An Austin-based real estate investor and developer has made one of the biggest commercial property buys of the year in North Texas.
Capital Commercial Investments has bought the sprawling former JC Penney headquarters in Plano’s Legacy business park and plans to resume renovation of the landmark property.
The previous owners were in the middle of a $1 billion redevelopment of the 1.8 million-square-foot office campus on Legacy Drive west of the Dallas North Tollway when the property was taken over last year by a unit of Beal Bank. Beal Bank had provided more than $380 million in funding for the project.
Now Capital Commercial Investments has purchased the property — most recently called the Campus at Legacy West —and says it will immediately resume work on the massive development.
“We are going to add a lot of amenities to it to get it activated,” said Capital Commercial CEO Doug Agarwal. “We have a tenant for approximately 420,000 square feet we are working with, hoping to make a deal.
“There are so many tenants swimming in the marketplace,” Agarwal said. “We are going to see a lot of deals get made in the first quarter.”
Demand for office space in North Texas chilled starting last year when the COVID-19 pandemic hit. But real estate brokers say more businesses are now scouting the Dallas-Fort Worth market looking for big blocks of office space as their employees return from working at home.
“There is a whole number of them coming in January, February and March from California,” Agarwal said. “We have identified 15 million square feet of new office leasing requirements in the North Dallas market.”
The former Penney headquarters — built in the early 1990s for the department store chain — is the largest empty block of offices in the northern suburbs.
Penney has moved out of the buildings.
Tech firm NTT data occupies a large section of the campus. “NTT Data has expressed interest in expanding,” Agarwal said.
Along with the huge buildings, Capital Commercial acquired more than 40 acres of land surrounding those offices, which had been planned for retail, additional offices, apartments and a hotel.
Agarwal said that Japan-based Miyako Hotel is moving ahead with plans for a high-rise project in front of the existing office buildings. “The hotel will start construction in 2022 — a 14-story building with a luxury Japanese spa and a very famous sushi restaurant,” he said.
Capital Commercial did not disclose the terms of its purchase of the choice Plano property. But the office campus had previously been offered for sale with a price tag of $450 million. It was marketed for sale by commercial property brokers at Cushman & Wakefield.
Beal Bank provided a $444 million loan to finance the purchase, county records show.
The Penney campus is surrounded by the $3 billion Legacy West mixed-use development, which is home to companies including Toyota, JPMorgan Chase, Liberty Mutual Insurance and FedEx Office.
Several new office buildings are in the works in the area near Capital Commercial new project, but most of those buildings won’t be ready until 2023 or a little later.
“And they will still have cost exposure to higher prices for labor, steel and concrete,” Agarwal said. “We think the office rental rates in Legacy will be driven up $2 to $4 per square foot from where they are today.”
The huge Plano purchase is Capital Commercial’s second recent property buy in North Texas.
In early 2020, the investor acquired American Airlines’ former headquarters at the south end of DFW International Airport.
The almost 1.4 million-square-foot office complex was up for grabs after the Fort Worth-based airline moved its operations to a new campus west of State Highway 360.
The new owners have been working with businesses that will occupy remodeled space in the former airline campus
“We are having a great response at the old American Airlines headquarters,” Agarwal said. “We really love the Dallas market.”
Note: This story was corrected Saturday to reflect that the company’s name is Capital Commercial Investments, not Commercial Capital Investments.