U.S. Hotel Appraisals Hotel Market Snapshot: Irving and Las Colinas, Texas
Irving and Las Colinas benefit from their position between their big-business neighbors, Dallas and Fort Worth. Recent years have seen the development of new hotels, and several new projects are poised to bring in more demand.
By Kathleen Donahue and David Bone
Wealthy cattle rancher Ben H. Carpenter developed El Ranchito de Las Colinas ("the Little Ranch of the Hills") as one of the country’s first master-planned communities in 1972. Las Colinas and neighboring Irving’s location between Dallas and Fort Worth aided in attracting numerous real estate developers and Fortune 500 corporations during the building booms of the 1980s and 1990s. Now present-day hoteliers need to assess the fertility of the Irving/Las Colinas’ lodging and economic landscape following the blight of the Great Recession.
Demand Generators
There’s no argument that Las Colinas has established itself as one of the premier business centers of the Dallas/Fort Worth Metroplex, with major companies such as Pioneer Natural Resources, Flowserve Corporation, and Kimberly-Clark Corporation taking up residence in the city. Local businesses benefit from traffic brought in by the Las Colinas Urban Center, which offers gondola cruises down its River Walk-style canal; the center also features an above-ground people-mover system that aids transit—and patronage—throughout the city center.
Even under the duress of the recent recession, the market area continues to benefit from corporate relocations and expansions, as well as new commercial developments. Office occupancy increased slightly during the second quarter of 2011; net absorption totaled 118,727 square feet for the same period. This trend reflects the popularity of this submarket for office relocations. The Greater Irving/Las Colinas Chamber of Commerce helped recruit many new businesses in 2010 and 2011, including Celanese Corporation, Consolidated Electrical Distributors (CED), Noah's (a multi-purpose event center in Irving), Devcon Security, Terminal Reality, Internet Business Group (IBG), and KidKraft. Dallas’ upscale NorthPark Center and Galleria mall channel much of the area’s retail activity along with shopping centers such as the nearby Vista Ridge Mall in Lewisville, the Grapevine Mills outlet mall, and Southlake Town Square.
New Developments
Residential, convention, and entertainment developments have also been on the rise in Irving. La Villita, a 300-acre residential development by Cousins Properties, was completed earlier this year, and projects such as Avalon Square (173 townhomes) and Escena (an office, retail, and residential development) are under construction.
Under development for nearly three years, the Irving Convention Center will be one of the premier mixed-use entertainment and convention complexes in the nation. The first phase of construction, completed in January of 2011, comprises a 275,000-square-foot convention facility; the $137-million price tag on this first phase was fully funded by hotel occupancy taxes. The second phase of the development will comprise an entertainment facility featuring a 3,400-seat concert venue, ten themed restaurants, fifty private suites, and several live-music stages. The project’s third phase calls for a 300- to 500-room headquarters hotel that will feature multiple food and beverage outlets and a spa; although no concrete details about this phase of the development have been formally announced as of yet. While opening dates for the entertainment and hotel portions of the convention center complex remain speculative, the recent completion of the convention facility itself should help boost the market area’s economy and hotel performance as early as next year by attracting more meeting and group business.
Better Traffic
Major infrastructure projects will soon enhance transportation to the Irving/Las Colinas area. The planned Dallas Area Rapid Transit (DART) Rail Orange Line will provide a route from Northwest Dallas to the Las Colinas Urban Center in 2012 and to Dallas/Fort Worth International Airport in 2014. Two new stations—at Las Colinas Urban Center and the Irving Convention Center—are being constructed as part of the 14-mile, $1.3-billion regional rail expansion.
The $518-million Irving Diamond Interchange, which is still undergoing construction, will eventually provide a seamless vehicular channel between Irving/Las Colinas and Greater Dallas. In July of 2011, the Texas State Legislature passed a roadway funding bill that will accelerate the expansion of a nine-mile stretch of State Highway 183, which will ultimately allow for more and smoother travel to and from Irving/Las Colinas.
New Hotels
Several upscale, branded-boutique hotels have recently entered or are on their way to the Irving/Las Colinas market. The 136-room aloft Hotel opened in October of 2008, followed by a 200-room NYLO Hotel in July of 2009. The NYLO Hotel features a 3,000-square-foot ballroom with a dramatic urban loft design, an expansive outdoor courtyard, and The Loft signature restaurant. A 123-room Element, a stylish extended-stay property, opened in September of 2009 on the north side of Irving, just off Interstate 635 near the Dallas/Fort Worth International Airport.
Two more hotels have been proposed for locations near the Irving Convention Center. One of the hotels would be part of the Irving Entertainment District project, which the City of Irving is endeavoring to fund. Fram Development’s plans for its North Shore mixed-use development also include a hotel, though the developer has yet to break ground on the project.
Conclusion
A diversified economy, relatively low cost of living, and pro-business climate will aid the recovery of the Irving/Las Colinas economy and hotel market. While the recent recession has resulted in slight declines in average rate and occupancy for area hotels since late 2008, demand ramped back up in 2010. Infrastructure improvements are fortifying local connections with the Dallas/Fort Worth market, and the arrival of new upscale hotels and the proposed large-scale projects should strengthen the area’s appeal as an all-in-one destination. Diversity and convenience are key to the market’s performance, and while some developments have been slow to solidify, hotels in Irving and Las Colinas are likely to see strong new sources of demand over the next several years.
Irving and Las Colinas benefit from their position between their big-business neighbors, Dallas and Fort Worth. Recent years have seen the development of new hotels, and several new projects are poised to bring in more demand.
