The Bays at Frisco, an 18-acre golf resortbetween PGA Parkway and U.S. Highway 380 in Frisco, Texas, broke ground recently. 

Partnering with California-based TaylorMade, The Bays at Frisco is a four-story, 100,000-square-foot golf lab and suites equipped with real golf equipment and technology, restaurant and bar and onsite boutique hotel.

The Bays will be a unique social and entertainment hub that blends the traditional sport with modern technology and offers great views of PGA Frisco. 

Leadership from The Bays, TaylorMade and the City of Frisco recently celebrated the official start of construction on The Bays in Frisco. Additionally, Parker and Pierceson Coody, PGA Tour players from North Texas, were also in attendance to hit the official first drives at The Bays.

The Bays is designed to generate an immersive golf experience where all ages and levels, from avid golfers to novices, are transported into a golfer’s paradise and presented with the opportunity to play across deluxe golf hitting bays and a spacious 25,000-square-foot putting green with an extensive bar. Guests can make the restaurant itself a destination with a 100-foot-wide video wall along with upscale menu options prepared by the restaurant’s professional chef. A 12,000-square-foot private membership club will be on the third and fourth floors. There will also be dedicated space for corporate suites, events and partnerships.

The Bays will feature a boutique, 19-key hotel on the third and fourth floors with suites, each with its own private hitting bay, and one- and two-bedroom rooms. Executive suites will be available for corporate events or office retreats. The boutique hotel will feature a rooftop pool with cabanas for guests.

A strong property management team has always been essential to office building owners hoping to attract and retain tenants: It’s a key benefit that helps owners set their buildings apart from competing properties. 

Today? Property management teams are even more important to the owners of office properties.

It’s no secret that the office sector is struggling today. The work-from-home movement means that many companies are renting less office space. That makes it more difficult for office building owners to fill their properties. 

Having a strong property management team in place? That’s a key amenity that building owners can tout to prospective tenants, another tool they can use to entice tenants to choose their office property over others. 

Property managers today, then, are partners to building owners, working with them to identify and meet the needs of tenants. Not only does this help building owners attract new tenants to their office properties, but it also helps them retain those tenants they already have, lowering their buildings’ vacancy rates. 

We spoke with two property management professionals in the Minneapolis-St. Paul market about how this business has evolved since the start of the COVID pandemic and what it might look like in the future. 

Here is some of what they had to say. 

Jen Nergard
Vice president
Commercial property management and leasing
Schafer Richardson
Minneapolis

Do clients expect more from their property management companies today?
Jen Nergard: Absolutely. We are a privately held company. With that, we have assets that we manage in our REIT and outside our REIT. The majority of our decisions are made by those in our office who work with Schafer Richardson. This means that we can be nimble and adjust to what we are seeing in the market today. We understand that it is a tenant’s market, so we have adjusted to that.

What does that mean? You have to respond in a way that allows the tenants to call the shots. If you want that tenant to remain in your building, you have to make sure that they understand that you are working for them, working to meet their needs.

Are tenants taking more ownership over their spaces?
Nergard: Yes. Especially in our office portfolio, we see tenants who want to draft their office-improvement plans without a lot of oversight from their landlords. They are open to feedback and oversight, but a greater number are self-performing. They want to tell landlords what they want to see, and they want their landlords and property management teams to deliver.

It comes down to how badly landlords want the work. What are you as a landlord willing to do to get that deal done? Tenants might have specific requests relating to HVAC or lighting. They might be focused on the adaptability of document storage or of using storage space in a different way. Landlords and property managers need to work with tenants to meet these needs.

Want are tenants looking for today from their property management teams and landlords?
Nergard: Because it is a tenants’ market, they can largely call the shots. The property manager has to ensure that everyone knows what an individual tenant wants from the building. Whether we are managing an A, B or C building, that is key. Some tenants want to pay extra for all the amenities and services, including fitness centers, outdoor spaces and conference rooms. They expect a certain level of service from their building’s landlord and property management team. Others just want to be in a building that offers free parking. They don’t care as much about those other amenities.

For a property manager, it’s important to understand the driving factors that motivate tenants to stay in a space. That is the focus I see from the best property management teams. They understand what tenants want and work to deliver that. It’s the specificity of managing the available dollars down to the penny so that tenants get the best bang for their buck. They want tenants to be happy with what the cost is at the end of the year.

