Sunday, July 11, 2010
Saturday, July 10, 2010
New Post
After some number crunching, my colleagues and I come to the conclusion that our Carroll property simply would not work for what we want to do. Even if we were to get the property at a large discount, the numbers didn’t seem to work. Frustrated with all options so far, we set out to attempt to find some viable option. Continually, we ran in to road blocks. The numbers just would not work in the areas we were looking in. My partners and I seemed to be getting more and more frustrated. We all realize that to find projects that will work involves a lot of time looking and knowledge of an area over a period of years. The issue is we don’t have much time and we would like to see our project succeed. We were all pulling our hair out, so we went to Dr.Forgey for some advice. Dr.Forgey discussed our issues and came to the conclusion that prices simply just don’t support a redevelopment project. So we have moved our attention away from a redevelopment and onto a new construction development. Dr. Forgey has supplied some sites that he feels would work and we are off and running again.
The site Dr.Forgey suggested was off Rosedale and May. It is two lots with great visibility on Rosedale. There is a for sale sign up and the asking price is $25 per square foot. Personally, I believe this price makes it very difficult to make the numbers work. The site is on the eastern side of the area and I am honestly not very thrilled with it. It seems to lack the business synergy we are looking for in this project. So we can walk to Church’s Chicken. Great(Sarcasm)! On further investigation I noticed that besides about three single family homes, the whole block seemed to be owned by two entities. It seems they are trying to accomplish a land assemblage. It would actually be a great spot for one and would do a lot for the area. The issue might be in that it is in a historical area and the three homes might be difficult to get torn down . Still, someone tore down all the other homes on the block and it looks funky with just those three homes on the site. Not really thrilled with the site and realizing that the numbers really don't work, we decide to proceed forward. It feels like we have already fallen pretty far behind and need to accomplish something.
I decided to get on loopnet again and try to come up with some better alternative. There had to be some property out there that was better suited for our development. As luck would have it, I stumbled upon a property off Lipscomb that perfectly meets our criteria, is cheaper, and is surrounded by numerous new developments. The property is two lots that are approximately 9,500 SF of land. NS-T4 is the zoning classification and the price is only $15 a square foot. I think beside the traffic visibility, this is actually a better site. The property is in walking distance to numerous medical office buildings and banks. It is also in walking distance to the First Friday on the Green site, which is a outdoor concert every first Friday in that area. As a tenant, it would be great to be able to just walk to this event. The only possible issue of the site is that there is an existing building which may pose a problem with the city. This was our only real issue with the site.
So, I discuss the property switch with the rest of my development team. We really don’t like the idea of changing properties this late in the ball game, but this new property seems to be the most favorable we have stumbled across. That being said, I still don’t expect the numbers to work. Everyone seems to be on board with the property and we FINALLY have our property.
Okay, so I make a phone call to the broker and discuss our idea for the property. We want to stick to Dr. Forgey’s less is more idea and go with five units , each with one thousand square feet. Making five thousand square feet combined. They will have economical construction and will have a loft feel. Retail will not work for this location because of the lack of traffic. It will be great for office and residential though. The broker says that the property will be great for such a development. I ask about the possible issue of demolition and he said the city would probably give me a medal for getting rid of the existing structure.
Someone's Home
Jason and I decide to take a look at the property and the surrounding area. Despite our switching to this property, we still have not physically seen it. When I drive up I see what the broker was talking about. The current structure is a P.O.S. and will never have anyone live in it again. Besides the homeless guy in back. So, there is two crappy convenience store buildings facing Rosedale and our property being behind the one on the west side of Lipscomb. Our property really is very well located and primed for a new development. On the other side of Rosedale within walking distance to numerous places and entertainment. http://www.fortworthsouth.org/FWS/arts-music-theater.html
On the north side of the property are some new developments that were interesting. There are two new development. Both are two stories and are approximately 8,000 Square Feet. They have a office tenant on the bottom and four residential loft style apartments on top. They seem to be a great comparable for our project. I call the real estate agent and ask about pricing. She lets me know that they are asking $1.25 a square foot and the bottom floor is owner occupied and did not have a rate for it. This office space would have been an awesome comparable for the project if I knew what it was.
