Katy Building History

• The Katy Building, constructed between 1912 and 1914 for Dallas businessman Colonel John M. Simpson, served as the headquarters for the Missouri-Kansas-Texas (MKT) railroad for over 50 years. The MKT, the first railroad to enter Texas from the north, became popularly known as “KT” based on its stock exchange symbol, eventually earning the nickname “The Katy.” Reflecting its origins, the building was named after the railroad company and is still widely referred to as “The Katy.”

• Designed by H.A. Overbeck in the Beaux-Arts architectural style, the seven-story structure was built with terra cotta and masonry. It featured fireproof construction, dedicated office spaces, and a power plant in the basement. Over the years, the building underwent significant renovations, first in 1978 under Thomas E. Woodward and again in 1985. In 1988, the Katy Railroad was acquired by Missouri Pacific Railroad (MoPac), which is now part of the Union Pacific system.

• Current ownership acquired the property in 2014. While the interior has undergone extensive renovations, the historic character of the Katy Building has been meticulously preserved, maintaining its legacy as a Dallas landmark.

Adaptable Programming Opportunities

• The property offers exceptional versatility in its design and zoning, making it ideal for future hotel use.

• Developers have several concept options to explore, including luxury, lifestyle, upscale, boutique, or micro-hotel models, providing a range of possibilities to suit market demands.

• The sub-basement encompasses approximately 2,400 square feet, while the basement offers an additional 4,800 square feet of space.

• Floors one through seven, each measuring approximately 6,400 square feet, are seamlessly interconnected by an ornate marble central staircase, blending historic charm with functional design.

• These spacious and well-configured floors are perfectly suited for a variety of facilities, including meeting spaces, guestrooms, restaurants, bars, fitness rooms, and retail outlets.

• Adding to its appeal, the north and west sides of the property boast vast, unobstructed views of the John F. Kennedy Memorial Plaza and the Historic West End District.

• For the financial analysis, HVS has projected 75 guestrooms, based on an assumed building allocation of 750 square feet per guestroom.

Opportunity for Tax Incentives

• The historic significance of the property presents a compelling opportunity to leverage both federal and state historic tax credits, enhancing overall project returns. These incentives can substantially offset redevelopment costs, improving financial feasibility and increasing investor yield.

• Eligible programs include the following credits:

  • State Tax Benefit: A 25% tax credit on qualified rehabilitation expenditures, applicable to projects exceeding $5,000 in costs.

  • Federal Historic Tax Credit: A 20% tax credit on qualified rehabilitation expenditures on federal income tax (with no limit).

• Integrating these tax advantages into the redevelopment strategy can enhance financial performance and strengthen the investment appeal of the project.

Flexible Tenant Structure & Activation Potential

• The property’s existing lease structure provides a smooth transition for redevelopment, minimizing encumbrances and maximizing flexibility:

  • Short-Term Lease Agreements: The majority of the ground-floor retail and all of the upper-floor co-working tenants are on short-term leases, allowing for easy vacancy.

  • Restaurant Lease: A five-year lease was recently executed with Mayfair Garden, a contemporary Indian gastronomy restaurant. 

  • Outdoor Activation Potential: The previous restaurant tenant received city approval to convert the metered parking in front of the building into an outdoor seating area, creating an attractive pedestrian-friendly space.

  • Vacant Lower Levels: Both the basement and sub-basement are currently vacant, with the sub-basement featuring direct stair access to the exterior, offering unique potential for adaptive reuse.

  • Sale Leaseback Opportunity: Current ownership is willing to consider a short-term sale-leaseback arrangement, allowing the developer to obtain essential entitlements while ensuring a neutral cash-flow position.

Fully Unencumbered Offering

• The property is being offered free and clear of any management encumbrances.

• This structure ensures a streamlined transition for developers to execute their vision without pre-existing management constraints.

Thriving Downtown Dallas Hotel Submarket

• Downtown Dallas continues to demonstrate strong lodging demand, supported by a dynamic mix of corporate presence, tourism, and convention activity.

• A thriving tourism sector and a strong corporate base drive consistent demand for upscale accommodations, sustaining high occupancy levels.

• Downtown Dallas attracts millions of visitors annually to its cultural institutions, entertainment venues, and convention center events, reinforcing the need for premium lodging options.

STR Report Analysis

• The HVS team selected two separate competitive sets for a competitive market analysis:

  • Upper-Upscale to Luxury set: eight hotels ranging from 134 to 326 keys

  • Limited- and Select-Service set: six hotels ranging from 127 to 193 keys

• While growth has slowed in recent years, the market is stabilizing, presenting a unique opportunity to invest at a point of predictable recovery.

