Elm Associates JV to Redevelop $171M M-U Skyscraper in Downtown Dallas

By Scott Baltic, Contributing Editor

A stalled effort to redevelop 1401 Elm, a vacant 52-story, 1.5 million-square-foot downtown Dallas office building, into a mostly residential tower should move forward now, following the building’s purchase by a new joint venture. The project is slated to cost $171 million.

The JV, Olympic 1401 Elm Associates L.L.C., consists of Seth G. Weinstein, one of the principal owners of Olympic Property Partners, New York, and Bryan Dorsey of BDRC, a Fort Worth–based development group. The sale was announced late last week by Cushman & Wakefield of Texas, whose Scot Farber represented the seller, 1401 Elm Street Holdings L.L.C., an affiliate of Polidev International, San Francisco.

The sale price for 1401 Elm, which has been vacant since 2010, was $20 million, which is part of the total $171 million price tag, Weinstein told Commercial Property Executive. (If $20 million sounds cheap, note that when Colliers International listed the then-vacant building for sale in May 2010, the asking price was $19 million, according to the Dallas Morning News.)

The C&W release said that the City of Dallas will provide up to $50 million of tax increment financing, in which Farber also played a role.

When completed in 1964, the building, then the First National Bank tower, was the tallest building west of the Mississippi River, a C&W spokesperson told CPE.

Prior owners had intended to redevelop the building, which covers a full city block bounded by Elm, Akard and Field streets, into a mostly multifamily project, Weinstein said. The new owner’s plan calls for 500-plus apartments, 70,000 to 100,000 square feet of office space, 950 parking spaces and about 70,000 square feet of retail space, including a supermarket, he told CPE.

Renovations and amenities will include extensive updates to the exterior façade at ground level; The 9th Floor, an outdoor/indoor terrace featuring an infinity pool, restaurants and a multi-media theatre; and a public-access observation deck on the 50th floor. The Petroleum Club on the 49th floor will be refurbished into a public restaurant.

The project’s architect is Merriman Associates, of Dallas.

Weinstein noted that the relatively modest 17,000-square-foot floor plates on floors 10 through 49, with floor-to-ceiling glass, are almost ideal for apartments and perhaps better suited to them than as office space.

The building is slated to reopen in summer 2016, he said.

As an interesting aside on the building’s history, Weinstein noted that in the original 1978–91 TV show “Dallas,” J.R. Ewing’s office was supposedly in 1401 Elm, and the Petroleum Club portrayed the fictional “Cattlemen’s Club.”

Thompson & Knight L.L.P., led by Mark Weibel in Dallas and William M. O’Connor in New York, served as legal counsel to the JV in the acquisition, private-sector financing and TIF financing.