The second building is still under construction so my partner and I decide to poke around and see if someone knows the cost per square foot of the construction. We end up find the supervisor with Fort Construction Bob. We ask Bob what it costs to build something like this. Bob is a great guy. He not only lets us know, but takes us in the building and shows us the plans. Bob then fills us in on issues he is having with the project engineers. Apparently the engineers actually put one of the A/C units in a closet. Not a A/C closet, but one that was actually supposed to be utilized by the tenant. Bob vented his frustration and gave a solution. Bob also informed us of the projects strategy and information on the surrounding properties. The properties are all owned by the Texas Pain Institute Doctor. He actually has a pretty good thing going. He owns a older building and slowly expanded into these two other newer buildings where he is the owner occupied tenant for the bottom floor. It’s great because he can get an SBA loan with favorable terms and a investment property as long as he occupies 50 percent of the property. WOW, a Doctor makes a solid real estate decision. I suspect they used the SBA loan. They may have paid cash, but these are the only loans that seem to be closing right now and bankers are all over them.
After our tour of the property with Bob, Jason and I decide to head to the city and find out what it would really take to get our project developed we. I have never been to the City of Fort worth even though I have lived here basically my whole life. We had an interesting experience finding the place after about an hour of looking. Finally we arrive. As I walk into the lobby the first thing I notice is a huge plant garden that seemed to be approximately 2,000 square feet. I think what a great big waste of space. I guess it made room more pleasant, but honestly I didn’t think it was the most attractive looking thing I ever saw either. Then I started thinking of the opportunity costs and maintenance of keeping such a thing. I calculated that the city was paying approximately $60,000 a year for the office space to house this thing and that is not including maintenance or other opportunity costs. Our tax dollars hard at work. Now, I do believe that we should provide pleasant work environments, but I think it must pass the cost benefit analysis test.
¬¬¬¬So, everything for the most part is really automated at the city. You can really find anything you need to know in brochures or online. I don’t really like doing that though. I find it much better to speak with someone at the city. You just seem to find out more and I always leave feeling more informed. My partner on the other hand believes in the automated system and doesn’t want to bother anyone or waste their time. I then inform him that is what they are paid to do and they really don’t care for the most part. The employee’s of the city are usually always very helpful and our looking to help you out, even if you are a graduate student doing a project. They really don’t seem to discriminate. We attempted to get a meeting with the plans department to see if we could get our project through. We were quickly shot down. Determined to have a conversation with someone on the viability of our project we looked elsewhere. We found a very nice lady in zoning that informed us on what we could and could not do with the property. We asked what the next step was and she insisted in a meeting that would include a representative from each of their departments to discuss all issues at once. At first I wanted to meet and discuss the project but then sided with my partner on this one. Our project still did not pass any financial feasibility analysis and we were about 99 percent sure we would be wasting everyone’s time. So we passed.
The site Dr.Forgey suggested was off Rosedale and May. It is two lots with great visibility on Rosedale. There is a for sale sign up and the asking price is $25 per square foot. Personally, I believe this price makes it very difficult to make the numbers work. The site is on the eastern side of the area and I am honestly not very thrilled with it. It seems to lack the business synergy we are looking for in this project. So we can walk to Church’s Chicken. Great(Sarcasm)! On further investigation I noticed that besides about three single family homes, the whole block seemed to be owned by two entities. It seems they are trying to accomplish a land assemblage. It would actually be a great spot for one and would do a lot for the area. The issue might be in that it is in a historical area and the three homes might be difficult to get torn down . Still, someone tore down all the other homes on the block and it looks funky with just those three homes on the site. Not really thrilled with the site and realizing that the numbers really don't work, we decide to proceed forward. It feels like we have already fallen pretty far behind and need to accomplish something. I decided to get on loopnet again and try to come up with some better alternative. There had to be some property out there that was better suited for our development. As luck would have it, I stumbled upon a property off Lipscomb that perfectly meets our criteria, is cheaper, and is surrounded by numerous new developments. The property is two lots that are approximately 9,500 SF of land. NS-T4 is the zoning classification and the price is only $15 a square foot. I think beside the traffic visibility, this is actually a better site. The property is in walking distance to numerous medical office buildings and banks. It is also in walking distance to the First Friday on the Green site, which is a outdoor concert every first Friday in that area. As a tenant, it would be great to be able to just walk to this event. The only possible issue of the site is that there is an existing building which may pose a problem with the city. This was our only real issue with the site.
So, I discuss the property switch with the rest of my development team. We really don’t like the idea of changing properties this late in the ball game, but this new property seems to be the most favorable we have stumbled across. That being said, I still don’t expect the numbers to work. Everyone seems to be on board with the property and we FINALLY have our property.
Okay, so I make a phone call to the broker and discuss our idea for the property. We want to stick to Dr. Forgey’s less is more idea and go with five units , each with one thousand square feet. Making five thousand square feet combined. They will have economical construction and will have a loft feel. Retail will not work for this location because of the lack of traffic. It will be great for office and residential though. The broker says that the property will be great for such a development. I ask about the possible issue of demolition and he said the city would probably give me a medal for getting rid of the existing structure.
