City of Richardson study to provide ideas for flex redevelopment

01/31/2013

Richardson’s history and growth as a technology city is reflected in its abnormally large inventory of office-showroom or “flex” space. That product is typically a single-story building with 50% or more office space but adaptable to other uses, including a lab, test center, assembly floor, product demo space or storage. Flex buildings often have an overhead door or even a dock.

 

The first “spec” buildings in Richardson were built in the 1970s by Vantage Companies under the direction of Ernest Randall, Jr. The product proved to be very popular among engineering and technical companies that supplied products or services to Texas Instruments, Collins Radio and later to Nortel, Alcatel and Ericsson. Ericsson itself was a prolific user of flex space, occupying a number of flex buildings south of Arapaho.

 

Business was good, and vacancy rates fluctuated in a healthy 6% to 10% range for decades through the 1990s. More flex space was built, particularly in the East Arapaho/Collins area, until the total inventory reached over 10 million square feet – as much flex product as in Plano and Garland combined!

 

When the tech downturn occurred starting in 2001, the big telecom companies changed their business models, utilizing overseas outsourcing to more cost-effectively meet their supply needs. Flex vacancies soared, eventually reaching over 30%. Over 3 million square feet of vacant flex space constituted a significant lost economic opportunity.

 

Recognizing that, in 2009, the Richardson City Council designated the East Arapaho/Collins area, the heart of Richardson’s flex space inventory, as one of six key areas in the city to study for enhancement and redevelopment opportunities. The boundaries established for the East Arapaho/Collins study area were generally E. Collins on the north, N. Plano Road on the east, Apollo Road on the south and N. Greenville Avenue on the west.

 

After a nationwide search, in mid-2012, the City selected SB Friedman Development Advisors of Chicago to assist with a market analysis and study of the East Arapaho/Collins area. Friedman’s extensive knowledge of the real estate development community and its understanding of the factors which enable private capital to be employed in redevelopment efforts helped win it the assignment.

 

Friedman’s study included an in-depth analysis of flex building ownership, rental/sales values, physical features, transportation, utility and communication infrastructure, alternative development types, market and demand factors and other considerations. In addition, Friedman interviewed many stakeholders in the E. Arapaho/Collins area, including property owners, brokers, investment firms and tenants. 

 

Friedman’s analysis will be presented to the City Council at an open-to-the public Work Session on February 4 at City Hall, and the following day President Stephen B. Friedman and Project Manager Ranadip Bose will present their findings at the Richardson Chamber’s Broker & Developer Luncheon meeting. 

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