Observers of North Texas real estate may have noticed something unusual about Frisco’s $2 billion Wade Park development.
Namely, that it is still a very large hole in the ground and not the 175 acres of apartments, offices and high-end retail space promised by Atlanta-based Thomas Land & Development back in 2014.
The project has been in a kind of suspended animation since site excavation stopped about a year ago, and lenders started threatening to foreclose on the property.
But in the nation’s fastest-growing city — whose growth has been propelled by an influx of exactly the kind of wealthy new residents you’d expect to make a giant project like Wade Park successful — how is it that a showpiece development is floundering?
And what happens if it fails?
The Dallas Morning News talked to experts about what Wade Park’s struggles say about the region’s economy more broadly. Here’s what you need to know.
What was Wade Park supposed to be?
Four years ago, when Thomas Land bought the site along the Dallas North Tollway at Lebanon Road from an established Frisco family, the area was exploding with massive new mixed-use developments.
Richardson’s CityLine development was well underway. By the time developers broke ground in June 2014, the region was still abuzz over Toyota’s announcement that it planned to move its North American headquarters to Plano’s gargantuan Legacy West.
Wade Park was pitched as the biggest of the projects along Frisco’s heavily marketed (but now defunct) $5 Billion Mile, which also included the $1.5 billion Star complex — home to the Dallas Cowboys — and the $1.5 billion Frisco Station.
Developers said they’d nabbed a Whole Foods Market, an iPic Theatre, two upscale hotels, a Starbucks and a Pinstripes bowling center as retail and entertainment tenants, which would ideally help lure people to live in residential buildings and set up shop in high-rise offices.
It was slated to start opening in the spring of 2015.
What went wrong?
Work started at the site, but it stalled about a year ago, leaving a football field-sized hole and partially built buildings.
Thomas Land defaulted on more than $130 million in debts and contractors who did work on the site — concrete makers, construction companies and plumbers — started seeking millions in unpaid bills.
In February, the two lenders declared the project in default and said they planned to foreclose on the property. But instead of doing so, the lenders have posted the property for foreclosure for five months in a row without going through with the sale.
Experts say that while they can’t speculate on the lenders’ exact reasons for holding off on foreclosing, a foreclosure wouldn’t be a win for anyone involved.
“Nobody wants this to fail,” said Joseph Cahoon, director of Southern Methodist University’s Folsom Institute for Real Estate. “It hurts Frisco, it hurts North Texas, it hurts other groups.”
Instead, the lenders and developers are likely working to renegotiate loan terms.
Officials with Thomas Land have said they are trying to get new funding for the project.
Cahoon said that, broadly speaking, it looks like Wade Park has been a victim of timing.
A project of Wade Park’s scale needs at least one major corporate office tenant — a reliable employer to anchor demand for shops and restaurants and apartments nearby. That’s increasingly been the case for large mixed-use developments.
And Wade Park — unlike CityLine, which counts State Farm as its anchor, or the Cowboys at the Frisco Star or Toyota and a handful of financial services giants at Legacy — hasn’t had that.
Back in 2014, Cahoon said, companies were announcing lots of big expansions and headquarters relocations, especially in non-coastal markets, which meant that the other developments were able to capitalize on the trend.
But those moves have slowed.
“That whole corridor … they’re all competing for the same corporate users,” he said. “Invariably somebody’s going to lose.”
Which means that Wade Park’s “clock has been ticking” since work started on the site.
Should this make me nervous about Dallas-Fort Worth’s booming economy?
Experts have predicted that the end of the nation’s economic expansion could be coming in 2020. Meanwhile, D-FW’s housing and office markets have softened considerably.
Cahoon said that in recent years, developers were building office space even before they had tenants signed up. But no more.
“At this stage in the market, no lender would move forward with a construction loan on a truly speculative office building,” he said. “Particularly of [Wade Park’s] size and scale.”
High-end office buildings are expensive to build, and it’s always been a risk to get started without a big company already onboard.
And there just aren’t “massive tenants growing on trees,” Cahoon said. Companies like Toyota and State Farm, which are large enough to require hundreds of thousands of square feet in office space and amenities, are rare in the world.
Projects like Legacy West and CityLine were more like “lightning in a bottle,” he said.
Now, Cahoon said, demand has shifted toward industrial space, as more and more commerce moves online. That requires warehouse space, which — fortunately for developers — is much easier and cheaper to build.