J.C. Penney may sell land around Plano headquarters
By MARIA HALKIAS and STEVE BROWN
J.C. Penney Co. may finally develop the land around its headquarters, which is one of the largest vacant parcels in West Plano.
Real estate brokers say that Penney has picked a development team led by Plano-based Karahan Cos. that includes Columbus Realty and KDC.
The 240 acres of land face Dallas North Tollway and State Highway 121. The spot is considered a prime office and mixed-use construction location, especially now that years of major road construction in the area has been completed.
“We’re exploring various real estate options, but nothing has been confirmed at this time,” said Penney spokesman Joey Thomas.
Penney has owned the land since 1987 and was one of the first companies to move to the area after EDS led the way with its campus-style development near the tollway. Penney made enough money from the sale of its Manhattan office building to buy the land and build a 2 million-square-foot headquarters building facing Legacy Drive.
The chain of 1,100 department stores is undergoing a transformation under CEO Ron Johnson. It’s spending about $850 million a year on technology to remake its stores into a collection of branded shops. It has cut costs by about the same amount, but steep sales declines have weakened cash flow.
Penney has been selling assets to shore up its cash position. The company has promised Wall Street that it will have about $1 billion in cash at the end of the fourth quarter. The chain will report year-end results later this month.
Last year, Penney sold assets ranging from a $3 million building left over from when it owned Eckerd drugstores to $246 million worth of shares in mall developer Simon Property Group.
The Plano acreage won’t produce cash until developers start new multi-use projects. Penney has other assets it can sell and an untapped $1.5 billion line of credit. It ended the third quarter with $525 million in cash.
Penney has spent more than a year talking to real estate developers, including Trammell Crow Co., Lincoln Property, Hines and Forest City Enterprises, according to real estate sources.
Karahan developed the popular Shops at Legacy retail center, which is just east of the Penney headquarters on the tollway at Legacy Drive.
Columbus Realty has built hundreds of apartments in the Legacy business park.
Developer KDC just finished building the 12-story Encana Oil & Gas tower on the tollway in Legacy. KDC has also developed and owns other office properties in West Plano.
Follow Maria Halkias and Steve Brown on Twitter at @Maria Halkias and @SteveBrownDMN.