• If broader economic conditions support travel, the market could experience stronger demand, leading to significant upside in revenue and ADR.

• Recent years indicate a return to more predictable trends, which could present strategic investment opportunities.

• For the Limited- and Select-Service set, demand has grown at a 4.3% compounded annual growth rate (CAGR) since 2021, with the data demonstrating a consistent trend.

• For the Upper-Upscale to Luxury set, demand has grown at a 15.4% compounded annual growth rate (CAGR) since 2021, with the data demonstrating strong momentum. Room rates have consistently improved, with ADR for the year-to-date March 2025 period indicating sustained pricing power at $306, supporting strong RevPAR growth.

• Upper-Upscale and Luxury hotels attract higher-spending guests, corporate travelers, and tourism demand, creating multiple revenue streams beyond room bookings. As a result, the HVS team believes this market positioning offers the strongest investment returns.

Prime Location in the West End Historic District

• Situated in the vibrant West End Historic District, the property benefits from a prime urban setting that appeals to both business and leisure travelers.

• Guests will enjoy easy access to RJ Mexican Cuisine, YO Ranch Steakhouse, 3Eleven Kitchen and Cocktails, and a variety of shopping and nightlife options, making it a highly desirable destination.

• The property’s strategic location across from the Dallas County Courthouse and two blocks from Dallas County Offices ensures a steady flow of government-related lodging needs.

• Major employers such as AT&T (headquarters), Comerica Bank, and the Federal Deposit Insurance Corporation (FDIC) drive consistent business-travel demand in the area.

• The West End Historic District draws millions of visitors annually to iconic sites including the Dallas Holocaust & Human Rights Museum, Dallas Museum of Illusions, Dallas World Aquarium, Dealey Plaza, John F. Kennedy Memorial Plaza, Sixth Floor Museum, The Light Up Arches, The Old Red Museum, West End Square, and Wild Bill’s Western Store.

Kay Bailey Hutchison Convention Center Dallas

• The Kay Bailey Hutchison Convention Center Dallas (KBHCCD) is a major economic driver for the city, contributing significantly to tourism, job creation, and business activity. The following list outlines some key economic facts:

  • Massive Economic Impact: The planned expansion of KBHCCD is expected to generate $1 billion in economic impact from booked conventions starting in Q1 2029.

  • Convention Demand Growth: Nearly 100 additional organizations, many of which have not considered Dallas in the past two decades, are now interested in hosting events at the expanded convention center, representing billions of dollars in additional economic impact.

  • Job Creation & Tourism Boost: The expansion is designed to attract larger conventions, increasing visitor spending, supporting local businesses, and creating new jobs across hospitality, retail, and entertainment sectors.

  • Major Expansion Plan: A $3.7-billion expansion was overwhelmingly approved by Dallas voters in November 2022. The expanded KBHCCD will feature 2.5 million square feet of total space, including 800,000 square feet of exhibit space, 260,000 square feet of meeting rooms, and 170,000 square feet of ballroom space.

  • Urban Revitalization: The expansion aims to reconnect Downtown Dallas to its southern neighborhoods, fostering growth in retail, dining, and housing while strengthening the city’s long-term economic development.

• With its ambitious expansion and increasing demand from global organizations, KBHCCD is set to further elevate Dallas as a premier destination for conventions and business events.

Premier Business Hub: The Expanding Dallas–Fort Worth Metroplex

• The Dallas–Fort Worth Metroplex continues to solidify its reputation as one of the most sought-after corporate destinations in the nation, attracting Fortune 1000 and Global 500 headquarters through both relocations and local business expansions.

  • Corporate Relocations & Expansions: The region consistently ranks among the top markets for new and expanded corporate facilities; for example, AT&T, Comerica, Fluor, and Toyota relocated their headquarters to the Metroplex. More recent moves include industry leaders such as AECOM, Caterpillar, CBRE, Charles Schwab, Jacobs, and McKesson.

  • Fortune 10 Presence: The Metroplex is one of only two regions nationwide to host two Fortune 10 companies, Exxon Mobil and McKesson, with combined Fortune 500 revenues totaling $1.4 trillion, second only to the New York metropolitan area.

  • Expanding Industrial & Logistics Footprint: Major corporations have significantly grown their distribution, logistics, and manufacturing operations, including Amazon, BMW, DHL, Galderma, General Motors, Molson Coors, and Pratt Industries.

  • Office Market Growth: Companies such as 7-Eleven, American Airlines, Liberty Mutual, State Farm, FedEx, and Pioneer Natural Resources have expanded into new corporate office spaces, while Goldman Sachs and Wells Fargo have announced large-scale office construction projects to accommodate thousands of employees.