Gulf Coast Western, a prominent oil and gas exploration company, has ventured into real estate with the purchase of a two-building office complex in Dallas. The acquisition, finalized through a foreclosure deal, involves Parkway Office Center North and South, strategically located along the Dallas North Tollway.
Gulf Coast Western, based in Dallas, acquired the office complex at a reduced price, with plans to invest up to $10 million in renovations. The company, already a major tenant in the complex, occupies a full floor totaling 14,000 square feet in the southern building. The company intends to expand its footprint by leasing half of the fourth floor, increasing its total space to approximately 21,000 square feet.
Matt Fleeger, President and CEO of Gulf Coast Western, emphasized his contrarian investment approach. “While many are retreating from commercial real estate, I view this as an opportunity to invest in my hometown and transform the space into a vibrant office environment,” Fleeger told CoStar News.
Fleeger, known for his risk-taking as a wildcatter in the oil industry, plans to leverage his local business connections and his network from Southern Methodist University to attract tenants to the office complex. At the time of acquisition, the complex was 45% occupied. Additionally, Fleeger intends to introduce Mesero Tex-Mex restaurant, a business in which he holds a stake, to operate in the building’s vacant restaurant space.
Investment Strategy and Renovations
The new ownership group, comprising Gulf Coast Western and Enverra Real Estate Partners, aims to inject between $8 million and $10 million into the property. “I’m not deterred by what some may see as a risky investment,” Fleeger added. “This approach allows us to enhance the property in a way only a tenant with a vested interest could.”
The purchase was facilitated through a partnership with Enverra Real Estate Partners, which acquired the complex’s loan from its previous lender, Principal Financial. The $22 million loan was purchased at an undisclosed discount, leading to the foreclosure on the previous owner, Apex Pacific Partners, on September 3.
Enverra, founded earlier this year, identified the acquisition as a strategic move amid rising distressed note sales. The firm, led by Managing Partner Tommy Spinosa, is capitalizing on the current market conditions by making all-cash offers using partner balance sheets and collaborating with high-net-worth individuals and private investors to acquire discounted real estate.
Spinosa, formerly with Bridge Investment Group, emphasized the firm’s goal to restore the office complex to Class A standards promptly. This trend of tenant acquisitions is becoming more prevalent, as property values in the Dallas-Fort Worth area have dropped by 30% to 40%, according to Bill Kitchens, CoStar’s market analytics director.
Future Prospects
The Parkway Office Center North and South, encompassing approximately 230,000 square feet, is undergoing significant upgrades. Planned improvements include a new facade, 38,000 square feet of speculative suites, and enhancements to the lobbies, cafe, common areas, and amenities such as a fitness center, tenant lounge, golf simulator, and large conference room. The renovation will also address the garage and landscaping.
Enverra Real Estate Partners, with offices in Dallas, Atlanta, and Washington, D.C., is focusing on acquiring office and apartment properties in the Sun Belt region, with investments ranging from $30 million to $70 million. The firm’s Dallas office, led by Spinosa and McKim, is central to its strategy as it seeks to capitalize on market opportunities in Texas and beyond.
Conclusion
Gulf Coast Western’s entry into real estate with the acquisition of Parkway Office Center reflects a broader trend of tenants investing in their office spaces amid fluctuating market conditions. The planned renovations and strategic expansion are set to transform the Dallas office complex into a modern, tenant-focused environment, showcasing a bold move by a seasoned industry leader.
