State Farm wins [DBJ Real Estate Awards] Deal of the Year

When you think of big real estate deals, it’s hard to get much bigger than State Farm Insurance, which signed leases for more than 2.5 million square feet of office space in North Texas last year.

Among them was a 1.5 million-square-foot lease that will make the Bloomington, Ill.-based company the anchor tenant for KDC’s $1.5 billion mixed-use development slated for Richardson. It was the largest office lease ever signed in North Texas.

“We think their decision to place a large service center within the Metroplex is really a gift to the entire area,” said Randy Cooper, of Cassidy Turley’s Dallas office. “This is a great company and a well-run organization. This is great for the community.”

Cooper and his Cassidy Turley colleague Craig Wilson helped State Farm examine options for building office space to suit its needs. The goal: Streamline the company by turning Dallas, along with Atlanta and Phoenix, into a major regional office.

State Farm looked at other development sites in North Texas before choosing KDC’s, said Cooper, who declined to identify the others in the running. The KDC development is a 186-acre project near North Central Expressway and President George Bush Turnpike that will include several million square feet of office space, nearly 4,000 apartments, as well as hotel, medical and retail space.

“That site has terrific vehicular access, and it was a large piece of property controlled by a great developer, KDC,” Cooper said.

The State Farm-anchored development will be a catalyst for other developments along the President George Bush Turnpike and will be an important factor in Richardson’s future economic growth, said Bill Sproull, president of Richardson Economic Development Partnership.

“State Farm’s decision to locate in Richardson, starting with a lease at Galatyn Park and later a 1.5 million-square-foot campus on the Bush Turnpike, is the culmination of a vision that has guided the city for several decades,” Sproull said.

As an original member of DART with four commuter rail stations, Richardson was positioned for economic growth, he said. The train and other major freeways will help more than 7,000 employees access the Richardson campus, Sproull said.

The KDC space is scheduled to be ready for State Farm to occupy by the end of 2014. Meantime, the company is moving forward with a series of other office expansions.

In January 2013, the company signed a lease for 311,000 square feet in northern Richardson. Last year, it signed a short-term lease for 291,000 square feet in Richardson and a longer-term lease for a 410,000-square-foot facility in Irving.

Similar deals are popping up in Atlanta and Phoenix, starting with short-term leases.

State Farm’s deals will make a substantial mark on the local workforce. The company has had an operations center in North Texas since the mid-1990s, but it is hiring hundreds of additional employees to work in the newly expanded operations center.

“North Texas is doing a lot of things right,” Wilson said. “It has the right labor, transportation and business friendly environment. It’s a positive reflection on the community.”

The growth has been so large it has fueled speculation that State Farm could be looking to move its headquarters to Dallas, though that rumor has repeatedly been denied by the company.

“As it has done throughout its 90-year history, State Farm continues to review its facilities, looking to ensure employees are in the right places to provide the best service possible for our customers,” spokeswoman Patti Kelly said, adding that the headquarters will remain in Bloomington. “Customers’ expectations continue to evolve, and we need to adapt as those expectations change.”

Kelly declined further comment about the company’s operations, but according to the Dallas Central Appraisal District, State Farm has business personal property scattered throughout North Texas in cities such as Carrollton, Lancaster, Rowlett, Irving, Addison, Mesquite, Cedar Hill and Duncanville.