With 'Edgy' New Project, Cawley Partners Sees A Window Of Opportunity In Plano
Cawley Partners is building a 200K SF spec office development, HQ53, in Plano on the northern edge of Legacy West. Cawley Partners CEO Bill Cawley said he thinks this new development hits a chord no one else is playing in the market.
“This is kind of our company’s idea of what we think the market really wants and nobody’s providing,” Cawley said.
HQ53 will be reminiscent of some of the projects in the West End: tech-driven, edgy and millennial-focused, but at Plano prices, Cawley said. Aesthetically, this means sealed concrete floors, high ceilings and wood beams on open ceilings.
The inspiration and the proof of concept for HQ53 is a spec suite Cawley Partners built for a company.
“We did a spec suite in one of our existing buildings and built it out that way. We just kept getting people wanting that space over and over, so I said, ‘OK, I’m going to build a building like this,’” Cawley said.
Despite feeling that the upcycle is in its twilight, Cawley is moving to get this building built in the next 16 months. His reasoning hinges upon the timing and remaining demand in the area.
“There’s very few sites left in Legacy and Legacy has already pretty much gobbled up most of the space, and most of the vacancy that was left in the market has gotten absorbed, so I think the timing is good, but we’re also coming up with something completely different from what’s there,” Cawley said.
According to him, two months ago in Legacy, Stream Realty Partners had a building somewhere between 20% and 30% leased; there was a 100K SF building 100% vacant; the Gaedeke building was sitting around 50% leased; and a building in Frisco Square had 230K SF of vacancy. Now Stream is almost fully leased and the building in Frisco Square expects to be fully leased by the end of the summer.
Cawley, who said he never wants to be zigging when he should be zagging, is confident that even as the sun sets on this cycle, HQ53 is a prudent move. Still, he does not plan to put shovels to dirt until he gets 70K SF to 90K SF of pre-leasing.
Financing on the development sits at 60% loan-to-value as is, and will go up as pre-leasing moves forward.
“When I built my first building I thought one tenant would come take the whole thing. But really the market is, you’re going to have multiple tenants looking for space, and you’re going to get sizes from 5K SF to 10K SF tenants to 50K SF and 75K SF, 85K SF and 100K SF. There’s more 50s and 60s than there are 100s, so we’re doing this with a completely different game plan,” Cawley said. “There’s more small and medium size tenants than big. My first time I did this, I chased big tenants and never got one. And so now we’ve designed a building that breaks easily for smaller tenants … but will also work well if a larger tenant comes along.”
Cawley estimates HQ53 will deliver in about 16 months judging from the activity/interest he has seen so far in pre-leasing. So far, one potential tenant is in the pre-lease negotiations process.