Someone's Home
Jason and I decide to take a look at the property and the surrounding area. Despite our switching to this property, we still have not physically seen it. When I drive up I see what the broker was talking about. The current structure is a P.O.S. and will never have anyone live in it again. Besides the homeless guy in back. So, there is two crappy convenience store buildings facing Rosedale and our property being behind the one on the west side of Lipscomb. Our property really is very well located and primed for a new development. On the other side of Rosedale within walking distance to numerous places and entertainment. http://www.fortworthsouth.org/FWS/arts-music-theater.html
On the north side of the property are some new developments that were interesting. There are two new development. Both are two stories and are approximately 8,000 Square Feet. They have a office tenant on the bottom and four residential loft style apartments on top. They seem to be a great comparable for our project. I call the real estate agent and ask about pricing. She lets me know that they are asking $1.25 a square foot and the bottom floor is owner occupied and did not have a rate for it. This office space would have been an awesome comparable for the project if I knew what it was.
The second building is still under construction so my partner and I decide to poke around and see if someone knows the cost per square foot of the construction. We end up find the supervisor with Fort Construction Bob. We ask Bob what it costs to build something like this. Bob is a great guy. He not only lets us know, but takes us in the building and shows us the plans. Bob then fills us in on issues he is having with the project engineers. Apparently the engineers actually put one of the A/C units in a closet. Not a A/C closet, but one that was actually supposed to be utilized by the tenant. Bob vented his frustration and gave a solution. Bob also informed us of the projects strategy and information on the surrounding properties. The properties are all owned by the Texas Pain Institute Doctor. He actually has a pretty good thing going. He owns a older building and slowly expanded into these two other newer buildings where he is the owner occupied tenant for the bottom floor. It’s great because he can get an SBA loan with favorable terms and a investment property as long as he occupies 50 percent of the property. WOW, a Doctor makes a solid real estate decision. I suspect they used the SBA loan. They may have paid cash, but these are the only loans that seem to be closing right now and bankers are all over them.
After our tour of the property with Bob, Jason and I decide to head to the city and find out what it would really take to get our project developed we. I have never been to the City of Fort worth even though I have lived here basically my whole life. We had an interesting experience finding the place after about an hour of looking. Finally we arrive. As I walk into the lobby the first thing I notice is a huge plant garden that seemed to be approximately 2,000 square feet. I think what a great big waste of space. I guess it made room more pleasant, but honestly I didn’t think it was the most attractive looking thing I ever saw either. Then I started thinking of the opportunity costs and maintenance of keeping such a thing. I calculated that the city was paying approximately $60,000 a year for the office space to house this thing and that is not including maintenance or other opportunity costs. Our tax dollars hard at work. Now, I do believe that we should provide pleasant work environments, but I think it must pass the cost benefit analysis test.
¬¬¬¬So, everything for the most part is really automated at the city. You can really find anything you need to know in brochures or online. I don’t really like doing that though. I find it much better to speak with someone at the city. You just seem to find out more and I always leave feeling more informed. My partner on the other hand believes in the automated system and doesn’t want to bother anyone or waste their time. I then inform him that is what they are paid to do and they really don’t care for the most part. The employee’s of the city are usually always very helpful and our looking to help you out, even if you are a graduate student doing a project. They really don’t seem to discriminate. We attempted to get a meeting with the plans department to see if we could get our project through. We were quickly shot down. Determined to have a conversation with someone on the viability of our project we looked elsewhere. We found a very nice lady in zoning that informed us on what we could and could not do with the property. We asked what the next step was and she insisted in a meeting that would include a representative from each of their departments to discuss all issues at once. At first I wanted to meet and discuss the project but then sided with my partner on this one. Our project still did not pass any financial feasibility analysis and we were about 99 percent sure we would be wasting everyone’s time. So we passed.
Thursday, July 8, 2010
Thursday, June 17, 2010
Saturday, 12June2010
Dr. Forgey describes the structure of the Studio. The class will consist of a potential commercial real estate development project. The idea is to locate a improved property that can work as a redevelopment site or a undeveloped site. The development must be located within the Fort Worth TIF district near the hospital district or the 7th Street redevelopment. The redevelopment must fit the criteria of having role up doors, a total project price cap of $500,000, and must be suitable for retail/multi-family use. The new development must be similarly able to sustain a development with the subsequent criteria. The students must locate a potential project, obtain financing, work with the city, and maneuver potential issues
Dr. Forgey then outlined his ideal property. The ideal property is an industrial building shell. It will have large role up glass doors to provide a industrial feel while having a new clean look and providing natural light to the interior of the property. The exterior will possibly be landscaped slightly to provide a more urban natural feel or a place to congregate outside. Possibly used as an area to provide a venue for local entertainment. The build-out will be minimal. Potential use of modular bathrooms/kitchen areas are an option, exposed air ducts etcetera to provide almost an industrial loft feel. All to be done as economic as possible while providing a certain industrial/modern feel for the tenants. The ideal property would consists of four units and be interchangeable as multi-family or retail. The retail would potentially be something tenants would be attracted to live near.
