Firms With Expiring Leases May See Sticker Shock

Reserve Capital Partners is a recently launched Dallas-based commercial real estate investment firm and partner Brant Landry recently discussed the 2018 vision, the firm’s funding and market trends in this EXCLUSIVE.

Landry says RCP plans to close on Danari Office Park at Preston and Beltline this month.

Landry says RCP plans to close on Danari Office Park at Preston and Beltline this month.

DALLAS—Reserve Capital Partners is a recently launched Dallas-based commercial real estate investment firm which was also instrumental in the launch of E. Smith Realty, now ESRP, four years ago. The firm has properties pending in Dallas.

In this exclusive, partner Brant Landry recently discussed the vision for the year, the firm’s funding and various market trends apparent in DFW. What is your vision for 2018? 

Landry: Our vision is to acquire an additional $200 to $250 million in assets in 2018, either through office or industrial asset classes. Please explain the Reserve Capital Fund 1. 

Landry: Reserve Capital Partners Fund 1 is a fully subscribed real estate private equity fund based out of Dallas. Fund 1 will have a total portfolio size of approximately $300 million in total assets once the fund is fully deployed. Reserve Capital Partners Fund 1 was co-founded by myself, Clint Riley and Greg Seitz. The three of us have a minimum of 20 years of real estate experience each and combined experience of 75 years of real estate experience. What other projects is Reserve Capital Partners working on? 

Landry: We have quite a few projects in the works right now that will be enormous assets to Reserve Capital Partners. We just issued an $87 million offer on another office asset. We also plan on closing on Danari Office Park at the northeast corner of Preston and Beltline this month. What market trends do you see for 2018? 

Landry: 2018 will be an exciting year for the real estate market. I see continued job growth, rent growth and new development, but also sticker shock for companies that have leases expiring. We believe there will be a flight to value in some cases. How can a company evolve and grow throughout various trends? 

Landry: A company can evolve and grow throughout trends by focusing on fundamentally sound real estate. Do not try to time the market or overpay just for the sake of acquiring assets. How do you anticipate these trends affecting business?

Landry: Profits are up and companies are investing heavily in their facilities. Higher rents and class-A properties are not impacting companies absorbing that type of space. However, more conservative companies will be watching the correction in the economy closely and create a more defensive position as it relates to occupying real estate. Class B-plus or A-minus assets will be the only asset classes that will offer rent structures that will resemble what companies experienced 7 to 10 years ago. I believe that some companies will move to a class-B property to protect bottom-line earnings. Are there any trends you see from 2017 continuing into 2018?  

Landry: I think we will see more of the same–job growth, strong demand, delivery of supply and some rent growth. I think with rising interest rates, development will slow down.

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