RED Development Sells Majority Interest in Dallas Tower

The company sold the 505,000-square-foot office and retail components of its mixed-use asset in the Uptown submarket.
The Union Dallas. Image courtesy of JLL
The Union Dallas. Image courtesy of JLL

JLL Capital Markets pulls double-duty at The Union Dallas mixed-use destination in Dallas, landing a buyer for the property’s 505,000-square-foot office and retail components on behalf of RED Development, and orchestrating acquisition financing for the new owner, Seoul-based KB Asset Management. According to the Dallas Morning News, KB Asset purchased the property for $370 million, with the assistance of $222 million in financing.

RED broke ground on the $350 million The Union, located at 2300 N. Field St. in Dallas’ coveted Uptown submarket, in 2016. The approximately 866,000-square-foot mixed-use property consists of a 22-story tower encompassing 87,000 square feet of ground-level retail offerings and 418,000 square feet of premier office space atop a multi-level parking facility, as well as a 31-story, 309-unit luxury residential high-rise, which was not included in the transaction.

RED completed development of the HKS-designed office and retail segments at The Union in 2018 and today the space is more than 94 percent leased. Office tenants include Salesforce, law firm Akin Gump Strauss Hauer & Feld LLP and accounting firm Weaver. Global conglomerate Koch Industries, a capital partner in the development of the office project, also occupies space in the building, having signed a 5,100-square-foot lease in 2019. Grocer Tom Thumb anchors the retail component, with a 60,000-square-foot space. The building also features a greenspace amenity deck, conference center and fitness facility.

The closing of The Union disposition comes several months after HFF facilitated the sale agreement, which came together prior to JLL’s July 2019 acquisition of HFF. HC2 Capital advised KB Asset on the transaction, while JLL placed the buyer’s five-year, fixed-rate acquisition loan with Goldman Sachs. For its part, RED will remain in the picture at The Union, retaining a minority interest in the property and maintaining management and leasing responsibilities.

Big-ticket deals

The hefty price tag attached to The Union office/retail asset amounts to roughly $730 per square foot, a figure that the Dallas Morning News describes as a record for the city’s office sector. Industry experts saw it coming. “Investor interest in Dallas is strong—the sale of 1900 Pearl posted a new record price of $700 per square foot and other record-breaking sales are on the horizon,” JLL noted in a fourth-quarter 2019 report.