State Farms Richardson office deal tops any other area corporate expansion

By Steve Brown | Real Estate Editor
The Dallas Morning News 

Next week when State Farm Insurance holds the formal groundbreaking for its new Richardson office campus, the Illinois-based company is expected to at last disclose details about the project.


One thing is already clear — there's never been a real estate deal like this one in North Texas.


Longtime property brokers say that no other company has leased so much office space in the Dallas area in such a short period.


And the huge office complex that State Farm is building in Richardson will be one of the region's biggest employment centers, with thousands of workers.


Since last August when the first leases were signed, State Farm has rented more than 1.4 million square feet in Richardson's Telecom Corridor and 400,000 square feet in Irving.


The total of 1.8 million square feet of offices is about the same amount of space in downtown Dallas' largest skyscraper — the 72-story Bank of America Plaza.


"State Farm is the biggest lease I can think of in this area," said Paul Whitman, president of the D-FW office of commercial real estate firm Jones Lang LaSalle.


And statewide, its new office campus project is second in size only to Exxon Mobil's new campus being built in suburban Houston, he said.


After more than 40 years in the business, Whitman has handled some of North Texas' biggest office deals, including Exxon's 1989 move from Manhattan to Irving.


"Exxon was a corporate relocation, but it was only 300,000 square feet of space," he said. "State Farm is many times larger than that.


"The biggest one I have ever been involved in was 750,000 square feet that was leased by JPMorgan Chase when they relocated their global investor services group to the Dallas North Tollway."


Whitman said other major office moves to North Texas in the past, including American Airlines and J.C. Penney, didn't gobble up nearly as much space as State Farm is renting.


Just last week, State Farm took two more big Richardson buildings that are now occupied by high-tech firm Ericsson. Ericsson is moving workers to its Plano campus.


Real estate brokers say that much of the office space State Farm is renting is to temporarily house workers while the company builds its big campus on State Highway 190 at Plano Road.


Developer KDC broke ground on the project in April.


The Richardson office campus is one of three new employment centers that the Bloomington, Ill.-based insurance firm is building. The others are in Atlanta and outside Phoenix.


Details coming up


State Farm spokesman Gary Stephenson said the company next week will comment on the number of employees who will work in the Richardson offices.


Employees are relocating from other cities to the new operation, Dallas home sales agents say.


"The majority of job functions will relate to claims operations (various jobs within the claims function); also in the customer service and sales support areas," Stephenson said in an email.


"These are the three large categories of work function, however with any large operation there will be numerous other positions/work as part of the functions handled in Dallas — communications, human resources, IT and technical applications, and so on."


Stephenson said the size of the campus is still in flux and could grow over time.


"The construction phase in Richardson will be in the range of 18 months, give or take, and total space needed is always subject to adjustment," he said.


"We are planning for expanded customer service and long-term growth, in a great location, and are also aware that market conditions are always fluid."


State Farm held a job fair in March to hire between 500 and 600 full-time workers. And the insurer plans a "career showcase" next week to talk with hundreds more potential employees.


Market tightens


With State Farm already moving people into the Telecom Corridor, the supply of empty office space in that area has plunged, said Bill McClung, executive vice president in the Dallas office of Cushman & Wakefield.


"The building landlords in Richardson are beside themselves," McClung said. "It's certainly tightened up that market."


Richardson officials expect that State Farm will soon be the city's biggest employer.


"Today, the largest employer in Richardson is AT&T with 4,300 people," said John Jacobs, executive vice president with the Richardson Economic Development Partnership. "State Farm should surpass that easily."


Jacobs said that back at the height of the 1990s telecom boom, Nortel Networks had almost 10,000 workers in Richardson. State Farm has now filled five of the office buildings that Nortel once occupied along North Central Expressway.


"This is a big win for the entire metroplex," Jacobs said. "State Farm came here to access the workforce that exists in North Texas.

"The velocity of this has been unprecedented," he said. "I can't think of anything in the history of the Dallas area like this." 
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