term lease agreement. The lease agreement is probably the most important document a developer can produce. However, getting a tenant to sign a long term lease is not that easy. Remember the building(s) is not yet built and probably will not be for a couple of years.So how does a developer find these coveted tenants and get them to sign a legally binding contract to pay them rent in a building that doesn’t exist yet? Often, the fundamental component to attracting prospective tenants to a development project is location, what this author refers to as the where principle. The generally accepted mantra for putting a real estate project on the right track for success is location, location, location. Pick up any article about real estate, look at any Web site, or watch any show on television today and you will find that most real estate decisions are based on location. Location is probably the single most important factor for attracting and retaining tenants, especially, desirable, financially stable tenants.However, location is relevant to what you are planning to develop and whom you are developing the project for. As the developer, site selection or location should help you focus on the key benefits to the tenant. Application of the where principle to a prospective site will result in a detailed analysis of the market that surrounds, encompasses and makes up the development area. The surrounding demographic information and comparable, competitive project data should strongly support the new project and the intended use. Finally, it should strongly demonstrate to the tenant how the proposed site will be important to the success of the tenant’s trade or business. Focus on the location and the location information most important to the tenant and getting them to sign a long term lease agreement will be much easier.We will examine the where principle in more detail and all of the five basic principles to developing commercial real estate and how these simple principles will demonstrate how to buy the land, build the building, attract tenants, be a landlord and buy or sell a commercial real estate project.