A New York real estate dynasty will soon own a struggling Far North Dallas tower, and they plan to keep property as office space.
Arthur Zeckendorf and his AZ Family Partners firm placed the winning bid for Preston Plaza, a 10-story office tower at 17950 Preston Road, Zeckendorf and auction adviser Cushman & Wakefield told The Dallas Morning News.
Neither party revealed the winning bid amount. The Collin County Central Appraisal District most recently valued the property at $35 million for tax purposes. Such valuations are typically below market value.
The transaction is expected to close in two weeks.
Cushman & Wakefield touted the 6.3-acre site’s potential for a multifamily development under SB 840, a new state law that allows apartments and mixed-use residential to be built in all zoning districts that allow office, commercial, retail or warehouse uses without a need for rezoning.
D-FW Real Estate News
However, Zeckendorf has no plans to build apartments here. The New York developer said the property will remain office space, citing strong metrics and its location. Commercial real estate information firm CoStar named Dallas-Fort Worth as the U.S. leader for office demand earlier this month.
Despite their history with residential projects, the cost to build new apartments didn’t make sense. Rents for condos aren’t there yet either, Zeckendorf said.
“The safest investment is to keep it as office. The office market in Dallas is probably performing the best of any office market,” he said. “We think there’s not much supply… We can charge a rent that’s very competitive, yet they get to be in a great location in a Class A building.”
The firm estimates it will spend $14 million to make improvements to the tower and some surrounding area. That figure doesn’t include any potential spending on new buildings.
Zeckendorf said they plan to make Preston Plaza into a smaller, boutique-type of office building with amenities like a health club and a coffee shop.
The partnership has hired Forge Commercial and Management to lease and manage the office building and parking.
“We want to plant more trees. We want to make it feel more residential, more like a park,” he said. “We might build some out parcels, a restaurant — something that might be an amenity.”
The north Dallas tower was built in the late 1980s and renovated in 2015, according to the listing. The nearly 260,000-square-foot building is 35% leased. Current tenants include Republic Title, Veritex Bank and Texas Health Surgery Center.
The pending purchase is among Zeckendorf’s first forays into the D-FW market. Zeckendorf is the son of William Zeckendorf Jr., who the New York Times called “Manhattan’s most active real estate developer” in 1986.
Arthur’s grandfather, William Zeckendorf Sr., was one of New York’s most celebrated developers in the postwar era.
He assembled the plot of land along the East River where the United Nations Headquarters now stands. He also owned several New York landmarks during his life, including the Chrysler Building.
Arthur has made his own name in New York real estate, particularly in the luxury residential market.
His Zeckendorf Development has partnered with Atlas Capital Group condo project at 80 Clarkson Street in the West Village. The most expensive unit was a $63 million five-bedroom condo on the 31st floor of the West Tower, The Real Deal reported in March.
“We plan to buy more [here],” Zeckendorf said. “We think this is a great place. We’re only buying in New York and Dallas-Fort Worth.”