Located just south of downtown Fort Worth is an area know as Near Southside. Once a prosperous neighborhood surrounding the medical district, the area had fallen into decline. With many vacant buildings, it had become a blighted area to the point that several of the 5 major hospitals in the district were considering moving to their main campuses to other parts of the city.
In 1996 an organization was founded committed to the revitalization of Near Southside based on the two-fold recommendation of Sasaki Associates. The Boston company believed that there was a need to 1) to create an organization to work daily on revitalization and 2) to work with the city to create an economic development tool to encourage development in the area. Fort Worth South, Inc. is a non-profit organization with the mission to promote the redevelopment of Fort Worth’s Near Southside as a vibrant, urban, mixed-use neighborhood. The mixed-use element meant they would need to attract new residents and businesses and create a sense of community that was non-existent. Mike Brennan, Planning Director of FWSI, talked about the vision and challenges of recreating Near Southside.
One of the primary problems with the area was that it had become a cut-through rather than a destination. Interstate highways created a psychological barrier from downtown. Widened streets encouraged moving through rather than looking around. All of this would have to change if Near Southside were to develop a new identity. Magnolia, the main street through the community, was designed to be a walkable or complete street - welcoming not only automobile traffic, but pedestrians and cyclists as well. The group was also committed to making the area a unique collection of local businesses while supporting economic anchors that already occupied the area. As a result they have attracted an eclectic variety of restaurants and small businesses and developed a growing sense of individuality not seen in other parts of the area.
The other role of FWSI was to market the area with the goal of changing perceptions of the neighborhood. In addition to attracting businesses and residential development, the organization strives to invite those outside the neighborhood to events such as Friday on the Green, Art Goggle, and other events to help them experience the unique culture of Near Southside.
The formation of Tax Increment Finance District #4 (TIF District) has also played a major role in the improvements and development of the area. Working with the city, the committee developed a redevelopment plan that included updating rules to allow for the type of mixed-use development they desired. (Prior to these changes it was illegal to have businesses and residential in the same building in this area.) It also offered financial incentives to support projects that met the goals of the redevelopment plan.
While the project has experienced much success, not everything they hoped for has come to fruition. One goal was to create a user-friendly access to the area through a modern street car. Plans were made for initial phases and the project even received $25 million in federal funding. Unfortunately, a close vote by the city council voted the project down and resulted in several developers pulling their projects from the area.
Despite political hurdles, New Southside has continued to grow and develop. Their community events attract people from outside the neighborhood and the area is quickly gaining a reputation of having a friendly and eclectic culture. One of the goals of Near Southside is to create a sense of authenticity. While they use this as an acrostic, the word really sums up the atmosphere of the area. Not only is it full of wonderful architecture, there is a sense of truth in the community and that is always a good thing.
Flexibility and imagination are two of the greatest qualities of the human mind. When something isn't working the way we want it to, we can simply go back and look at it again. We can ask the questions: "What would I change?" and "How would I do this differently now?". This perspective is at the core of adaptive reuse and redevelopment.
Real estate has two major components - the land and the improvements. If the land is not being used to its highest and best use, then redevelopment can be considered. Using existing buildings in a way other than their original purpose, adapted to the current needs of an area or market, is the process of reuse.
REDEVELOPMENT: There are situations where the value of a property is weighted heavily, if not entirely, in the land. This is predominately true in areas where the availability of raw land is limited or non-existent, such as built out urban areas or areas limited by geography, such as waterfront. The existing buildings on this land may be more of a limitation than an asset. The process of undoing previous construction or undertaking demolition may have its challenges, but once complete the developer is left with a blank slate. This allows use of the the land based on present needs and market demands. Redevelopment can be costly, but in many cases is more financially sound than trying to work around the existing structures.
ADAPTIVE REUSE: Looking at an existing building and imagining a new use is at the core of adaptive reuse. As the needs and demands of an area change, the former use of a structure may become obsolete. An increasing trend in development is to seek out ways to use the existing structure for something other than its original purpose- to help it adapt to the current needs of a community. The desire to keep the existing structure may be asthetic or financial, but the results are creative and varied.
Tax Credits: The financial help afforded by tax credits helps developers, both small and large, reduce out-of-pocket development costs. While many of these credits come with extensive expectations and restrictive timelines, they are often the difference between completing and shelving a project. Most of these programs are government funded and therefore have a very specific goal.
