Foch Street Project

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:

1. Multi-family demand will diminish.  Currently there is a solid demand and ample supply with more multi-family developments already in the pipeline.
2. 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.
3. 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.
4. A venue that capitalizes on the inherent strength of the area is needed: one that coexists with the Trinity River Park and Trail System.
5. 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.