The Dallas commercial real estate market may not be as healthy as some fluffers would have us believe. The other night, Tina Brown told a packed audience at SMU’s Tate Lecture Series that every business is struggling today — struggling to stay afloat, struggling to figure out the new world of marketing via web and social media, struggling to figure out where the next big thing is going to be or even if there IS a next big thing on the 9% unemployment horizon. Case in point: Metropolitan Real Estate Investors LLC is struggling to keep up with their $180 million loan on Comerica Bank Tower in Dallas. Their account has been transferred to a special servicer due to a risk of default, according to Fitch Ratings and as reported in the Wall Street Journal.

Now LA-based Metropolitan has the honor of being one of the largest, most highest-profile commercial real estate assets in North Texas to be “in trouble”. And at 1.5 million square feet, it’s a doozy.

Metropolitan Real Estate Investors LLC bought the third tallest tower in Dallas in 2006 for a hefty $216 million. All you have to do is see “2006″ to know they paid peak price. The trophy granite high-rise was designed by architect Philip Johnson and his former partner, John Burgee,  and was built in 1987. According to the Journal, Metropolitan got a hefty $180 million mortgage, which they’ve been able to shoulder until now. But here’s the trouble on the horizon: a major tenant is not renewing its lease. That tenant would be Energy Future Holdings, which holds a lease until Sept. 14. Energy Future Holdings currently subleases its space to TM Advertising, who, according to the Dallas Morning News is giving a hand to Victory by moving down there. Probably got a better deal, too. TM has 200 employees.

So that leaves Metropolitan with no choice but to modify its loan, which matures in 2017. And here we fall into the Russian Roulette of real estate financing these days. The banks are trying to shed loans, not take on new and certainly do not want to re-negotiate to lower terms. Their goal is to increase reserves, not decrease, without getting the Feds on their case. So there you have it — a mess.

Reports indicate that Metropolitan’s net income in the Tower is short about 3 million.

The news even surprised George Roddy, president of Addison-based Foreclosure Listing Service. Roddy told the Dallas Morning News:

“I don’t think you can say that it means much of anything except for the fact that the commercial market has experienced a sluggishness in the last year or two,” he said. “Foreclosures have been up in the last year or two, and while they may have been leveling off, it doesn’t mean we’re out of the woods as it relates to commercial real estate.”

Commercial real estate foreclosure filings have been falling, down 3 percent from a year ago for the first five months of 2011. Compare that to a  whopping 63 percent gain in the first five months of 2010. But we are in no way out of the woods, yet.

In 2007, Comerica Inc. relocated its corporate headquarters from Detroit to Dallas and Comerica occupies the first five floors of the 60-story granite skyscraper, hence the name change to the “Comerica Building.” It was originally called Bank One Center until JPMorgan Chase acquired the Bank One Corporation in 2004, then it was called Chase Center until Comerica came to town.

For those of us who haunt these four corners almost daily, I am thrilled to learn that Central Market will be filling in the old vacated Borders location on the southeast corner of Preston Royal. Course the commercial real estate world was saying that was going to be Trader Joe’s but honestly, I didn’t believe it. Trader Joe’s belongs up at LBJ and Preston/Forest or over in Lakewood, my humble opinion. Here’s the announcement from Central Market: Plans for Fifth Dallas-Fort Worth Location,” and why the  H-E-B, San Antonio-based conglomerate is  moving into the 30,000-square-foot space (about half of the Lover’s Lane store, which I quite frankly think it too big) with a new concept that this neighborhood is going to lap up — literally:

“Research has shown us, and many of our customers have told us, that while we’re a destination store — people will drive 10, 30, even more than 100 miles to shop with us — they’d like us to be more accessible, closer to home,” says Stephen Butt, Senior Vice President of Central Market H-E-B. “By adding a new, neighborhood-friendly store design to our portfolio, we can start to better respond to our customers’ interests. We believe this is a new way to bring Central Market’s offerings to more customers in the future.”

Butt goes on to explain the company has been looking at real estate around the state, and just wanted to find the perfect location to launch its new store concept. Well, Preston Royal is about as perfect as it can get. I’ve heard the demographics surrounding those four corners actually surpass Highland Park Village, which is about as Gold Coast as you can get. Also, I was at Celebrity the other day, and they told me traffic is way down for them since Borders closed. (They also told me no Trader Joe’s going in.) So having Central Market’s new store could bring in more customers… or competition especially if it offers a cafe, which it will. The new Central Market concept store opens before the holidays — Thanksgiving — yes!

