News Article | 3/19/2010

The Cordish Cos. set to revive retail and restaurant leasing activity in Victory Park


 It’s a beautiful Friday afternoon at Victory Park in Dallas, but not a single person is in AT&T Plaza outside American Airlines Center. Large video boards in the plaza blast highlights of the Dallas Mavericks’ Jason Kidd and Dirk Nowitzki and promos for Victory Park’s restaurants and bars, but nobody’s there to watch them.


The restaurant patios are empty, and across the street, on Victory Park Lane, most of the storefronts ­are locked. The Ghostbar atop the W hotel is overlooking a ghost town.


Almost a year after Hillwood, the original developers of Victory Park, began ceding control of the mixed-use project to German-backed institutional investors, the $1 billion development is now in limbo.


Its office buildings are filling up, but its retailers and restaurants have struggled, and some have pulled out. Among the higher-profile flops are restaurants N9NE and Nove Italiano and a collection of high-end retail shops called LFT.


Last April, Hillwood agreed to give up its ownership position in its Victory buildings as part of a financial deal with the investors who had provided equity for the project. So far, the new ownership group, US Treuhand, has said little about its plans to revitalize Victory Park.


But now, local commercial real estate sources say the investors plan to bring in Baltimore-based the Cordish Cos. to handle retail and restaurant leasing — and possibly more — at the development surrounding American Airlines Center and initially owned by Ross Perot Jr.’s Hillwood firm.


The mixed-use Victory is home to office buildings, condos, apartments and tenants such as the House of Blues, the Hard Rock Cafe and the W hotel.


Repeated calls over the last month to the Cordish Cos. weren’t returned.


Lance Fair of Orlando-based Estein & Associates, an affiliate of Hamburg-based Treuhand, declined to comment about whether Cordish Cos. will play a role in Victory’s future.


Fair said that re-tenanting the retail space is the new ownership’s top priority. But he declined to discuss the strategy for doing so, who might be involved, or the timetable for developing a plan. “We’re working on a number of things to make Victory a great place to be again,” he said.


Numerous sources at Hillwood referred questions about Victory to Estein & Associates. Fair said Hillwood remains the asset manager in Victory and runs its day-to-day operations, including leasing of retail space. Hillwood also maintains an office in Victory Plaza.


Office leasing has been outsourced to different leasing teams, with Cousins Properties handling leasing at Victory Plaza, Fair said, and Stream Realty Partners LP handling leasing at the 18-story One Victory Park office tower on Victory Avenue. Hillwood had previously handled leasing of the properties in-house.


One Dallas commercial real estate executive familiar with Cordish predicted the company will have a broad role if it becomes involved in Victory, and most likely take a substantial equity stake in the project. Cordish would probably handle leasing, property management and new development in Victory when the market improves, the source said. Such a move would likely completely eliminate Hillwood from involvement in Victory, the source said.


“Cordish is a full vertical operation,” he said. “They do it all.”


Seeking critical mass

Longtime Dallas restaurateur Jeffrey Yarbrough, an investor in the recently opened Naga Thai Kitchen & Bar in Victory, said the development’s new owners need to take steps to increase foot traffic.


“I will be much happier when we have some critical mass and some neighbors around us,” Yarbrough said. “Right now, it’s a little bit like being the Lone Ranger down there. We’re on a corner, by ourselves, with nobody else around us.”


Yarbrough, a past president of the Texas Restaurant Association, also served as a restaurant consultant for Victory Park in 2008. A former Deep Ellum restaurant and nightclub owner/operator, Yarbrough now runs Dallas-based bigInk PR & Marketing, where his clients include chefs, restaurateurs and other hospitality industry leaders.


After analyzing Victory’s restaurant scene, Yarbrough concluded that the area needed more affordable restaurants, and Hillwood announced plans to add about seven less-expensive eateries and a neighborhood grocery store to the tenant mix.


“The goal for Hillwood at that time was to bring in a collection of local restaurateurs to focus on more consumer-friendly, value-driven restaurants, versus the high-end glitz-and-glam experience,” Yarbrough said.


Two of those ­— Naga and the Hard Rock Cafe — have opened. Another, Neo Pizza, is scheduled to open soon. The other announced tenants, including a burger joint, a comfort-food place, a neighborhood bar and the grocery store, never materialized, even though they were in the final stages of lease negotiations when Hillwood began turning control over to the new investors, Yarbrough said.


“As far as I know, everything just got put on hold,” he said.


At Victory Tavern, General Manager Jason Smith said the place gets packed right before Mavericks basketball games, Stars hockey games and concerts at the American Airlines Center, but otherwise it’s empty. On Friday afternoon, three businessmen sat at the bar, working on laptop computers. Nobody was eating or drinking.


“When we’re busy, we’re very busy,” he said. “Right before games, we’ll be slammed. Then it goes back to being a ghost town.”


Property value success

In terms of creating property value, the Victory Park project has been a remarkable success, said Karl Stundins, area redevelopment manager for the City of Dallas Office of Economic Development


Since 1999, the year the city formed a Tax Increment Financing District for the area that includes Victory, property values have jumped from $16.4 million to $502.9 million ­— an increase of almost 3,000%, Stundins said. “In the global sense, from a property tax standpoint, the city has received more development faster than we projected,” he said.


Foot traffic in Victory should increase in the long-term with the recent opening of he Dallas Area Rapid Transit Green Line and the 2013 scheduled opening of the Perot Museum of Nature & Science, Stundins said.


“I think (the critical mass will materialize), with the quality of the buildings, as the buildings fill up with people and as there are more events,” he said. “I see the bones being there.”


As much as anything else, Victory Park’s retailers and restaurants have been hurt by bad timing, said Earl Harris, senior vice president and director of project leasing for The Weitzman Group based in Dallas.


“The issue was, you had higher-end retail and restaurant operators that came up against a downturn in the economy, and that was a bad combination at the wrong time,” Harris said. “It was too high-end, too exclusive, and it really didn’t match with what people’s pocketbooks were saying.”


The future of Victory Park’s restaurants and shops looks more promising as the project’s office space, condos and apartments fill up, Harris said. But it’s important to get the right retailers and restaurants in soon, he said.


“They can’t afford to make another mistake,” he said. “It has to be re-tenanted right, or it’s going to get the stigma that nothing works in Victory.”