I know that a strong property management team is an important amenity for any building. What makes a property management team a strong one?
Nergard: It’s about understanding the goal of the ownership group of a particular building. What is the goal to attract and retain tenants? Once a team understands that its members can focus on delivering. The efficiency and quality of the management team can develop from there.

Is it more difficult for building owns to retain tenants today?
Nergard: It boils down to what the tenants need out of the building. Can they grow in that building? A tenant might need a certain amount of square footage today but might want to grow into more space in a year or two. Are we able to write the lease with that kind of looseness in mind? Or maybe we aren’t heavily marketing space next door so that one day that tenant can move into it. That might keep that tenant in place.

It really is about understanding what tenants need and desire. If we see a small business that is in growth mode in one of our buildings, we will do whatever we can to retain them. That includes trying to help them plan for their future.

How closely do strong property management teams work with landlords?
Nergard: Very closely. For instance, some tenants went dark during COVID. They didn’t have policies in place saying that workers needed to be in the office at least two or three days a week. We are aware that those spaces might be available soon. We are watching those leases. We are planning from a landlord’s perspective: What if those tenants are not going to renew their leases? What will be a good fit for that space?

We are having conversations with our landlord like this sometimes on a weekly basis. It’s about being proactive.

How has evolving technology changed the job of property management teams?
Nergard: It is so important. But it can also be tempting to invest in technology just to say that you’ve invested in it, even if your building doesn’t need it. If you buy into every platform out there, it gets to the point where you are being inefficient with your dollars. We do buy into certain platforms, though, that we know help us manage our properties more efficiently.

For instance, platforms that allow tenants to easily pay their rent each month boost efficiency. Those are more of a standard today. Technology that improves a building’s security is important today.

The more tenants we get who pay their bills automatically online, the more efficient we can be. We are not investing our managers’ time in collecting rents. I’d say we have 60% to 70% of our tenants on online payment systems. We would like to see it even higher. Some businesses just prefer to physically write that check each month. They might never change. We, though, want to make it easier for tenants should they want to skip that step.

How about green issues? Are more tenants and building owners interested in more energy-efficient properties?
Nergard: It depends on the tenant and their business. We do, though, focus on how we can lower the utility costs in a building. We encourage tenants to take the steps necessary to lower a building’s utility bills. It’s the same with recycling. We encourage tenants to increase their recycling efforts naturally. It’s about educating the tenants. It’s important that we provide the education and communication necessary so that tenants now how they can boost the efficiency of the buildings.

Mel Schultz
Manager
Clarity Commercial
St. Louis Park, Minnesota

How has property management evolved during your time in the business?
Mel Schultz: Communication has become more and more important. It’s so important to be in regular communication with building owners and tenants about their concerns and needs. For instance, tenants today are very concerned about their rental costs going up. Building owners are worried about insurance costs. Insurance premiums are going up in Minnesota and across the country.

You need to be in contact with tenants and building owners about the issues they are facing. Coming out of COVID, there is a really strong sense of needing to be more communicative and in touch with your tenants. By doing this, we can help building owners build their relationships with their tenants. We can help owners and tenants understand what is going on, let them know that we are taking care of the issues that matter to them. We can communicate with them about the steps we are taking to help the buildings they own or occupy.

I like this. It’s how we have always run our business. That strong communication helps build a relationship. Ultimately, when that happens, tenants stay longer in a building.

Does a strong property management team make a building seem more attractive to tenants?
Schultz: It does. Remember, we also work with our tenants and owners on security issues. That is an important topic in Minneapolis today. There is a bigger push from tenants for cameras and access systems. They are concerned about the safety of their workers. When a new tenant moves in, it’s important for us to quickly let everyone in the building know who they are. If we know that a vehicle is going to be left overnight in the parking lot, we need to communicate that information to tenants. It’s about making sure that everyone in a building knows what is going on in that property.

How have the expectations of tenants changed over the years?
Schultz: Tenants are more involved today. It’s great. There is not so much of a gap between tenants and property managers. I think that the global pandemic created such a need for everybody to communicate better with each other. During COVID, everyone wanted to know what property managers and building owners were doing to keep things clean, to keep people six feet away from each other, to keep everyone safe. That expectation of increased communication hasn’t gone away. COVID was a bit like a global reset for everyone. There is good and bad that comes with that. One of the good things? We all communicate with each other on a more consistent basis now.

