DALLAS — Read this story and more North Texas business news from our partners at the Dallas Business Journal
When Costco Wholesale Corp. agreed last year to buy a 10-story office tower along U.S. Route 75 next to one of its Dallas stores, at least one retail broker speculated that the company might tear it down — but so far, that doesn't seem to be the case.
Instead, Issaquah, Washington-based Costco and design firm MG2 Architecture Corp. of Seattle have filed plans for $12.9 million in renovations to the roughly 198,000-square-foot office building and 590-spot parking garage at 12655 N. Central Expressway, according to four filings with the Texas Department of Licensing and Regulation.
Those filings call for $7.73 million in tenant improvements to 34,442 square feet of the office tower; $3.6 million in maintenance, upgrades, and repairs throughout the property; $1.5 million in garage maintenance and security upgrades; and $80,000 for a pedestrian path.
The acquisition closed on March 28, according to a deed filed with Dallas County. Built in 1982, the building is on about four acres adjacent to the Costco store near the intersection of U.S. 75 and I-635 on Churchill Way, one of its 13 stores in the Dallas-Fort Worth area.
Representatives for Costco and their design firm did not immediately respond to requests for comment. It's still unclear whether Costco will put its own offices in the building or whether it has other long-term plans for the site. Information in TDLR filings is often preliminary and subject to change, but they provide an early indication of construction plans.
Nationally, Costco has purchased similar properties including a former Hertz Corp. office building in Oklahoma City for a new operations center and a small office building in Springfield, Virginia, next to a store to potentially expand, according to reports from The Oklahoman and CoStar News.
The previous owner of the Dallas office building, Houston-based Hartman SPE LLC, filed for Chapter 11 bankruptcy protection in September and has been selling office and retail properties as its parent company, Silver Star Properties REIT Inc., shifts its focus to investing in self-storage.
Costco (Nasdaq: COST) made the highest offer of $14.25 million and went under contract in November, according to federal court documents. Another bidder made an offer of a little less than $12.1 million, according to court documents. Costco's offer was slightly higher than the $14.1 million market value listed by the Dallas Central Appraisal District.
As of late last year, when Costco went under contract, the office building was about 72% leased, and its largest tenants were Zion Oil & Gas, Move It Storage, and Cadence Bank, according to CoStar Group data.
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