AllianceTexas marks milestone, plans more expansion

A. Lee Graham

Mike Berry remembers cold-calling companies, trying to drum up interest in a multibillion-dollar vision dancing in Ross Perot Jr.’s head. Twenty-five years later, AllianceTexas has fulfilled that vision in a multi-use development that has packed a more than $50-billion punch to the North Texas economy. Adding to that are more than $1.3 billion in total property taxes paid to the development’s eight taxing entities. Sharing their enthusiasm with prospective tenants was a daily challenge for Berry, Perot and other Perot Group associates before Hillwood Properties rose to global prominence in real estate circles.

As president of Hillwood Properties, a Perot company, Berry still logs many miles courting prospective tenants for the 17,000-acre AllianceTexas development, which houses corporate campuses and office complexes, residential housing, schools, hospitals and churches. It spans nearly 32 million square feet and continues to enrich the North Texas economy. The development’s success has not gone unnoticed. AllianceTexas was chosen to receive the Fort Worth Chamber of Commerce’s Vandergriff Award, given at the Sept. 4 State of the County luncheon at the Worthington Renaissance Fort Worth Hotel.

The award is presented annually to a legacy individual or organization whose contributions have positively affected Tarrant County on an international scale. Kick-starting the development was Fort Worth Alliance Airport, the world’s first industrial airport, which opened in December 1989. Companies soon clamored for space, with FedEx, BNSF Railway and Tom Thumb-Safeway among its early tenants. Deloitte University and Fidelity Investments soon opened major corporate campuses, followed by, pushing Perot’s early vision into technology unheard of when AllianceTexas began. Still, less than half of AllianceTexas has been developed, and Hillwood is not resting on its laurels. Its executive team is planning several build-to-suit and speculative projects, including more than 2.7 million square feet of industrial space and a 155,000-square-foot Class A office building at Alliance Town Center, the 900-acre retail component of AllianceTexas. Mike Berry shared some insights from AllianceTexas’ 25 year history with the Business Press.

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Where were you when AllianceTexas first opened? Did you foresee it becoming what it is today? It was July 9, 1988 [when Fort Worth Alliance Airport broke ground]. That was my first day on the job. When we opened the airport, we were already in the business of marketing the project. We made a couple of significant deals before we opened the airport. We did a project with Santa Fe Railway to build an auto and loading factory for Honda and Ford on the west side of the project on the rail line. The first project we built around the airport was when American Airlines committed to build their wide-bodied aircraft maintenance base. By the time we opened the airport on Dec. 14, 1989, we were already under construction on both of those projects. We had to build a new interchange and Eagle Parkway, a taxiway from the runway. Water and sewer. There was a lot of dirt flying back then. What was your role? My official title back then was director of marketing. My job was to find companies to locate at AllianceTexas, and so I spent most of my time making presentations to companies about the project, calling on companies, going and making presentations to companies, working with brokers and site-selection consultants, and [spending] a lot of time working on the master-planning side with our developer. How did you spread the Hillwood name, make potential tenants aware of the company? We had a pretty aggressive marketing program back then. We would advertise the project in aviation publications like Aviation Week and Air Cargo World and the Journal of Commerce and different trade magazines, where we would be able to attract companies. We had lots of brochures and videos. We would mail those out to different companies and worked closely with brokers who did site selection. We had consultants in the aviation industry we worked with and would team up. There was a lot of cold-calling. Did you help out with that? Yeah, that was my job. Me and Bill Burton (currently senior vice president of Hillwood Properties). He joined not long after we started the project. We had a big book, the World Aviation Directory, which had all the aviation and aerospace industry companies, and we basically used that book as a calling guide. We’d pick companies we thought might be interested.

