By Candace Carlisle
A Los Angeles-based real estate investment management firm has acquired a vacant office building, once housing operations for Dallas-based telecommunications giant AT&T, with plans to upgrade the property within the Telecom Corridor in a multimillion-dollar reboot.
Stanton Road Capital LLC acquired Campbell Glen II, a four-story, 210,000-square-foot office building at 1125 E. Campbell Road in Richardson, Texas, for an undisclosed sum. According to the Dallas Central Appraisal District, the low-rise office building was last valued at nearly $24 million. The building, which was acquired April 18, is 100% vacant after AT&T shifted its operations away from the property years ago.
The acquisition comes at a time when the future of Richardson’s Telecom Corridor has pivoted beyond just being a homing beacon for telecommunications companies such as AT&T, Ericsson and MetroPCS to a more diversified industry mix.
Two decades ago, about 85% of companies looking at Richardson, located about 13 miles north of downtown Dallas, were tied to the telecom industry, giving the area some weight behind trademarking the words, ‘Telecom Corridor,’ for the 5.5-mile stretch of the city’s portion of North Central Expressway. But times have changed.
“At the time, people said they had never seen a concentration of telecom companies like that in one place at one time and people told us, it’s not a good thing, it wasn’t sustainable,” said John Jacobs, an executive vice president at Richardson Economic Development Partnership, who spoke with CoStar News during a corporate recruitment trip in Washington, D.C.
“Now, we have a more diversified economy with financial services companies, who use technology, and State Farm Insurance’s regional campus, among others,” Jacobs said. “We’re probably more of a tech corridor than a pure Telecom Corridor, but our roots are in telecom. I think the next great innovation will happen at the intersection of existing technologies and I think this will make Richardson an even more potent area.”
That industry mix has led real estate investors seeking aging office properties to reboot into next generation space to Richardson, including the recently closed Stanton Road Capital deal, which is resulting in attracting major corporate tenants to the city.
Last year, San Francisco-based Spear Street Capital helped lure Steward Health Care System, the largest health care operator in the United States, to lease space in its revamped Galatyn Commons, a four-building office campus in Richardson. An India-based tech firm also recently decided to set up its U.S. operations hub in a former Verizon-leased property in Richardson after Q Real Estate Holdings, a Fort Worth, Texas-based real estate firm, invested millions in upgrading the office building to attract a top tenant.
Stanton Road Capital, which has owned other properties in the Dallas area, plans to re-brand and re-position the recently acquired office building once housing AT&T’s operations into an amenity-rich option for tenants seeking to set up an office in Richardson, said Clint Madison, a managing director at Cushman & Wakefield’s Dallas office.
“This property offers a tremendous amount of re-positioning opportunity,” Madison said in an interview. “We want to provide the amenities and the environment tenants are looking for to be successful in hiring and retaining talented employees.”
Not all office options have the amenities, Madison said. Those that do, like Galatyn Commons and Q Real Estate’s building at 2400 N. Glenville Drive in Richardson, have leased quickly to tenant, he added.
The redevelopment project, which is still being outlined, is expected to include a new structured parking garage to increase the parking ratio to nearly six parking spaces per 1,000 square feet of office space, a new fitness center, a grab-and-go eatery, new lobby and an outdoor space with a terrace overlooking a creek adjacent to the building.
Tim Ronan Jr., founder and managing partner of Stanton Road Capital, said Richardson continues to attract top-tier corporations and the firm believes investing capital in amenities and upgrades will “attract high-quality tenants.”
Within a few miles of the office building is the University of Texas at Dallas, long used as fertile recruitment ground for semiconductor design and manufacturing company Texas Instruments. Last week, Texas Instrument announced it planned to expand its footprint with a $3.1 billion manufacturing plant in the region.
Richardson’s lease rate sits about $2 per square foot below the market average office lease rate, which is $25.70 per square foot and benefits from proximity to DART rail stations, according to CoStar data. Recently, the city’s first speculative office building in recent years, 3400 CityLine, began landing some big office leases, including DXC Technology and Xandr, the advertising analytics arm of AT&T.
For the record:
Clint Madison and John Fancher of Cushman & Wakefield are the leasing brokers for the new landlord, Stanton Road Capital. HFF facilitated the sale between the buyer, Stanton Road Capital, and the seller, Macfarlan Capital Partners LP. Cushman & Wakefield is managing the project and Jones Commercial is the project architect. A general contractor has yet to be selected.