Ripe for Retail

Things don't always work out as planned. In the mid-1980s, Ross Perot Jr. began work on AllianceTexas, a 2,000-acre commercial park surrounding the world's first industrial airport, off Interstate 35-W in north Fort Worth. The goal was to cater to air cargo, aerospace and other air-related tenants. But then BNSF Railway Co. and Union Pacific Railroad joined the party, and an inter-modal logistics hub emerged.

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Perot's company, Hillwood, began snapping up nearby land and launched a residential division. Today, the rebranded AllianceTexas is a massive 17,000-acre, Y-shaped development that sprawls across four cities — 24.4 million sq. ft. of commercial space and 5,200 single-family homes stretch over 65 square miles.

To service the Alliance market, Hillwood has three huge projects under way that could add more than 5 million sq. ft. of retail space, says Mike Berry, president. “It's a real transition period for us,” he says. “We spent the first two decades building the foundation and creating the market. Now we're managing the growth and continuing the growth — but it's a different mix than what we originally envisioned.”

The developer is going solo on Lone Star Crossing, a 1 million sq. ft. entertainment complex that surrounds a 235,000 sq. ft. Cabela's store, which opened last year in the northwestern section of AllianceTexas. Most of the components will be freestanding structures, as opposed to a strip center or mall, Berry says. A planned leisure hotel will cater to the Cabela's crowd and racing fans visiting the nearby Texas Motor Speedway.

In the northeast section of the project, Hillwood is hooking up with General Growth Properties, a Chicago-based REIT, on The Shops at Circle T Ranch. Plans for the 280-acre, 2.5 million sq. ft. complex include a power center and outdoor shopping mall modeled after General Growth's 1.3 million sq. ft. Shops at La Cantera in San Antonio. The peripheral buildings will be developed first, with the first 400,000 sq. ft. phase breaking ground in 2006.

The third piece of the retail pie is Alliance Town Center, a 200-acre, 2 million sq. ft. mixed-use project that Hillwood is co-developing at the south end of the park with Fort Worth-based Trademark Property Co. The first 600,000 sq. ft. phase, anchored by a 98,000 sq. ft. JC Penney store, is slated to open this fall.

Terry Montesi, CEO of Trademark, says AllianceTexas is ripe for retail. “It's the fastest-growing residential area in North Texas, and it's very under-retailed, which is an unusual thing in a market like Dallas,” he says.

According to Residential Strategies Inc., more than 40,000 residential lots are platted for development within a 10-mile radius of AllianceTexas. DR Horton, the country's largest homebuilder, is among the most active builders in the corridor. It entered the Alliance market about seven years ago, says Rick Horton, divisional president.

Hillwood's expansion at Alliance is funded in part by cash it raked in last fall, when it sold a majority stake in more than 40 industrial buildings within Alliance to Prudential Real Estate Investors Inc.

Local real estate brokers put the value of the deal at about $200 million. The transaction marked the first time Hillwood has let someone else get in on the action at Alliance.


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