Best Real Estate Deals: Rehabilitation deal of the year winner
Page was hired to rebrand The Campus at Legacy, a three-building, 1.2 million-square-foot office complex which was formerly part of the EDS Campus. See what the Dallas Business Journal has to say about this new project and the steps they took to get it built.
When EDS scaled back its presence in Plano more than five years ago, Dallas-based KDC Real Estate Development & Investments and other investors purchased 2.75 million square feet of office.
Part of the deal included a campus with more than 1.2 million square feet under roof on a 107-acre tract in Plano’s Legacy Business Park. The campus has three building clusters. Each cluster features a 300,000-square-foot main building with two 50,000-square-foot buildings to the rear.
John Brownlee, a senior vice president and partner at KDC, says that because of the size and the unique nature of the site once known as the EDS Clusters, his firm negotiated a deal that called for the electronics giant to lease back the facilities for two and a half years.
The deal gave EDS time to conduct an orderly move and KDC time to begin planning.
“What we structured was a deal that was most advantageous to both of us,” Brownlee says. “That was really designed to give us time to determine how best to bring these projects up to date and how to go to the public market with them. We spent a lot of time in the first two and a half years planning and talking to people in the market about the features that quality tenants would want.”
One of the conclusions KDC’s planners reached was that even though the Legacy Business Center and Shops at Legacy offered many services tenants would find attractive, there was still a need for some services right on the Campus at Legacy. That led to a decision to include a 1,500-square-foot café, an 8,000-square-foot fitness center and a 2,500-square-foot conference center in the amenities package.
KDC officials knew that after EDS vacated the buildings in 2008, the facilities would need extensive design upgrades and structural updates to compete in an already-competitive market. KDC launched a two-year, $15 million renovation that started at the front gates and moved throughout the project. The structures were sound, but they had not been updated in more than two decades and due to the original owner’s high security needs, they had an institutional look hunkered down behind barbed-wire fences and what the new owners described as bunker-like entrances.
The first priority, according to Brownlee, was to remove barbed-wire fences and bunker-like entryways to make the site more welcoming to potential tenants and their clients. Then the common space renovations were tackled, including a decision to convert large cafeterias in each of the main buildings into distinct entries for the multiple tenants.
With the recent relocation of the Denbury Resources corporate headquarters to the Campus at Legacy, KDC has more than 900,000 square feet of the campus under lease, putting the project at 95 percent occupancy in less than three years.
With the project nearing full occupancy, Brownlee says, “We were very pleased to get it done in this time frame. This is a lot, and it’s been all new transactions for us.”
Denbury Resources is the largest tenant in the sprawling reborn campus, but other major tenants include PepsiCo, with 93,888 square feet; St. Jude Medical, with 83,000 square feet; Bear Transportation, with 81,000 square feet; Futurewei Technologies, with 50,000 square feet; Dr Pepper, with 42,000 square feet; Lifecare, with 36,000 square feet; and North American Coal Corp. and World Ventures, with 38,000 square feet each. The Pepsi space is LEED C1 Gold Certified and Denbury Resources is seeking LEED CI certification.
Key Players: Phil Rykhoek, CEO, Denbury Resources, tenant/buyer; Jeff Ellerman, vice chairman CB Richard Ellis, broker; John Brownlee, KDC, landlord/owner, developer; Phillip Sharp and Mike Rosamond, KDC, project managers; Elaine Hamm, Plano Economic Development Board; Chuck Armstrong, Corgan, Jim Manskey and Ken Howell, TBG Partners, David Flatt, Lindsay Mathias and Kris Walsh, Page Southerland Page, architecture; Kim Hogan, HOK, Michelle Schwabauer, Entos, interior design; Jean Cairey and Nick Ryan, Jones Lang LaSalle, property managers.
Pete Litterski - Dallas Business Journal
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