The desire to help preserve historic buildings while recognizing the added expense in the process led to the Historic Preservation Tax Credits. The goal was to encourage developers to rehabilitate and re-use historical buildings in a way that maintained their historical integrity while giving them new life. The result was a number of developers considered buildings that otherwise would have been ignored or torn down. One example is the American Society of Metals building in Cleveland, Ohio (see video above). The renovation of the building included a 103 foot geodesic dome designed by R. Buckminster Fuller. The history of the building inspired not only the physical structure, but the interior decor as well. Rehabilitation Tax Credits also help with the renovation, restoration and rehabilitation of historic buildings.
New Market Tax Credits were established in 2000 to spur new business in low-income areas (see video above). The nationally funded credit allowed investors to receive a tax credit for making donation to CDEs (Community Development Entities) in hopes of revitalizing under developed or blighted areas. These funds were distributed through October 2011. The Low Income Housing Credits are a dollar for dollar tax credit given to developers to encourage the development of low income housing. While the LIHTC is not limited to redvelopment projects, many developers combined these credits when including residential units in their projects.
Other Financing Options:Tax Increment Financing districts are a means to improve a specific area. Tax dollars are used for anything from schools with in the area to improving infrastructure needed for redevelopment. The goal is to help revitalize areas that are under-developed or suffering from blight. Developers benefit from these funds because they help provide financing for some of the additional development costs of a project such as street repair, lighting, even sewer updating. The benefit to the area is that it experiences renewed development and revitalization.
Oriented Developments: A growing trend in development is to orient it, often through mixed use, to the major type of transportation of an area. The two most common oriented developments are Transit Oriented Developments and Pedestrian Oriented Developments. A transit Oriented Development seeks to maximize access to public transportation available for residents to live, work, and play. It centers around transit stations and often becomes a determining factor in placement of stations and businesses. A Pedestrian Oriented Development focuses on the walkability of an area. This might include wider sidewalks or actual pedestrian streets. This type of development capitalizes on the lifestyle of residents and attracts residential, retail, business and entertainment venues that want to serve this growing population.
This project was given to us with the assignment of evaluating and developing a creative use for the property. While the developer has gone ahead with his project, we were challenged to think outside of the box and come up with an end-user for the vacant space.
3 Buildings on Property
The Property: The property is comprised of three buildings with two of them being predominately leased. Our focus will be on Building 2. Building One is home to a number of retail businesses including a restaurant, yoga studio, art supply store and vintage clothing boutique. Building Three is located behind Building Two and is fully leased by 1 restaurant/bar and 7 office tenants. Both buildings are currently leased for $14.50/SF, NNN.
Building 2
Building Two was formerly leased to a single tenant metal fabricator who vacated on 12/31/2012. They paid approximately $2.50/SF gross for their 80,000 SF space. There is approximately 4,500SF of old office space at the southeast corner. The building is cast in place concrete construction with dock high finished floors, built in 1948. One concern is the flat roof that holds water after rains.
The Market: The three buildings are located on the southeastern edge of the So7 mixed-use development in close proximity to Trinity River Park. This area is sided to the east by Trinity Park and is located just west of downtown Fort Worth. Recent redevelopment has led to high levels of activity since 2007, attracting retail, dining, and residential developments. There has also been an increase in office space. Based on information provided by the developer, lease rates as of 1/1/11 ranged from $30-45/SF, NNN for retail and $25,26/SF for office. In 2008, Cypress Equities bought the land that now houses W7th project at the high water mark of approximately $42/SF. Other sites have brought $30-35/SF with sales stopping around 2009. There has been continued addition of multi-family and rents were approximately $1.40-$1.50/SF and rising as demand has continued to increase.
The Decision Point: On January 1, 2011 the investors faced a decision point. Building 2 was completely vacant and while the partnership formed around Blgs. 2 & 3 would break even based on the occupancy of Building 3, the property tax bill was due at year end. The partners recognized the value of the property and knew it would have future value, but were not interested in "feeding" the project until that occurred. The questions being considered included redevelopment versus demolition? Use of tax credits to develop? Creating a way to effectively 'mothball' the project until the market improved? Our assignment was to develop a plan that would address these concerns.