PS: I need to post the Butt family’s second home compound in Port Aransas, coming up!

Update: The Dallas Morning News reports this new Central Market will feature more kosher foods, taking on the expanded Tom Thumb at Preston Forest. Dallas is one of the most competitive grocery markets in the country, and now we know why. BTW, I would rather have seen Trader Joe’s up at Preston Forest than Natural What-Ever It Is. Went in that store once, walked out without having touched my plastic. Anyone else get it?

The Tax Doctor

Meet Tiffany Hamil Mackey. She is a Dallas attorney who wants to get tough on taxes — property taxes, that is. Tiffany is a graduate of Southern Methodist University and received her Juris Doctor degree, cum laude, from Texas Wesleyan School of Law. She attended the University of Florida, one of the top three tax programs in the nation, for her Master of Laws degree in Taxation. Yep, we’ve brought out the big guns here this year once again. Tiffany has helped thousands of property owners fight their appraisals and lower taxes and she is here for the next few critical weeks to take your questions.

By now, of course, you have received your appraisal. My guess is that few went up, few went down, most stayed the same. But look closely at what they did your values: did land go up while improvement went down? The deadline for protesting is June 1. Once again this year,  you can protest on line. When it comes to property taxes, foreclosures are your friend. Once again the chief appraiser may not exclude comparable homes that sold at foreclosure in any of the three years preceding the tax year. So that foreclosed home down the street may help lower your property value and this is one time when you embrace it.

State law also states that we can use homes sold within the last 24 months as comps, and the chief appraiser cannot exclude comparable homes that have declined in value because of the economy.

Also this year — we can arbitrate all residential homesteads and some real and personal property valued at $1 million or less and ALL residential homesteads.

That’s kind of complex, we’ll ask Tiffany to clarify.

So go get your appraisals, get yourself up off the floor, and write us here for The Tax Doctor: the Tax Doctor is IN.

Is Dallas Real Estate hopping like it’s 2006? I have an SOS request from a reader who needs a lot in the Park Cities to build a home. They are willing to pay up to $600,000 for a nice lot — maybe more for a corner? (Maybe less for being near the Tollway?) If you know of anyone with a great lot or Money Pit who needs to sell and net about this much, shoot me an email and I’ll forward it onto the builder.

Modernistas, unite! Your day has come or rather, will be here very soon, like next weekend. The White Rock Home Tour has been happening for a few years.  But next week, the tour turns thoroughly modern, benefiting Hexter Elementary, and becoming the city’s first all modern home tour. And wait ’till you see the homes coming up: like 8214 San Benito Way — be still, my heart. Talk about House Candy, if this one were on the market I think I’d be popping out of the computer.

Located in beautiful, grand Forest Hills, this modern marvel is as functional as it is innovative. The homeowners have lived at this address for many years and opted to tear down the original structure to build their dream home. But finding the right architect turned out to be a bit harder than they imagined. Then they discovered their next door neighbor and architect, Jay Matthiesen, who was able to see their vision perfectly. Jay came up with a plan that gives the homeowners a unique contemporary design with a livable family environment.

A stone walkway leads you to the impressive glass entry. Twenty-two foot ceilings with front and rear facing walls of glass allow you to see through the center of the home and fill it with light. Upon entering notice the limestone fireplace, which is the solid centerpiece of the living room. Privacy is not an issue with all that glass as a smooth stucco exterior is used on either end of the home. Uniquely designed wooden screens protect the bedrooms from street views.

With two teenagers and constant family gatherings, large rooms are needed for entertaining. A 400 square foot kitchen with oversized black marble bar meets their every need. Notice the 12 ft. wall of natural wood lined cabinetry. Upstairs a game and media room allow for additional gathering space as well as a teenager hideaway. The second floor provides spectacular views of the neighborhood and backyard oasis with pool and fire pit. Not ridiculously large, this residence is just over 5,000 square feet with 4 bedrooms and 4 full bathrooms.

