Abandoned building near City Hall slated for condominiums, retail

Board approves $15 million in public subsidies

09:26 AM CDT on Friday, May 12, 2006

By DAVE LEVINTHAL / The Dallas Morning News

One of downtown Dallas' oldest buildings is primed for renovation from abandoned hulk into condominiums and retail space, now that a City Hall board has approved $15 million in public subsidies for it.

Built in 1910, the structure at 500 S. Ervay St. will be converted to 321 residential units and 45,000 square feet of retail, according to Bisno Development Co., which owns the property.

The building, vacant for most of the decade, sits across Ervay from City Hall.

The Downtown Connection Tax Increment Financing District board approved the $15 million in subsidies, subject to several caveats.

One is a report from the developer about how it will fulfill affordable housing requirements.

The Dallas City Council must approve the deal, which probably will come before it next month, city officials said.

"I don't believe the project can go forward without the subsidy," said Robert Bisno, chairman and chief executive of Bisno.

"But it's a great project."

Downtown living enters new era

Aleshia Howe - April 24, 2006

More than 1,200 curious homebuyers crowded the streets of downtown Fort Worth April 1 and 2 to take a tour of living opportunities – an event that signifies a new era of the center city, said Downtown Fort Worth Inc. President Andrew Taft.

“We couldn’t have had this tour a year or two ago,” Taft said. “We weren’t ready for it. But with downtown booming like it is, we had a great response. The fact that we had 1,200 people show up the first time we’ve had an event of this nature is just the tip of the iceberg of downtown’s living potential.”

Since the dreary days of a blighted downtown in the 1990s, Fort Worth’s center city has blossomed into a booming residential market buzzing with activity.

And Taft said the developing area has nowhere to go but up – in every sense of the word.

“When people are looking for a place to live, downtown simply offers things that traditional developments can’t,” Taft said. “Where else can you find the view that The Tower can give from 488 feet high? Downtown living isn’t just an upcoming trend – it’s a trend that’s here.”

According to Integra Realty Resources D/FW LLP, new home starts in the Metroplex set a record-breaking pace in 2005 with 47,324 new, single-family homes – 16,745 of which were in Fort Worth.

Taft said there is a parallel between the general residential market and that of the downtown market.

“Downtown Fort Worth is mirroring the residential renaissance that we see happening across the country,” Taft said. “The downtown strategy of starting with apartments to test the viability of the market then transitioning into condo sales is exactly what we’ve done and it’s worked beautifully, just as it has in other downtown markets. The difference is that we have buildings like the Neil P. Anderson and The Tower to offer. You can’t find spots like those across the country and definitely not at our prices.”

Fort Worth’s Downtown Strategic Plan, released in 2003, calls for 10,000 new units in the greater city corridor by 2013. According to Downtown Fort Worth Inc., a non-profit organization that manages the downtown Tax Increment Finance District, the greater corridor is defined by the core downtown area, Lancaster corridor, Samuels Avenue, lower and upper west sides, upper east side and Fort Worth South.

Currently in the greater city corridor, the total number of units built is 1,871 with an additional 2,436 proposed and 785 under construction.

The core downtown area has seen 500 new units – both rental and for sale – created with 350 new units under construction and nearly 100 undergoing renovation.

Though residential development has been popping up in downtown at a break-neck pace, Taft said he expects the number of upcoming progress to level off soon.

“I expect the pace to take a breather,” he said. “And some of the projects that have been announced probably won’t occur. Just like in any other real estate market, there is a risk of over-saturation – look at Dallas’ office market. It was overly saturated and they are still suffering from it. There is a risk with real estate of overbuilding, but I don’t think we have done that yet. We still have a ways we could go.”

James “Jim” R. Harris, partner in James R. Harris Partners LLC, has researched and spoken on the topic of local residential development at the annual Tarrant County Commercial Real Estate Forecast for the past three years.

During his research, Harris said he spoke with several downtown developers who agreed that the center city housing market is steady.

But the days of developers purchasing cheap, downtown buildings to renovate and market at affordable prices are all but gone, Harris said.

“Up to now we’ve sort of picked the low-hanging fruit in downtown, so cost per unit has been cheap,” Harris said. “Going forward, there are not going to be the inexpensive buildings, so developers will have to raise selling prices per square by 50 percent, to be able to make the same amount on their properties.”

Harris said no one really knows what the future of the downtown residential sector holds, but, according to his research, he doesn’t expect the market to take a dive.

The most telling number for the downtown living sector, Harris said, is the demand per unit per year in the area. According to his figures and what he gathered from developers, Harris said he reported a demand of 150 to 200 units per year during the 2006 real estate forecast.

