Never let a good crisis go to waste. That axiom underlies the revival of a landmark corporate campus in Richardson.
The crisis came from insurance giant State Farm’s 2014 move from the 800,000-square-foot campus that once was the U.S. headquarters of telecom equipment giant Nortel.
The four buildings in what was called Galatyn Park boasted great-looking glass lines and ceilings of 9 feet plus. The structures also have backup electrical service — via dedicated generators — that is atypical for office buildings.
State Farm vacated its 600,000 square feet in favor of Richardson’s CityLine, which offered more amenities that can help retain top-notch professionals.
Spear Street Capital, a real estate investor with offices on both coasts, swooped in to buy the property from Dallas-based Champion Partners, which had acquired it via separate transactions in 2010 and 2013.
Inside Galatyn’s four buildings, Spear Street added a full-service cafeteria, coffee shop, conference center, and a large employee lounge with collaboration areas, says Chris Taylor, executive managing director at Cushman & Wakefield.
“In an effort to attract a revitalized tenancy, the new owner had a chance to create a one-of-a-kind environment in the heart of one of most attractive corporate markets in the country,” he says.
What separates Galatyn are Spear Street’s improvements to the exterior, says Russ Johnson, principal at Peloton Commercial Real Estate, who handles leasing the property with Taylor.
“Social amenities include an expansive outdoor kitchen, multiple outdoor dining and meeting areas, bocce ball courts, a fire pit, bicycle checkout stations, a food-truck court, and an outdoor stage and amphitheater for large company events,” Johnson says.
The multimillion dollar overhaul, which Spear Street started in February 2016, is done except for the expected completion of a fitness center in December.
Though the complex’s occupancy was 35 percent in early March, Service King Collision Repair Centers has announced that it will move its headquarters into 64,916 square feet at Galatyn this summer.
“Galatyn Commons offered best-in-class features at a competitive market rate,” says Michelle Frymire, Service King’s chief financial officer. “The key differentiator of our new office will be the teammate-friendly amenities and layout, both in our own space, and in the complex overall.”
BUYING LOW, SELLING HIGH
For its part, Champion Partners upgraded the campus’ common areas and lobbies, along with outside landscaping during its ownership, says Steve Modory, who serves as Champion’s co-managing partner with fellow owner Jeff Swope.
In 2010, when Champion first invested in Galatyn, it also acquired a nine-story, 229,307-square-foot building just up the road at 2600 North Central.
The deal, which Modory credits to real estate veteran Jack Minter’s referral, gave Champion the Class A space for a total price and improvement budget of half its replacement cost.
When it sold what it re-branded as Tower 2600 in 2014, Champion’s upgrades to the property had increased occupancy to 97 percent.
Still, Modory tips his cap to Spear Street.
“They have done significant improvements that enhanced Galatyn’s value, allowing them to get historically high rental rates in the Richardson submarket,” he says.