Madison Realty funds Whole Foods-anchored Southlake project

Commercial Observer reports that Madison Realty Capital has originated a $77 million construction loan for Shivers Farm, a Whole Foods-anchored mixed-use development in Southlake, Texas, sponsored by a joint venture of Trademark Property Company and Harrison Street Asset Management. The project will put 37 single-family residential lots and 161,000 square feet of commercial space on 40.2 acres at 1900 North White Chapel Boulevard, about 26 miles northwest of downtown Dallas; roughly 128,000 square feet of that will be retail and 33,000 square feet office across nine buildings, and Whole Foods will take 35,500 square feet as its first store in Southlake. Madison Realty Capital says the property will be the only grocery-anchored retail north of SH 114 within three miles.

The loan got done because the pieces carry their own exits: the 37 lots give the sponsor a saleable land position that does not wait on lease-up, the Whole Foods lease supplies a credit anchor with first-mover status in the suburb, and the office component is capped at 33,000 square feet, small enough to fill from local demand without dragging the project into the wider Dallas office market. Samir Tejpaul, Madison Realty Capital's managing director and head of investments, called Dallas-Fort Worth "one of the most fundamentally sound and diverse markets in the country" and Southlake "a particularly sought-after suburb" that will get its first Whole Foods from Shivers Farm.

The borrower side carries the same selective logic as the loan itself: Harrison Street, the $110 billion manager co-sponsoring with Trademark Property, has spent this period doing deals where demand is already identifiable—in late August it joined Meridian to buy a Chantilly, Virginia office portfolio for a secure-facility push, and on the day this loan surfaced, this publication reported that Harrison Street was rebuilding its global capital-raising bench. A secure-facility purchase and a Whole Foods-anchored development are both placements short on speculative upside and long on known tenants.

For construction credit, the loan is built on a proven anchor, a lot-sale exit, and an office component small enough to matter little if leasing is slow—the safest version of construction lending, a lease plus land sale in an affluent exurb. The capital being deployed here says nothing about speculative construction or ground-up office. If construction lending is coming back, it is coming back in this form: a thin wedge at the top of the risk curve, leaving the mass of speculative projects to wait.