By Kathleen Donahue and David Bone
Wealthy cattle rancher Ben H. Carpenter developed El Ranchito de Las Colinas ("the Little Ranch of the Hills") as one of the country’s first master-planned communities in 1972. Las Colinas and neighboring Irving’s location between Dallas and Fort Worth aided in attracting numerous real estate developers and Fortune 500 corporations during the building booms of the 1980s and 1990s. Now present-day hoteliers need to assess the fertility of the Irving/Las Colinas’ lodging and economic landscape following the blight of the Great Recession.
Demand Generators
There’s no argument that Las Colinas has established itself as one of the premier business centers of the Dallas/Fort Worth Metroplex, with major companies such as Pioneer Natural Resources, Flowserve Corporation, and Kimberly-Clark Corporation taking up residence in the city. Local businesses benefit from traffic brought in by the Las Colinas Urban Center, which offers gondola cruises down its River Walk-style canal; the center also features an above-ground people-mover system that aids transit—and patronage—throughout the city center.
Even under the duress of the recent recession, the market area continues to benefit from corporate relocations and expansions, as well as new commercial developments. Office occupancy increased slightly during the second quarter of 2011; net absorption totaled 118,727 square feet for the same period. This trend reflects the popularity of this submarket for office relocations. The Greater Irving/Las Colinas Chamber of Commerce helped recruit many new businesses in 2010 and 2011, including Celanese Corporation, Consolidated Electrical Distributors (CED), Noah's (a multi-purpose event center in Irving), Devcon Security, Terminal Reality, Internet Business Group (IBG), and KidKraft. Dallas’ upscale NorthPark Center and Galleria mall channel much of the area’s retail activity along with shopping centers such as the nearby Vista Ridge Mall in Lewisville, the Grapevine Mills outlet mall, and Southlake Town Square.
New Developments
Residential, convention, and entertainment developments have also been on the rise in Irving. La Villita, a 300-acre residential development by Cousins Properties, was completed earlier this year, and projects such as Avalon Square (173 townhomes) and Escena (an office, retail, and residential development) are under construction.
Under development for nearly three years, the Irving Convention Center will be one of the premier mixed-use entertainment and convention complexes in the nation. The first phase of construction, completed in January of 2011, comprises a 275,000-square-foot convention facility; the $137-million price tag on this first phase was fully funded by hotel occupancy taxes. The second phase of the development will comprise an entertainment facility featuring a 3,400-seat concert venue, ten themed restaurants, fifty private suites, and several live-music stages. The project’s third phase calls for a 300- to 500-room headquarters hotel that will feature multiple food and beverage outlets and a spa; although no concrete details about this phase of the development have been formally announced as of yet. While opening dates for the entertainment and hotel portions of the convention center complex remain speculative, the recent completion of the convention facility itself should help boost the market area’s economy and hotel performance as early as next year by attracting more meeting and group business.
Better Traffic
Major infrastructure projects will soon enhance transportation to the Irving/Las Colinas area. The planned Dallas Area Rapid Transit (DART) Rail Orange Line will provide a route from Northwest Dallas to the Las Colinas Urban Center in 2012 and to Dallas/Fort Worth International Airport in 2014. Two new stations—at Las Colinas Urban Center and the Irving Convention Center—are being constructed as part of the 14-mile, $1.3-billion regional rail expansion.
The $518-million Irving Diamond Interchange, which is still undergoing construction, will eventually provide a seamless vehicular channel between Irving/Las Colinas and Greater Dallas. In July of 2011, the Texas State Legislature passed a roadway funding bill that will accelerate the expansion of a nine-mile stretch of State Highway 183, which will ultimately allow for more and smoother travel to and from Irving/Las Colinas.
New Hotels
Several upscale, branded-boutique hotels have recently entered or are on their way to the Irving/Las Colinas market. The 136-room aloft Hotel opened in October of 2008, followed by a 200-room NYLO Hotel in July of 2009. The NYLO Hotel features a 3,000-square-foot ballroom with a dramatic urban loft design, an expansive outdoor courtyard, and The Loft signature restaurant. A 123-room Element, a stylish extended-stay property, opened in September of 2009 on the north side of Irving, just off Interstate 635 near the Dallas/Fort Worth International Airport.
Two more hotels have been proposed for locations near the Irving Convention Center. One of the hotels would be part of the Irving Entertainment District project, which the City of Irving is endeavoring to fund. Fram Development’s plans for its North Shore mixed-use development also include a hotel, though the developer has yet to break ground on the project.
Conclusion
A diversified economy, relatively low cost of living, and pro-business climate will aid the recovery of the Irving/Las Colinas economy and hotel market. While the recent recession has resulted in slight declines in average rate and occupancy for area hotels since late 2008, demand ramped back up in 2010. Infrastructure improvements are fortifying local connections with the Dallas/Fort Worth market, and the arrival of new upscale hotels and the proposed large-scale projects should strengthen the area’s appeal as an all-in-one destination. Diversity and convenience are key to the market’s performance, and while some developments have been slow to solidify, hotels in Irving and Las Colinas are likely to see strong new sources of demand over the next several years.
About the Author:
Kathleen Donahue is Managing Director of the U.S. Hotel Appraisals consulting and valuation office in Dallas. A graduate of the University of Texas at Austin, Kathleen is a certified general appraiser in nine states across the western and south central U.S. and has overseen more than 200 hotel consulting and appraisal assignments. Contact Kathleen at (972) 890-3548 or kdonahue@ushotelappraisals.com.
About the Author:
David is a Vice President and oversees many of the projects for U.S. Hotel Appraisals. Clients praise David for his attentive service and unwavering commitment to quality. David has developed market valuations of real estate for use in financial reporting, asset management, acquisitions, financing, and legal proceedings. A graduate of Texas A&M University, David's post-academic education spans more than 300 hours of specialized appraisal classes. Contact David at (214) 629-0908 or dbone@ushotelappraisals.com.