Remedy Medical Properties and Kayne Anderson Real Estate acquire specialty surgical hospital in Dallas-Fort Worth

Joint venture partners Remedy Medical Properties and Kayne Anderson Real Estate announced the acquisition of the 161,264-square-foot Baylor Scott & White Frisco Medical Center in the Dallas-Fort Worth suburb of Frisco. 

The two-story, 68-bed specialty hospital, located at 5601 Warren Parkway, sits on 7.4 acres and is 100% occupied by Texas Health Ventures Group, a joint venture between Baylor Scott & White (BSW), the largest non-profit health system in Texas and one of the largest in the country, and United Surgical Partners International (USPI), the nation’s largest ambulatory surgery platform. 

BSW Frisco Medical Center is a world class surgical center consistently ranked among the best in the country, featuring 11 operating rooms including two robotic surgery rooms. The hospital’s services include orthopedics, OB/GYN, labor delivery/NICU, urology, spine, radiology, and general surgery, as well as an emergency department and onsite pharmacy. The facility boasts a suite of resort-like amenities for both patients and guests, such as complimentary valet parking, private rooms, and more. Included in the purchase is the adjacent two-story parking garage.

Frisco is the fastest-growing large city in the country over the past decade, according to the U.S. Census, with a compound annual growth rate (CAGR) of 10.9%, compared to a median CAGR of 0.9% nationwide. The city’s average household income is $181,000, which is 74% higher than the national average. 

The campus location is ideal, with easy access to two of North Texas’s primary thoroughfares, the Dallas North Tollway and Sam Rayburn Tollway and within 10 miles of six major hospitals, including Children’s Medical Center Plano and Baylor Scott & White Centennial Hospital. It’s also just one mile from The Star, the headquarters and training facility of the Dallas Cowboys.

The life sciences industry is betting on Texas. Developers should too

The State of Texas is a natural mooring for life sciences companies. It has one of largest clusters of biotech and pharmaceutical professionals in the country, and a network of universities and institutions focused on building strong biochemistry, biophysics and technology-based programs designed to churn out highly skilled talent. Texas has the makings of a mature market, but a void of turn-key manufacturing, lab/R&D real estate is slowing momentum. Together, the state’s three largest metros, Dallas-Fort Worth, Houston and Austin, boast an aggregated population of over 15.5 million but only nine million square feet of inventory, a fraction of other dynamic life sciences markets.  

So, what is driving the disconnect? Texas seems to be caught in the middle of a chicken-or-the-egg riddle. While biotech companies are waiting for the arrival of new state-of-the-art facilities, developers are standing by for the arrival of biotech companies. To resolve the standoff, developers can look to evidence of the impending real estate demand to justify breaking into this technical market. There are three key trends that will ensure the continued expansion of the life sciences sector in the state, and each is reason alone to motivate new development.

Economic incentives
The Cancer Prevention & Research Institute of Texas (CPRIT) has been a substantial driver of the industry’s expansion. The $6 billion grant program has helped to recruit 285 researchers and 16 companies to the state since launching in 2007. PanTher Therapeutics is a recent example of how the grant program is supporting growth. The clinical-stage oncology company, which focuses on treating solid tumors, received $14.2 million from CPRIT to expand the development of its clinical therapies. A taxpayer-funded program, CPRIT currently has capacity to deliver significant funding grants like this through 2027.

In addition to CPRIT, the Texas Medical Center Innovation Institute funds a series of programs to support the growth of early-stage life sciences companies, providing advisory and essential amenities. Both of these programs illustrate the state’s ardent investment in expansion of the life sciences industry. As more companies take advantage of funding opportunities and state-supported services, it will be imperative that there are quality facilities in place to meet demand.

Utility infrastructure
Like real estate availability, power is a major need for life sciences companies, many of which utilize substantially more power and water than a standard office tenant. Life sciences companies are looking for reassurance that Texas power and water utilities can meet their needs given its checkered reliability history—and many local municipalities are meeting the moment. Cities throughout Texas have committed to accelerating the expansion of substations and bringing in larger water and sewer infrastructure.

CenterPoint Energy is investing and expanding its electrical infrastructure in the Texas Medical Center area, which has helped to support an expansion of TMC Innovation Factory Labs, scheduled to open sometime this year. In addition, Xcel Energy is building new substations throughout Northern Texas, another hotspot for life sciences activity in the state, to ensure the region’s power grid can accommodate growth. These are just a few of the ways utility companies are supporting the industry’s growth.

Business-friendly suburbs
Austin, Dallas-Fort Worth and Houston are expectedly in the biotech spotlight. The three cities have established life sciences networks and a ripe pool of professional talent. However, the surrounding suburbs are presenting tremendous opportunity for developers. Markets like The Woodlands, Taylor, and Round Rock have quickly captured demand due to their business-friendly environment and commitment to infrastructure support. There has been a steady migration to these metros, foreshadowing further momentum to come. With ample land for new development in these suburban areas, there is a unique opportunity to create life science campuses that most tenants prefer to settle into, being close to other likeminded companies and talent.