These days, that could probably be conducted through a simple Google search. I don’t even know if the World Aviation Directory is in existence today online or digitally. Technology in the information age has changed the world dramatically. If I want to cold-call someone, I can learn a lot about them before I even pick up the phone. Back then, you had to do a lot of legwork. Yeah, a lot. It’s a fairly small fraternity [the aerospace industry]. Everybody seems to know everybody. Once you build relationships in there, it’s easy to network. If you could choose the top five milestones or achievements made at AllianceTexas since its inception, what would they be? First would be the Alliance Airport project. It was an industrial airport, the first one. That, from an aviation standpoint and industrial airport concept, that was really the stamp of credibility for us in the aviation market. That was the first big milestone. The second big milestone was when we opened state Highway 170. That was huge and happened two years after. When state Highway 170 was built, all of a sudden that gave us a real transportation artery and how we were better connected to D/FW Airport and the middle of the D-FW Metroplex. It was a huge transportation enhancement. You had an industrial airport directly connected with D/FW Airport and a major highway system and that was a big thing. We made two big deals while we built the 170: Food Lion and the Nestle [distribution center] projects. Both those distribution centers were anchored on the 170 and served by rail. That was another period of time that brought a whole new focus to Alliance. Now it’s the big logistics story we can tell for big retail national district operations because they now can connect rail and highway in the center of the country. That was all part of building the 170 project that put us on the map in the big box of logistics. The third big milestone was building the BNSF [Burlington Northern Santa Fe] hub. All of a sudden, it made people look at AllianceTexas as a true inland airport, not just an airport. We had direct connectivity to China and Asia and offered customers the ability to locate in the center of the country and bypass L.A. and Long Beach ports and bring products directly into the center. BNSF was the leader in developing the whole concept of intermodalism [allowing freight transportation in containers or vehicles using rail, sea vessel or other modes without handling the goods when changing modes]. You add all those things up and by 1994 all that was in place. It took us six years to build all that infrastructure. Once all that was in place by the mid-1990s, we had a different story to tell. When Nokia came around that time, that was another major milestone for us because here was a major manufacturer, a global company that’s in the technology business, committed to build a U.S. manufacturing center at Alliance. You mentioned having a different story to tell. What was that? A multi-modal one. You had rail, airport, highway and now the intermodal piece in 1994, and connection to ocean freight and in containers, which is how the largest volume of international shipping occurs. To be able to offer all that in one location for companies, whether they’re shipping product by air, truck or from Asia, they can bring it all into one central location. Anything since then that you would consider as big or significant? The Nokia deal came right after that. It was different from anything we had done to that point. It was high-tech [cellphone] manufacturing. They opened the U.S. telephone manufacturing center at AllianceTexas. They were exhibit A of all these things we had built and brought products by air, truck and brought in products overseas by ocean carrier that went through ports of Long Beach and on train to AllianceTexas in a container. They needed a free-trade zone, too [allowing companies within such areas to pay no duty on imports until they leave the zone for a domestic destination]. Then they really became the example of how companies could use all of the infrastructure at Alliance. Then another milestone that never fulfilled its potential was the Intel project. Intel came and bought 500 acres and were going to build a $1.3 billion semiconductor factory, or FAB [semiconductor manufacturing] plant. They started construction and spent $65 million, but the semiconductor industry globally went downhill. They stopped production and never made a comeback. By the time the market came back, they had changed strategy and decided not to build one in Texas. That would have been a real game-changer for us because they required a different set of supporters that we would have been able to bring in to Alliance and bring in to Fort Worth.

More recently, what significant activity has occurred? The Circle T Ranch, which has the Fidelity Investments project of 1.2 million square feet of office space, and Deloitte University. Those two are architecturally fabulous corporate developments and bring jobs to the region. Fidelity has several thousand [employees] there on their campus and has had a really positive effect on the region. Then Deloitte bringing over 40,000 people a year in for training, you can’t even put a value on what that’s meant for the whole area. They put us on the map in a different way as a corporate headquarters [destination]. The last thing that’s probably our shining or more visible area now is developing Alliance Town Center. That’s more than 7 million square feet of retail, four different hospitals and 500,000 square feet of office space under construction. We are building apartments, almost 1,200 units. And now we are doing new things. Entertainment, hotel and restaurant. When is AllianceTexas expected to reach build-out? We probably have 20 years, I think, roughly, of development left based on our current master plan and land holdings. There’s new development to the north between AllianceTexas and Denton, an extension of the AllianceTexas project. And our Harvest development, too [a residential concept blending homes and innovative farming concepts]. That could create some new development opportunities for us in the future. As far as what we’re doing in the core we’ll see more people-intensive development, more office, more corporate campuses. You can attract more office projects as residential grows and then entertainment destination uses. We’re looking at some of those things. You never know; the market changes every several years. The thing we try to be is flexible. We try to be attentive to trends in the market and be out front and maintain enough flexibility to adapt. We’ve seen a lot of changes. Like e-commerce, which didn’t even exist when we started Alliance. Look at Amazon and and the other major retailers getting into the Internet sales business and e-commerce industry. Those change design and structure and capitalization. It’s very exciting. It’s like we’re building a city, not just office; every day, it’s something different. It has allowed us to create a lot of businesses as part of developing Alliance: a water company to provide groundwater to irrigate all of our open spaces. And that’s helped the city [of Fort Worth] water resources. It does not put as much pressure on the city water system. We started a landscaping company, too.