How does Clarity set itself apart from other property management firms?
Schultz: We are a lot more hands-on. We try to keep our portfolio size as manageable as we can. If we don’t overextend ourselves, it is easier for us to have those touchpoints with our tenants. We want to make sure that our tenants and building owners can get in touch with a live person. There is always a live person on-call who answers calls. People won’t get a recording. People like that. People want to talk to people.

We are blessed with our clients. We have awesome clients. They appreciate the communication and education that we provide them. They feel good that someone is taking care of their investment.

How do you communicate with your clients?
Schultz: We don’t do a lot of surveys. But we are often on site and talking to tenants. We’ll talk about projects and lease renewals. We’ll talk about community events. We’re often there during fire drills. If you have enough of these activities at a property, and you do it right, you can have those touchpoints without sending everyone a newsletter. I always find that in-person contact is so much stronger than sending newsletters or emails. It helps build rapport and relationships.

How important has evolving technology been to property management?
Schultz: It’s been so important. You have building automation systems and security systems that so many tenants want today. You have technology to help monitor buildings’ energy usage. You can remotely check to make sure the trash was picked up on time. You can put security systems in place that make your tenants feel safer.

Energy efficiency is an important issue, too. There are some new efficiency requirements coming down the line concerning benchmarking where your building is when it comes to its carbon footprint.

Systems that monitor the temperature and energy use in a building can be important to us when we receive calls from tenants. A tenant might call saying that a worker feels hot or cold. If we have the temperature set at 68 to 72 degrees in a building, we can go that tenant with facts, instant facts, and say that the temperature is OK, that is outside of any reasonable expectation to tweak it further. The person who is uncomfortable either has to wear a jacket or shorts.

That comes back to communication. The more sophisticated systems with online controls that allow you to remotely monitor and access them? It’s a huge improvement over what we had to do in the past.

 JLL Capital Markets announced today that Kobalt Investment Company LLC, a Dallas-based commercial real estate investment firm, has acquired a controlling interest in the Rio Norte Shopping Center, located in the high-growth border town of Laredo, Texas.

Kobalt partnered with Dallas’ Stonefield Investment Advisors LLC and San Antonio’s Espada Real Estate to acquire the 222,291-square-foot Class A retail center. JLL represented the seller in the transaction.

Located directly off Interstate 35, the center is in the heart of Laredo’s retail core that includes one of the nation’s top Walmart Supercenters and the Mall del Norte, a 1.2 million-square-foot super-regional mall. Anchored by the top-performing Ross Dress for Less in Texas, Rio Norte Shopping Center is also home to Michael’s, Petco, Dollar Tree, Shoe Carnival, Five Below, dd’s discounts, Spec’s and more.

JLL’s Retail Capital Markets Investment Sales and Advisory team was led by Senior Managing Director Adam Howells and Associate Matthew Barge.

After years of turbulence, the future of the office sector is now clearer than it has been for some time. Investors who once adopted a wait-and-see approach are gradually coming to terms with the new realities of valuations and office utilization, according to the June U.S. office market report from CommercialEdge. 

Most metrics that track office utilization have plateaued in the last year. Kastle’s closely tracked Back to Work Barometer has not seen any significant recent increases in the top 10 surveyed markets. Remote and hybrid work have become the standard for many firms, and this trend appears increasingly permanent. Further compounding problems for office owners is that The Fed now expects to cut the benchmark interest rate just once this year. With many owners looking to extend or renegotiate loans, rates remaining elevated for longer than expected spells trouble.  

The anticipated wave of distress has still not materialized, with many factors causing pain in the office sector to slowly reveal themselves rather than hit all at once. Lease terms that can stretch up to 10 years mean that some tenants are still locked into pre-pandemic agreements and have yet to make an official decision on downsizing. Additionally, the process of negotiating extensions and modifications can take months.  

According to Trepp, 6.9% of office CMBS loans were delinquent in May, up from 4% in May 2023. Our office real estate outlook predicts that distress will continue to become more noticeable through at least the end of next year.  