There are many examples of this suburban flight. In partnership with Nurix Therapeutics, Alexandria Equities is developing 12 acres of life sciences real estate in The Woodlands, representing an investment of $200 million, and NexPoint has announced plans to develop a 200-acre “cutting-edge” life science project known as the Texas Research Quarter in Plano, representing a $3.8 billion investment. . Plus, Dallas’s Pegasus Park has reimagined the former corporate campus of jeweler Zale Corp. as a life science hub, adding 135,000 square feet of lab and office space to the development, which includes tenants like UT Southwestern, TAYSHA Gene Therapies, McKesson, Colossal, ReCode, etireaRX and BioNTX Each of these projects will attract new demand from companies that support these global giants and that want to establish a presence in the area.

The expansion of the life sciences industry marks a new era in commercial real estate, with the introduction of light-industrial, technology-enabled properties. The asset class is a new horizon for the industry, and undoubtedly, forward-thinking real estate developers have an opportunity to support the industry’s expansion throughout the state. However, even the most discerning developers can overlook demand cues. Having a partner that is embedded in local market dynamics and that deeply understands the nuanced fundamentals that inform development decisions is essential to drive strategic decisions and capitalize on this tremendous opportunity.

Project Management Advisors, Inc. Senior Project Manager Grayson Mann specializes in tenant improvement and ground-up development for biotech, pharma and the distribution industries.

New industrial leasing activity remains robust in Q2 2023

New industrial leasing activity remained robust in Q2 2023, totaling 11.5 million square feet, according to recent statistics from Cushman & Wakefield.

“Demand for industrial real estate in Dallas remains strong despite the slowing economy, as evidenced by the recent big deals by Southwire and Dollar General,” said David Eseke, executive managing director and industrial tenant advisory and leasing leader for the Dallas office. “The manufacturing, aerospace and defense as well as food/beverage industries continue to be some of the most active tenant segments in the market. With the continued population growth in the DFW market, we expect absorption to continue at 2019 levels or above.”

Net absorption totaled 3.5 million square feet for the quarter with notable move-ins including Hayes Company (904,495 square feet), Kenco (489,310 square feet) and LL Flooring (457,363 square feet) (Note: Cushman & Wakefield defines absorption as when the tenant takes occupancy.)

“On the supply side, the under-construction number continues to fall as projects deliver. Most of the new product is of the bulk variety and is focused mostly in South Dallas, East Dallas and Alliance. New starts in these submarkets are unlikely but there are several smaller infill developments in core submarkets that will be kicked off later this year,” Eseke added.

The market currently has 70.0 million square feet of industrial space under construction. Development activity is focused on South Dallas (13.4 million square feet), Alliance (12.5 million square feet) and East Dallas (million square feet). During Q2 2023, 13.3 million square feet of industrial space was delivered.

The overall vacancy rate in DFW totaled 6.8% in Q2. Notable leases include Southwire, (1.07 million square feet), Dollar General (1.0 million square feet) and Kimberly Clark (874,214 square feet).

Realized® hires first independent registered representative

Realized®, a leading provider of Investment Property Wealth Management®, announced that Simon Brower, the CEO of Upstream 1031, has joined the company as its first independent registered representative. The partnership underscores Realized’s dedication to bridging the gap between real estate and the wealth management industries by offering specialized real estate experience and guidance to investors. Brower will continue to operate under the Upstream 1031 brand.

Over the course of his career, Brower has overseen the placement of more than $1 billion into DST and tenancy in common (TIC) investments. Prior to founding Upstream 1031, Brower worked as managing director at Bluerock Value Exchange, where he managed Bluerock’s 1031/DST fundraising business. During his time there, he worked closely with investors, and their trusted advisors, to provide guidance and intelligent solutions for the creation and management of Delaware Statutory Trusts (DSTs).

Brower also held leadership positions with other real estate and securities companies such as KBS and Grubb & Ellis. He received his B.A. in Economics from the University of California, Irvine, and currently holds FINRA Series 7 and 63 licenses.

Quine & Associates announces new vice president

Quine & Associates, Inc. is has announced the promotion of Vice President Angel Somkham. Angel has spent over 20 years in commercial real estate in the Dallas/Fort Worth area. She specializes in commercial real estate leasing/managing, acquisitions/dispositions and tenant representation and has been a top producer and a recipient of numerous annual awards.   

Eagle Property Capital announces disposition of multifamily asset in DFW

Eagle Property Capital Investments, LLC (EPC), a vertically integrated real estate investment manager focused on the value-add multifamily space, announced the disposition of Colinas Ranch Apartments, a 160-unit apartment community, located in Irving northwest of Dallas-Fort Worth, Texas.  The Property was acquired by EPC Multifamily Partners IV, LLC (Fund IV) and RealtyMogul 89, LLC in October 2018.

Colinas Ranch Apartments, located at 3203 W Walnut Hill Lane in Irving, was built in 1971.  EPC successfully implemented a thorough repositioning strategy that substantially improved the profitability of the value-add property.  The strategy included upgrading the apartment interiors, existing common areas and amenities, adding new amenities and services as well as implementing water and energy conservation programs. In addition, the property benefited from operating efficiencies that reduced controllable expenses by being operated together with Grand Riviera, a neighboring property.