Sales Team Fires Up Plan for Dallas Trophy

DALLAS-A Holliday Fenoglio Fowler LP team, outmaneuvering four of its peers, will hit the streets this week with an international marketing campaign for the 1.5-million-sf Bank One Center. The trophy space is the only Dallas carve-out from the portfolio of its soon-to-be sold joint venture owner, Trizec Properties Inc.

Sources say the 1717 Main St. landmark was excluded from the Chicago-based Trizec’s asset sale because it was already in play before the buy-out deal was inked with New York City powerhouses, Brookfield Properties Corp. and Blackstone Group. The HFF team of executive managing director Mark Gibson and senior managing directors Andrew S. Levy and Glenn Whitmore claimed the marketing coup in recent weeks in a final face-off with CB Richard Ellis, Eastdil Secured, Jones Lang LaSalle and Trammell Crow Co.

The bell will ring for offers at the end of this month, triggering a race for a best and final and a fourth-quarter closing. If sources peg it right, the CBD trophy will bring north of $200 million. Its replacement cost, they say, is at least $300 per sf.

“The Bank One Center offering will be a compelling opportunity for a number of regional, national and foreign investors as it presents the rare opportunity to acquire one of the highest quality assets ever built in Dallas at a substantial discount to replacement cost,” Levy tells GlobeSt.com. “The offering is attracting attention from investors around the country that may not have previously been active players in Southwestern markets like Dallas.”

The 82%-leased Bank One Center’s tenant roster is heavily weighted with financial, legal and insurance companies. Its top space-takers are Chase Bank in 350,000 sf, of which 100,000 sf has been subleased to financial giant, ORIX USA Corp., and TXU Energy Services, which has its 130,838 sf on the sublease market. Insiders say the bank’s lease expires in 2010 and TXU’s in 2011.

“The good news to the building is both of those leases still have time left on them,” says Gregory Biggs, senior vice president in Dallas for New York City-based Studley. “There’s plenty of time to backfill that Bank One Center space and get a real marketing effort under way.”

Biggs, who’s marketing the TXU sublease space, says interest in its five floors is running high. “The activity is such that I’m optimistic we’re going to move the space,” he says. “It’s always one of the buildings that’s considered in a class A search.”

The fact that Cleveland-based Forest City Enterprises is redeveloping one million sf right across the street into residential and retail space only lends to the offering’s value. “Our neighborhood is changing,” says Don Dowell, leasing manager for Bank One Center’s JV owners, which includes Fort Worth-based Crescent Real Estate Equities Co.

Dowell says several buyers already have toured the high rise, a design of the renowned late Philip Johnson and John Burgee Architects, as have several large tenants, particularly eyeing the naming rights that go along with the right-sized deal. “This is one of the top buildings in the country,” he says. “The bank space is special. There isn’t anything like it in the country.”

Bank One Center has location and quality. It also has upside in its vacancy. “It’s a very intriguing value-add opportunity,” says John Alvarado, senior vice president of investment sales for Dallas-based TCC. “It will appeal to a significant number of investor types. But, what we have seen in the market has been private investors with leverage being the most aggressive buyers of value-added deals.”

A value-add building can generate a wide range of offers. A key part of the formula depends on how the buyer underwrites the vacancy. Bidding logically will be aggressive, but even more so if either side of the closing table has the backing of a large lease in the making.

“It’s not just paying the price of the building, it’s having the financial wherewithal for TIs and leasing commissions,” Alvarado explains. A best-guess at this stage of the competition is it will end up in the hands of a private buyer.

Alvarado, like Levy, predicts the bidding pack will include several first-time Dallas lookers. “We’re in an environment where there are a lot of new players,” Alvarado says. The shoppers are sure to include investment groups from Australia, Asia and the Middle East as well as previous buyers and lookers from Canada, Germany and inside the US.