Developers trying to make lemonade out of the Trump administration’s plan to offload North Texas’ federal buildings will need a lot of sugar.
The General Services Administration’s list of buildings around the country that are burning a hole in the government’s pocket included five office buildings (and one small parking garage) in Dallas-Fort Worth totalling 1.7 million square feet.
None of them provide a quick and easy path to redevelopment.
The offerings include the mammoth Fritz G. Lanham Federal Building in downtown Fort Worth as well as three buildings in downtown Dallas, ranging from from 190,000 square feet to 261,000 square feet. There’s also a 317,000-square-foot building in the Dallas suburb of Farmers Branch.
The most exciting conversion prospect is the historic Santa Fe Federal Building at 1114 Commerce Street in downtown Dallas. Dallas developer Tanya Ragan could see it becoming a mixed-use project with a hotel, office, retail and most important, a “fabulous rooftop.”
“It would be one of the best views in the city, because you’re adjacent to so many historic sites,” she said. “There are strict height restrictions and no obstructions.”
The expense, however, would be enormous. A transformation would require “incredible incentives” that city leadership might not support, she said.
The Farmers Branch building that’s home to an IRS office might be the most straightforward property from a marketing perspective, said Marcus & Millichap veteran Ron Hebert. It’s a land play.
If the building at 4050 Alpha Road was torn down, the 9.44-acre plot would be “a great size for multifamily,” he said. The suburb’s school district is more desirable to Dallas’, he added, and that community would be more likely to tolerate rezoning.
“You’d look out and see the stadium and the Green Belt. You could go walk around the college. It’s not a bad location,” he said.
While it sits on a much smaller plot — 2.87 acres — the A. Maceo Smith Federal Building could also be a land play, Ragan said. The 189,000-square-foot office building at 525 South Griffin Street was built in 1971 and last renovated almost 15 years ago.
But its proximity to the convention center is a bonus, she said.
It could also work for an owner-user like a charter school or nonprofit organization, Partners’ Steve Triolet said.
The Terminal Annex, another mid-size property on the list, could also have a second life as an updated office building, Triolet said. Ragan pointed out that parking is bad at the location, and it’s on the National Registry of Historic Places, so it can’t be easily torn down.
While downtown Fort Worth’s Fritz G. Lanham Federal Building has the benefit of a desirable location, its massive size and layout might make it an albatross of a development project.
It could be suitable for a multi-tenant conversion or repurposed into a mixed-use office space, Triolet said.
Regardless of the fate of these properties, Ragan worries they’ll mess with comps if the government opts for a fire sale.
“That is going to come up for conversation for everything else that is out there on the market,” she said.
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