An Austin-based real estate investor and developer made one of North Texas’ biggest commercial property purchases of the year.
Commercial Capital Investments has purchased JC Penney’s sprawling former headquarters in Plano’s Legacy Business Park and plans to resume renovations on the historic property.
The previous owners were in the midst of a billion dollar redevelopment of the 1.8 million square foot office campus on Legacy Drive west of Dallas North Tollway when the property was taken over last year by a unit of Beal Bank. Beal Bank had provided more than $ 380 million in financing for the project.
Now Commercial Capital Investments has bought the property – more recently called Campus at Legacy West – and has said it will immediately resume work on the massive development.
“We will add a lot of equipment to it to activate it,” said Doug Agarwal, CEO of Commercial Capital. âWe have a tenant for approximately 420,000 square feet that we are working with, hoping to make a deal.
âThere are so many tenants swimming in the market,â Agarwal said. “We’re going to see a lot of deals close in the first quarter.”
Demand for offices in North Texas cooled from last year when the COVID-19 pandemic hit. But real estate brokers say more companies are now exploring the Dallas-Fort Worth market for large office blocks as their employees return from working from home.
âThere are a large number arriving in January, February and March from California,â Agarwal said. âWe have identified 15 million square feet of new office rental needs in the North Dallas market. “
The old Penney headquarters – built in the early 1990s for the department store chain – is the largest empty office block in the northern suburbs.
Penney left the buildings.
The technology company NTT data occupies a large part of the campus. âNTT Data has expressed interest in expanding,â Agarwal said.
In addition to the huge buildings, Commercial Capital acquired more than 40 acres of land surrounding these offices, which had been intended for retail, additional offices, apartments and a hotel.
Agarwal said the Japan-based Miyako Hotel is moving forward with plans for a high-rise project in front of existing office buildings. âConstruction of the hotel will begin in 2022 – a 14-story building with a luxury Japanese spa and a very famous sushi restaurant,â he said.
Commercial Capital has not disclosed the terms of its purchase of the Plano Choice property. But the office campus had already been offered for sale for a price of $ 450 million. It was listed for sale by commercial real estate brokers from Cushman & Wakefield.
The Penney campus is surrounded by the $ 3 billion Legacy West mixed-use development, which is home to companies such as Toyota, JPMorgan Chase, Liberty Mutual Insurance, and FedEx Office.
Several new office buildings are under construction in the area near Commercial Capital’s new project, but most of these buildings won’t be ready until 2023 or even later.
âAnd they will always be exposed to higher costs for labor, steel and concrete,â Agarwal said. “We expect office rental rates at Legacy to increase by $ 2-4 per square foot from where they are today.”
The massive Plano purchase is Commercial Capital’s second recent real estate purchase in North Texas.
In early 2020, the investor acquired the former American Airlines headquarters at the southern end of DFW International Airport.
The nearly 1.4 million square foot office complex was up for grabs after the Fort Worth-based airline moved operations to a new campus west of State Highway 360.
The new owners have worked with companies that will occupy a renovated space on the former airline campus
âWe have a great response at the old American Airlines headquarters,â Agarwal said. âWe really like the Dallas market. “