But, he said, those numbers were based at current prices.

“The market is most likely to remain steady, but level off,” he said. “If there is a demand for 200 or less units per year, then it might take developers longer to fill their units than they originally planned, but they will still fill them. Of course, that demand is based on current prices and that is where the uncertainty comes in.”

Harris said he expects David Porter’s City Place project, which is the rebirth of the former Tandy Center, to be the next big thing to hit the residential market. Last month Porter announced intentions to convert the north tower of the former RadioShack headquarters to office space, adding that the south tower is still slated for residential development.

Harris said the decision to make the north tower office is not a hint at a slowing residential market, but a clear sign of a growing office demand.

“Porter bought those buildings for real cheap, so he could conceivably convert the south tower to residential, offer the units for a competitive price and still come out ahead,” Harris said. “After the south tower opens as residential though, developers will be hard pressed to find an affordable building in downtown to convert to residential.”

The center city residential market took a sharp turn in 2003 when The Tower, a former office building turned condo development, hit the market and never looked back. TLC Realty Advisors converted the 37-story office complex into 298 for-sale condominiums and four penthouses. Taft said The Tower’s success proved the viability of a new generation of for-sale, luxury residential units in the city’s downtown area. Since that time, five condo developments have hit the center city market, joining seven apartment complexes and paving the way for several more projects that are currently in planning stages.

“It’s a whole new world in downtown, post The Tower,” Taft said.

An “unspoken” cooperation between most developers in downtown has formed, Taft said, despite a competitive and time-sensitive residential market.

“Naturally the first developments out of the ground will be in a better competitive position than those that are not complete until a later date, but developers here seem to respect the fact that it is a tight spot they are building in and they are mindful of each other. Of course, there’s always a jockeying for position in any market, and downtown is no different.”

According to questionnaires distributed to some of the 1,200 visitors during the home tour, 45 percent of the interested homebuyers were from Fort Worth and the remaining 55 percent were from surrounding areas – 18 of which came from Arlington.

Williams Trew Real Estate Services represents five of the downtown residential developments, including The Tower and the newly renovated Neil P. Anderson building. Marshall Boyd, managing partner of Williams Trew, said the goal for the April home tour was to get exposure for downtown Fort Worth.

And, he said, it worked.

“We’ve had one sale from the home tour and several more contracts have been let,” he said. “People are excited about downtown.”

According to studies conducted by Downtown Fort Worth Inc., the largest percentage of downtown dwellers is made up of empty nesters and young, single couples.

“A significant number of purchasers in the downtown area have either not had children yet or have already raised their children and are looking to get rid of the big house in the suburb,” Taft said.

Boyd agreed, saying gas prices are also weighing heavy on commuters’ minds.

“With gas hitting $3 a gallon, people who live in Arlington, for example, and work in Fort Worth are realizing that it’s eating away at their income,” Boyd said. “We were happy to see that we were right about the commuting trend – it’s fading out as gas prices continue to rise.”

Boyd added that he spoke with many interested people during the home tour who said the thought of not having to drive to go to a restaurant, movie theater or performance hall was appealing. Many people, he said, were sold on the convenience.

“Of course you have those who don’t want to live in a downtown area, but the fact remains that more and more people are seeing the benefits of it,” Boyd said. “With so many new options in Fort Worth, it’s not a trend that will go away.”

John Wolffarth, a 26-year-old attorney who has lived at The Depot Apartments since September 2005, said the downtown area was the only place he looked when he moved from Austin last year because of its entertainment value.

“I wanted to live downtown basically to have easy access to Sundance Square, restaurants [etc.],” he said. “Plus, I thought there would be other people down here in my age group.”

Though Wolffarth works outside of downtown, he said the “atmosphere of downtown is worth the commute.”

As far as residential design in downtown, Boyd said the sky is the limit.

“It’s interesting how there is really no leading design for the residential space that’s being offered,” he said. “The developers are really doing a good job of spanning the gamut of products. There is a wide array of designs being offered, and no two designers are really doing the same thing. From penthouses to luxury condos to town home projects – they’re all unique in design.”

Taft said although the real estate market is hard to predict, the success of downtown residential will be a contender in the residential sector for years to come.

“No one knows the future, but the residential development in downtown is well thought out, has been well executed and I believe it will continue to be a trend for many years,” he said. “Space may be limited on the ground, but these buildings are tall and can accommodate a lot of units in tall places and that intrigues homebuyers – and it’s not something that is going away any time soon.”