Wednesday started like most normal days, with many “to-dos” and my list of priorities in order as I hit the ground running. However, one of the events that occurred that day was anything but normal; it was the culmination of more than 10 years of work, involving a host of people and two transitions of ownership.
For a decade, our company was fortunate to be a part of a project in Lewisville called Convergence, a 185-acre masterplanned campus of office and data center buildings off State Highway 121 in Lewisville. The 831,000-square-foot development was sold on Wednesday to Digital Realty Trust. Now 96 percent leased, our job as a service provider was done. The new owner will handle the project in house; therefore, our era with this project is officially over.
As a leasing specialist for more than 25 years in Dallas, I’ve learned that real estate assignments come and go, and that is our job to help get projects leased and ultimately stabilized for sale. In other words, don’t fall in love with the real estate! Well, this project was different from the start, and many lessons were learned during a 10-year period that warrant comment.
Our involvement started in 2002 with a leasing assignment with a local developer and owner. The project had been known as the “old TI campus” and was considered to be in a more remote location northwest of Las Colinas. Lewisville was not one of the selling features for a large office/data center prospect at the time, and the vacant campus was going to be a tough sell. Property enhancements under way were geared toward tearing down some of the existing buildings on site and opening up the project with expanded parking and trying to transition away from the look of the old Texas Instruments development. During the first four years, I am embarrassed to say that we had only made two leases and had been the bridesmaid on several large deals.
The world began to change when the project was sold in late 2006 to a new owner, Brookfield Opportunity Fund. We were fortunate to survive the sale and maintain the leasing. We also were engaged by Brookfield to take on property management. They were aggressive and proactive from the start. In our very first meeting, they called our team in and challenged us to “go outside the box” and be more aggressive in recommending how to best position the asset for success. A plan was ultimately established with a new architectural team and a host of other consultants, and we were reenergized to make it happen.
Brookfield was prepared to bet on the come and spend smart money to further redevelop the site. This was unusual, as many of our clients were not willing to spend a considerable amount of money upfront and make such a significant bet. This time, it paid off. Brookfield’s incremental investment over the next five years totaled more than $20 million. Prospects and the brokerage community began to embrace the positive transition. Our job became easier, as we were no longer challenged with “selling the dream.”
Our first significant deal went down in short order—a lease to Fidelity Investments for 160,000 square feet. We had a preceding relationship with the company as tenant and owner, which helped. Part of the advantage at Convergence was an on-site electrical substation, which provided certain office users and data center providers a fail-safe environment. Additional infrastructure improvements were made over time that created even more of a competitive edge. Brookfield was front and center in a very positive way with lease negotiations, and in step with our leasing and management team on day-to-day issues. In the end, all of these elements contributed to the project’s success.
Here are my take-aways from this assignment:
• It is wise to look at every asset on its own merit. When appropriate, be willing to recommend and stand behind investing smart investment dollars up front, particularly when you see and can help validate the potential end game for an asset.
• A team approach with your client works better, because users and brokers get to know the landlord early in the process. When proven creditable, it can be the difference of getting a deal done or not.
• It’s also wise to utilize local city officials to be part of your team. From the beginning we established a very transparent relationship with Lewisville city officials, and they helped make deals.
• Hire great people and let them do their job. Our property management and engineering team has been in place since day one. Our client realized the importance of this continuity and went the extra mile to take care of them along the way.
So, it is finally a new day for the old TI Campus. Convergence is now an established brand and home to seven quality tenants—office, lab and data center users. I guess I didn’t learn too well from some early advice about falling in love with real estate, because I have to admit, a significant part of my career will always be associated with my experience at Convergence.
As executive managing director and principal, Johnny Johnson is responsible for co-leading Cassidy Turley operations in Texas. Contact him at firstname.lastname@example.org.