Dallas Business Journal Article: From Santander Tower to supply chain, AP's Will Pender dives into what he's seeing in Dallas and beyond

By: Anna Butler, Real Estate Editor | Online, Dallas Business Journal | August 11, 2022

Twelve stories of Santander Tower –known for decades as Thanksgiving Tower –are set to shift from office space to more than 220 sleek residences. Two Dallas firms have partnered for the multifamily transformation at the glass and flamed-granite building: Woods Capital, the tower’s owner, and Mintwood Real Estate.

Leading the construction portion of the adaptive reuse project is Adolfson & Peterson Construction with other partners including WDG, Dallas-based Swoon and Austin-based TBGPartners. Beyond the apartments, the conversion will include common spaces, a dog park and a pool, among other amenities.

The shift to residences is not the first conversion from office space within the 50-story tower at 1601 Elm Street. The two top floors morphed into 64 luxury hotel units, an effort completed by Austin-based The Guild in 2020.

Will Pender, AP’s president of the Gulf States region, said that Woods, which has already invested $40 million in the refurbishment of its property, and Mintwood are going for a more boutique look and feel with the residences –“Think Restoration Hardware a little bit.”

“They’re going above and beyond what I would say is a market-rate apartment is going for,” said Pender in a recent interview. “It’s a wonderful project, and it is going to revitalize the Dallas CBD.”

Pender spoke more about the adaptive reuse opportunity, in addition to sharing his take on opportunities and challenges he’s seeing in the market and more in the interview that follows.

Adaptive reuse also seems like an interesting way to re-kickstart the momentum we were seeing in Dallas’ CBD before the pandemic and approach solving a problem in a different way.

Adaptive reuse is attractive because it costs a lot less than it does to tear down and then go back up.

Preservation is also important to people nowadays. When we clear lots in the middle of the city to build new buildings or build new houses, we lose a lot of the history. We’re never going to know our history if we keep tearing down these buildings.

We also find that adaptive reuse is anywhere from 25% to 40% faster on the construction cycle, primarily because we don’t have to build the structure. Day One, we can hit the ground running and start putting in the MEP systems, the mechanical, electrical and plumbing systems.We can start putting in the walls and start framing those up, so it is a quicker-to-market process.

Are you leaning on any particular experience when approaching an adaptive reuse project like this?

I’ve always been attracted to architecture. You go to Europe and see all these beautiful buildings. I want to preserve those types of things for the generations to come in Dallas and other parts of America.

I’m a big believer in sustainability and protecting Mother Earth for the future. Adaptive reuse is very sustainable. We’re not tearing down a building and sending a bunch of things to a landfill. We’re taking the bones, remodeling, updating and refreshing them.

Beyond adaptive reuse, what are other opportunities the firm is looking to capitalize on?

We see a long-term play and are committed to the multifamily practice in sectors. We see housing, whether it’s affordable or high-end, being a major player in the future. People need a place to live, and the more people we have come on to this earth, they will need a place to cover their heads.

Data centers is another market we’re getting into. Everybody has their iPhone or computer. We need to store all that information somewhere. There are a lot of data center companies out there that are starting to heat up and build projects.

We also have our bread and butter: Municipal work. We do a lot of courthouses and jails.We’re in the office market, as well. We’re just wrapping up the PGA Headquarters in Frisco, for instance.

What are the challenges you’re seeing right now?

Supply chain is still a real issue. It feels like whack-a-mole: One day it’s the HVAC equipment and another day it’s electrical panels as all these things pop up.

I am excited about the passage of the Chips Act. We’ll start to see companies ramping up their chip manufacturing facilities in the U.S., which has a lot to do with the supply chain since everything from HVAC units to electric panels utilize semiconductors.

To address these challenges, it’s about partnering. We get involved in projects six to 12 months out, so we can pre-plan and pre-buy our materials. We can select the trade partners that have the right labor pool at the right time. In partnering with our developers, architects and others, we’re able to say, “Maybe we shouldn’t draw this or specify this because it’s a 30 months lead time? We should go with this.” Or we can tell our developers, “We need to bring on these partners early in order to get this supply chain issue mitigated.” They’re working with us even though we don’t have a full GMP.

It’s about rowing in the same direction in the canoe and figuring it out together. We’ve been very successful with that.

Most of the folks I talk to in construction, engineering and architecture are not seeing the slow down or fall off in projects that I’ve heard about from some on the debt, structured finance and lending side.

We’re hearing the same thing. Initially, I was concerned about the interest rates in conjunction with rising material prices slowing things down.

I talked to a prominent developer last week, and he said to me, “If it’s a Class A project, a multifamily project or a big data center project, it’s going to go through.”

The Texas market –and specifically Dallas –is hot right now. It’s not slowing things down; it’s still penciling. There are certain sectors that may not work. It maybe Class C spec office, but the big, prominent projects in office, multifamily and data centers are going forward. We’re seeing more on the medical front as well with senior living and hospitals due to the aging population of Baby Boomers.

We're very lucky to be in the region that we're in right now.

There’s a reason I moved here in 2008. I moved from Orlando because of the recession. The recession hit in Florida about a year before the rest of the country due to the housing crisis. The only tower crane upin Orlando was building the new Magic arena.

If you compare that to Texas in 2009, we were hit, but for the most part, we were insulated. That’s going to be the same thing here. I think we are in a recession right now, but Texas is such a popular place. It is fiscally conservative and does the right thing. We’re going to be insulated, and deals are going to continue to go through.

In terms of perspective, I feel like people in Dallas learned so much from the late ‘80s that know how to handle this climate.

We’re blessed. We know what’s happening in Frisco, Plano, McKinney, Prosper and the whole northern part of DFW. The more we can split up into smaller economic zones, the more prosperous we can be. Then we’re not so reliant on downtown Dallas or downtown Fort Worth, but we start to spread out and it can appeal to more people. Some people don’t want to live in the CBD; some people love Frisco. The more we can get to micro-economic areas, the better it is for our region.

Do you have a favorite project that you've worked on so far in your career?

Years ago I did the rebuild of the underground parking garage at Plaza at Preston Center with a five-story office on top. That was a challenging project with a lot of good partners involved. We dug a hole in the middle of Plaza at Preston Center, this high-end, boutique shopping center, and then came back up with a two-story garage and the building. I’m very proud of that, and I go get coffee there about once a week and reminisce.

Sometimes I drive around projects I’ve been a part of, but I don’t say to people, “I built that.” That’s because we built it. What’s monumental is that any building you look at in our skyline has probably affected anywhere from 1,000 to 5,000 people, whether it was the architect, the developer or the trade partners that worked on the project. Whenever these buildings go up, I think about how many lives they are touching and helping.

What’s your advice to someone who’s starting out that may want to take on a leadership position in the future?

I don’t know if I have the keys to success. I was not a construction major. When I got into construction and was a young project engineer, I kept my head down, listened, learned, asked questions and went above and beyond what everybody wanted me to do. As the president, I still ask questions, have mentors and learn every single day. It’s about bettering yourself, really listening and becoming a humble servant leader.

This interview has been edited for clarity and brevity.

For a direct link to the article, please click here.

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