Dallas’ Pegasus Park development lands new funding

Featured in The Dallas Morning News

April 24, 2023

By Steve Brown

A Dallas life sciences campus is getting a financial boost from a local lender.

Pegasus Park is a 26-acre office and laboratory center located northwest of downtown Dallas on Stemmons Freeway. J. Small Investments, in partnership with Lyda Hill Philanthropies, is redeveloping the commercial complex that includes an 18-story central tower.

The high-profile high-rise once housed offices for Zale Corp. and Mobil Oil Co.

J. Small Investments bought the empty buildings in 2015 and began redevelopment of the property almost three years ago. Montgomery Street Partners is an investor in the development.

Dallas’ Hall Structured Finance said it is providing new financing for the project.

The central building has been leased to tenants including Southern Methodist University Institute for Computational Biosciences, UT Southwestern Medical Center, Health Wildcatters, Taysha Gene Therapies and Massachusetts-based BioLabs. Offices are also leased to nonprofit organizations.

The campus includes a brewery and restaurant operated by Community Brewing Co. There are plans to redevelop two existing warehouse buildings into research and development lab space.

“Pegasus Park is positioning itself as the preeminent innovation and life sciences business hub in the central United States,” Hall Structured Finance’s Allyson Van Blarcum said in a statement. “Its diverse tenant mix of for-profit and non-profit organizations has created a vibrant environment for idea sharing and collaboration in service to the Dallas life sciences and biomedical community and beyond.”

Dallas-Fort Worth is considered one of the nation’s top emerging life sciences markets in terms of size, institutions, talent and rapid growth, according to commercial real estate firm CBRE.

North Texas’ life sciences labor pool has increased by 17% (26,000 workers) since 2019, surpassing the average national growth of 13.7%, CBRE reported. Research and development employment in D-FW has grown 44.5% since 2019, coming in only behind New Haven, Conn., (94.2%) and Nashville, Tenn. (80%).

“D-FW has all of the pieces assembled to become a dominant force in the life sciences sector,” said Chelsea Story, vice president with CBRE’s life sciences practice in Dallas. “Our region attracted $1.6 billion in life sciences venture capital funding between 2018 and 2022, and the only limitation we have is the demand for life sciences facilities outpacing supply. Life sciences companies want to be in DFW and utilize our growing talent, and as developers continue to build and deliver new space, the sector will continue to grow.”

Terms of the new debt transaction were not disclosed.

“We were very pleased to be able to work with a lender with decades of real estate development, management and finance experience in the Dallas area,” J. Small’s Justin Small said in a statement. “They were able to understand our vision and opportunities for the project.”

Pegasus Park’s developers recently filed plans with the state for a $32 million addition to the campus that will include demolition of one building and renovation and expansion of another. The new addition will house Bridge Labs, which will have speculative laboratory space and offices.

Pegasus Park is also in the running to land the federal government’s new biomedical research agency headquarters. Dallas is competing along with other Texas cities for the project.

Hall Structured Finance is a division of Dallas’ Hall Group, one of North Texas’ best-known commercial property developers and investors.

Hall Group is building a $500 million mixed-use development in Frisco that’s one of the region’s largest such projects.

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