News Article | 2/9/2007

Fast times at Victory high-rise

Well, that didn’t take long. The first office high-rise planned for Victory Park is nearly full.

Just a couple of months after kicking off the 20-story One Victory Park with a 175,000-square-foot lease from the law firm Haynes and Boone LLP, developers Hillwood and Hines have secured two other big deals: a 48,500-square-foot lease from PlainsCapital Bank and a 145,000-square-foot commitment from the accounting firm Ernst & Young.

The two new leases put One Victory Park well on its way to being fully occupied, with only about 65,000 square feet of office space still up for grabs. Sources say rental rates on the two latest transactions were in the $35-per-square-foot range.

The buffalo bank

PlainsCapital Bank, originally from Lubbock, opened shop in Dallas in 1999. Now the bank considers Dallas its home base, with about $1.2 billion of its $2.7 billion in total assets coming from the Dallas-Fort Worth area.

The bank has signed a deal for a ground-floor bank as well as corporate offices on One Victory Park’s third, fifth and 14th floors. All told, it has leased 48,500 square feet in the building.

PlainsCapital will be moving its headquarters from 2911 Turtle Creek Blvd., where it has 30,000 square feet between corporate offices and a bank branch. The bank focuses on middle-market business banking and private client services for wealthy customers. It will keep its bank branch on Turtle Creek open.

Other tenants heading for Victory Park helped compel PlainsCapital to make the move.

“When you look at the lawyers and accountants and the people they represent every day, I think it can be a real home run for us,” said Alan White, chairman and chief executive of PlainsCapital Corp.

White and Hillwood representatives began talks on the move more than six months ago. “I wanted to be sure those other guys were coming in, because that makes a hell of a difference,” White said.

As part of the lease deal, signed Feb. 6, PlainsCapital also will hang its stylized buffalo sign on the west side of One Victory Park.

“I don’t have branches on every corner; I’m not going to have that,” White said. “This is going to give me the visibility that I need.”

PlainsCapital was represented in its search by Paul Whitman with The Staubach Co.

Staubach brokers Carl Ewert and Larry Toon teamed up with CB Richard Ellis Inc.’s Phil Puckett and Chris Herrmann to represent Ernst & Young. The tenant representatives declined to comment for this story, citing confidentiality agreements.

Ernst & Young says it has not signed a final contract, and declined to comment further.

The accounting firm said in June 2006 that it was looking for a new office for its 1,200 Dallas employees working at 2100 Ross Ave. in downtown Dallas.

“While we have narrowed our options based on a variety of criteria … it would be premature to state that we have made a final decision,” the company said in an e-mailed response to queries.

Real estate sources say the accounting firm plans to occupy five floors, or about 145,000 square feet, in One Victory Park. Its current, 240,000-square-foot lease at 2100 Ross runs through July 2009. The 33-story, 844,000-square-foot Arts District high-rise previously was known as San Jacinto Tower.

The smaller surface area Ernst is set to rent in One Victory Park is likely a function of efficiency — not a sign of downsizing. Haynes and Boone is moving from a 216,000-square-foot space at Bank of America Plaza to 175,000 square feet in the new Victory building.

It’s not hard to understand why these big-name companies are opting for new space, says Bob Mohr, chairman of Dallas-based Mohr Partners. He recently represented Texas Capital Bank in its 98,000-square-foot lease at 2100 McKinney — a new, 445,000-square-foot tower on the north side of Woodall Rodgers Freeway.

“Uptown is hotter than a pistol,” Mohr says. “It’s a great time for tenants to be looking, if they want to truly upgrade their space. And a lot of companies are in a much better position to upgrade today than they were three to five years ago.”

Besides One Victory Park, which is scheduled for completion in July 2008, Plains Capital also considered Rosewood Court, a 19-story, 400,000-square-foot building in Uptown being developed by Rosewood Property Co. and CarrAmerica. Ernst & Young looked at Saint Ann Court, a 27-story, 320,000-square-foot tower being planned by Harwood International, and Two Arts Plaza, a second phase to Billingsley Co.’s One Arts Plaza in the Arts District.

Without the Ernst & Young lease in hand, Billingsley will wait for another lead tenant before breaking ground on Two Arts Plaza, said T.D. Briggs with Peloton Realty Partners, which leases the complex. The bulk of One Arts Plaza has been leased to 7-Eleven Inc. and Thompson & Knight LLP. New office and retail deals are in the works for about 20,000 of the 45,000 square feet that remain available.

One Victory Park also was designed as part of a two-building development. Given the velocity with which they leased up the first tower, Hillwood and Hines are working on designs for the second phase.

“We anticipate working to pre-lease that, and already have quite a bit of interest,” says Bill Brokaw, vice president of Hillwood Capital.