The Project:
5-7 Year Outlook for 7th Street Corridor:
Multi-family demand will diminish. Currently there is a solid demand and ample supply with more multi-family developments already in the pipeline.
Retail activity will remain strong, but new projects such as Trinity Uptown will draw traffic away fromSo7 just as So7 has drawn traffic away from Downtown.
There is a need to create a venue in So7 that has regional appeal as many of the other stores and entertainment venues can be found elsewhere in other developments.
A venue that capitalizes on the inherent strength of the area is needed: one that coexists with the Trinity River Park and Trail System.
So7 will continue to draw people who are active and want a lifestyle where they can live, work, and play.
Development Summary:
Our proposal is based on the notion that Foch Street is unique given its location in the heart of the So7 development. Additionally, this property is unique because of Building 2's size, approximately 80,000SF. The fact that it has basically no finish-out gives the owner a tremendous opportunity to do something that is completely innovative and out-of-the-box. Although there are many questions that must be answered to determine the ultimate viability of our proposal, the idea capitalizes on the strength of the area's demographic and its location. It also utilizes the most important quality of every real estate project - scarcity.
The Proposal
What if you could build something where a strong demand existed and where there were only two of its kind in the US?
How far would people travel to your site in order to use your product or service?
What if you could set yourself apart in a billion dollar industry and your competitive advantage was very dominant?
Would you be interested? Most real estate developers would be!
The idea is simple: Develop a large facility that caters to serious athletes, especially the subset of serious athletes who are cyclists, marathoners, swimmers, and triathletes. With the existing 80,000SF building you could redevelop the former warehouse into an indoor velodrome, running track and Olympic size lap pool. The velodrome or banked cycling track, would allow cyclists to practice in a safe, climate controlled environment. It would enable them to "squeeze" a ride into their busy schedules and collect miles and times necessary for competitions. By combining this unique facility with a 250m running track and 50m lap pool you will have created an opportunity to cross train or to prepare for Ironman or triathlon competitions in one convenient location. This type of venue would attract amateur and professional athletes from miles away. In addition to membership and member use, you could attract swim clubs and school athletic programs and clubs from across DFW. There is a growing need for this type of exercise/training facility in DFW
This type of facility, modeled after Boulder Indoor Cycling, allows clients to continue their training and exercise in bad weather and in the dark. Imagine a place where a triathlete can train for all three events in an hour, perhaps even minutes from work and home. In one hour, he or she could swim, cycle and run under one roof. This facility would also become a magnet for other athletic retailers, even medical sports offices.
Fe workout facility logo
Our concept for this facility, named Fe after the atomic symbol for iron, shows how this empty warehouse on Foch Street can be re-purposed into a place where a serious athlete can become like iron. The facility will offer membership as well as race opportunity and facility rentals. It will have space for offices and a retail/snack bar space. The option of renting and storing bikes is another source of proposed revenue.
Proposed layout for Fe
While parking is somewhat limited on site, the aerial below shows an adjacent public lot within easy distance of the facility. If need be, arrangements could be made to use that space for parking. The aerial also show the close proximity of Trinity Park and Trails, another huge advantage of the site.
Aerial of Fe and surrounding parking and proximity of park
While additional research would need to be done on the project, it offers the developer a unique opportunity to create a regional draw and develop an ongoing income source. While the full project offers the most complete facility for cross training, the pool could be sidelined making the project even more affordable. While there is every expectation that Fe would be successful, this project also offers the owners the flexibility to use the site for this purpose while maintaining the option of changing its use or even demolishing it in the future. While this project does not lend itself to tax credit financing, there is a possibility that funds could be raised by forming a 501c3 that would create training opportunities to underprivileged kids, helping both the developer and the community.
In 1996 an organization was founded committed to the revitalization of Near Southside based on the two-fold recommendation of Sasaki Associates. The Boston company believed that there was a need to 1) to create an organization to work daily on revitalization and 2) to work with the city to create an economic development tool to encourage development in the area. Fort Worth South, Inc. is a non-profit organization with the mission to promote the redevelopment of Fort Worth’s Near Southside as a vibrant, urban, mixed-use neighborhood. The mixed-use element meant they would need to attract new residents and businesses and create a sense of community that was non-existent. Mike Brennan, Planning Director of FWSI, talked about the vision and challenges of recreating Near Southside. 