Clifford Miles Welch, AIA discusses MODERNISM THEN AND NOW: the influences of post-war residential architecture

When: April 15, 6:30-8:30 p.m.
Where: Design Within Reach, 4524 McKinney Avenue Suite 103, Dallas, TX 75205.
Cost:Donations requested, which benefit Hexter Elementary.
What:Light refreshments will be provided by II Cane Rosso from 6:30 to 7:30. A speaker to begin at 7:30.
RSVP: Space is limited to 150. Reservations required at dgoltl@dwr.com.
Parking: Complimentary valet.

6th Annual Advocate Magazines White Rock Home Tour
Presented by Ed Murchison, Realtor, Specializing in Mid-Century Modern Homes, Virginia Cook, Realtors

When: April 16 – 17, noon to 5 p.m.
Where: White Rock Lake area. See www.whiterockhometour.org for confirmed locations.
Cost:$10 in advance at White Rock Coffee, GreenSpot and neighboring Tom Thumb locations. Or, $15 during the tour at any tour-home.
What: Tours with remarks by docents at five White Rock area modern homes.

Architect meet-and-greets
Where, Who, When:

Saturday, April 16
1-3 p.m.
8214 San Benito Way
Jay Matthiesen AIA, CDP, architect

3-5 p.m.
10754 Wyatt Circle
Jane Landry FAIA, architect
Dwayne Landry FAIA, architect
Ellyn Amador, architect

Sunday, April 17
1-3 p.m.
9955 Woodgrove
Jonathan Delcambre, Assoc AIA, LEED AP BD+C, home designer

3-5 p.m.
8214 San Benito Way
Jay Matthiesen AIA, CDP, architect

 

 

  Tour Map

To download a printable version of our 2011 White Rock Home Tour map click here.

Hopefully, he’s not going anywhere, maybe just closer to Cowboys Stadium? Jason Garrett just put his gorgeous Highland Park home on the market late Friday with none other than broker to the rich and famous Allie Beth Allman listing it. Asking: $1,950,000. The Ivy Leaguer (Princeton, Columbia) just got named head Cowboys coach January 6, the 8th head hocho in Cowboys history.

The traditional home is on Lindenwood, east of Byron, on a 50 by 150 lot so typical of the choice Highland Park area. It’s more than 4,000 square feet and offers the lucky buyer four bedrooms, four and a half baths, three stories, and pool. (If those walls could talk…) New-ish construction, too: the home was built in 1999 and likely updated.

On November 8, 2010, Garrett was named as the Dallas Cowboys’ interim head coach following the firing of Wade Phillips. On November 14, 2010, Garrett won his first game as Cowboys head coach, beating the favored New York Giants 33-20 in the Meadowlands. Then he led the Cowboys to a 35-19 victory, their first home win all season.

Allie Beth is also listing the Wade Phillips home over on Norway abutting St. Mark’s, listed for over three million. Thank God for these coaching revolutions — keeps our market and Allie Beth hopping! Garrett bought Lindenwood in April of 2007, gosh four years ago, and paid about $1.9.

Dallas Fed president and CEO Richard Fisher told the Dallas Real Estate Council this morning the usual rah rah Texas stuff:  Texans are uniquely qualified to turn the economy around and get a grip on the nation’s $14.2 trillion debt. Lower unemployment here. We built and can continue the greatest job-creating machine in the world, we are risk-takers, but we need to be more intellectual. Dallas, he said, needs more universities and intellectual think tanks, what he called “warehouses for the capitalist’s tools—the human mind.” And we cannot stay ahead of the game unless we create great universities, he said. He’s so right — one reason why Houston is forging ahead of Dallas is the abundance of great Houston universities, like Rice.

But I wanted the real estate juice, and I got it: existing inventory is being absorbed, thanks to the dearth of construction. And capital is no longer an issue, banks are lending — really? The central bank, he says, has done it’s job.

But here’s the sweet spot of what he said: inflation. Fisher is concerned about rising inflation world-wide that may start to push up wages in Europe and the U.S. He’s hearing talk of  pay increases of 3 percent or so in certain high value-added areas, like Washington, D.C., and there’s an inflationary dynamic building world-wide.

“We just have to be very careful not to accommodate inflation in the United States,” Fisher said.

Could very well be why some major money people are buying up real estate.