The lack of comparable sales might have also contributed to slower sales activity. In 2021 and 2022, there were about 4,000 office transactions each year. Last year, sales fell by half to just over 2,000.  

As of May this year, there have been 600 sales, an increasing number of which are being sold at discounts. In 2023, over 20% of office buildings sold for less than their previous purchase price. In 2024, this figure has risen to nearly 30%. 

One silver lining for owners of existing office buildings is that the new office supply pipeline — competition for tenants in a weak market — will soon dry up, according to office real estate outlooks. Around 80 million square feet are underway currently, a figure that is much lower than in pre-pandemic years and one that will shrink further as projects deliver.

To date, CommercialEdge has recorded only 6.2 million square feet of new office construction in 2024. 

The national average full-service equivalent listing rate was $37.72 per square foot in April, an increase of six cents from the previous month, but down 1.7% year-over-year, according to our latest U.S. office market report. 

The rates for A and A+ office spaces have decreased by 4.3% from last year, currently standing at $44.91 per square foot. Class B office rates have inched up by 0.5% to $30.52 per square foot, and Class C spaces have seen an increase of 1.2% to $23.65 year-over-year in May.  

Offices in Central Business Districts have experienced the most substantial decrease in rents, falling by 6.9% year-over-year to $47.64 per square foot. Meanwhile, urban offices saw a year-over-year uptick of 1.8% to $44.89 per square foot, whereas suburban office spaces decreased by 1% year-over-year to $30.62 per square foot. 

The national office vacancy rate was 17.8%, an increase of 80 basis points year-over-year. The U.S. office vacancy rates have increased sharply in tech markets since the turmoil that upended the industry at the end of 2022. Some of the highest rates were recorded in San Francisco (25.2%, up 510 basis points year-over-year), Seattle (23%, up 350 bps) and the Bay Area (20%, up 230 bps). 

Evelyn Jozsa is a creative writer covering commercial real estate trends and insights in the U.S. for CommercialEdge. She has been covering the CRE industry since 2017. Reach her via email.

 JLL Capital Markets announced today that it has closed on the sale of 11000 Equity Drive, a 63,693-square-foot, Class-A office building in West Houston, Texas.

JLL represented the seller in the transaction. Satterfield & Pontikes Construction, the original developer of the property, purchased the asset with plans to occupy the entire facility.

Completed in 2006 and renovated in 2019, 11000 Equity Drive is a state-of-the-art, three-story building with efficient floorplates and modern design.

The property is situated within the 150-acre Westway Park, which is located just off the Sam Houston Parkway in West Houston. This location provides tenants accessibility to all of Greater Houston’s employment hubs and easy access to some of Houston’s most prestigious residential communities, including the Memorial Villages and Tanglewood. Additionally, 11000 Equity Dr. is close to an abundance of retail, dining and entertainment options as well as a handful of business class hotels.

The JLL Capital Markets Investment Sales and Advisory team was led by Senior Director Rick Goings and Senior Managing Director Jeff Hollinden.

Austin Regional Clinic (ARC) has embarked on a transformative project to replace a prefabricated metal building at its Ben White Boulevard location with a two-story, state-of-the-art medical office building. The Central Texas healthcare provider hired Lawrence Group Architects to perform a feasibility study and design for the new building.

Lawrence Group began the project by performing a detailed feasibility study of existing buildings on the site and assessing the area for programmatic and infrastructural conditions. The study informed ARC administrators to opt for a new building, bypassing a costly adaptive reuse option.

The 63,000-square-foot project will mark ARC’s debut of an Ambulatory Surgery Center which will occupy half of the clinic’s first level. The remainder of the building’s space will feature a comprehensive suite of specialty care services such as dermatology, podiatry, cardiology, musculoskeletal, gastrointestinal and more.

Currently progressing through the City of Austin’s permitting approval process, construction on the medical office building is expected to begin in July 2024.

The patient-centered design incorporates locally sourced materials, such as the use of limestone veneer with dark metal panels to reflect ARC’s community-focused values, plus wood panels throughout the interior that provide a welcoming ambiance for patients and staff alike.

The project is designed to achieve an Austin Energy Green Building (AEGB) 3 Stars rating through the use of sustainable materials, energy efficient systems, and natural daylighting.