After the discussion and obtaining an idea of what Dr. Forgey’s vision was for the project, the class drove to three potential redevelopment sites originally located by Dr. Forgey. The sites were mainly older auto repair shops. Someone suggested the possible environmental issues with redeveloping a former auto repair shop in retail/multi-family. I agree that it would be difficult, but considering the area the city might be open to a redevelopment of such public eye sores. I believe Dr. Forgey’s vision is in line with the cities for the area and because of this, they may be more will to work with us. Of course this is subject to a certain Phase I environmental that possibly could come back so negative no one would ever be allowed to reside at the location legally.
Dr. Forgey then took us to some sites around the hospital district to help us understand the character of the area and to help better our vision of the project. We went to some shops that specialized in selling antique home parts and furniture. It really added to the idea of the area. Then we had coffee at the Paris Coffee Shop, a local favorite in the middle of this revitalized area that is always packed with customers.
After our small trip to these properties, the class reconvened back at the class room. There my group and I discussed ideas on obtaining financing and site selection. Both of which are challenges. It appears that the only present solutions to financially securing commercial property today are cash, SBA, HUD, a considerable down payment, or some joint venture using the present property as collateral. Our options are limited because of the current economic climate. I don’t believe cash is an option and SBA does not apply. I am personally interested in the HUD financing because of the opportunity to obtain extremely favorable terms. The downside is getting a property owner to agree to lockup the right to own a property for a one year while maneuvering through the bureaucracy of obtaining government backed financing. The payoff seems to be tremendous if this can be accomplished. Mark(A Group Partner) and I have scheduled a meeting with a HUD representative to discuss this option. Because of the timing of the class and the timing goal of the project, this option does not appear to be extremely feasible. Though I still remain interested in this option and curious about its potential.
Our group decided to choose a redevelopment project. Our belief was that it would be a little more exciting and financing would possibly be more available. We then took off from the classroom again to pin down a potential redevelopment site.
Initially we toyed with the idea of redeveloping the old Anderson’s Furniture store. We all felt this was a great potential redevelopment and just a neat building in general. We were able to view the interior and came to the conclusion that while a great building, the present condition of the property carries huge redevelopment risks we are not willing to make. The building was also to large of a project and did not have the role up doors Dr. Forgey wanted.
Next we found a property off of Main Street we all felt was prime for redevelopment. The buildings bones were still in great shape. It would need to be completely gutted but we all agreed that if the property could be obtained at a suitable price to support our risk, that it would be a suitable project. As great of a redevelopment project this might be we had to pass on it because the property did not have role up doors to fit the scope of the project.
After that, we located a property on West Vickery. I loved the idea of using this property as a redevelopment project. The property looked vacant and had no signs of present use. It has beautiful older industrial look to it and a area to its side that not only could be used for parking but a multitude of possibilities. The issues were the size of the buildings depth. It seems too large for multi-family units. We played with the idea of using the extra space as storage in order to maximize the square footage. Which is a great idea but begins to make the project more complex. Ultimately we ended up passing on this building because the building was too large a project, the bay depth was too long, and we were not sure how available the property truly was.
Lastly, we were considering a property off of Magnolia which had been an old Auto Repair Shop. It was one of Dr. Forgey’s suggestions and fit the criteria very well. Role Up doors and a proper size project.
With are potential sites in hand we headed back to the class room to present them to the class. Main Street was at the time the groups number one pick, but was shot down immediately by not fitting the role up door criteria. The Vickery property showed some promise, so it was presented to the class as our project.
We then left again to examine each groups sites. Each group showed their sites and presented their development ideas. Our site at the time was the Vickery property, which previously stated was a no go upon closer examination. This brought us to go with Dr. Forgey’s suggestion of the Magnolia property. We then went back again to better understand the feasibility of the Magnolia Street site. The property seemed to fit the criteria quite well. We exchanged ideas on how the property would be split up and ideas for exterior beautification that were excellent. So now we had our property and our ideas and we were on our way to a redevelopment.
Monday 14June2010
Disaster!!! I contacted the broker of 1311 Magnolia and her response is below.
Hi Jerod,
It is for lease only and we have leases out that we expect to execute this week. I'll let you know if that changes.
This one brief two sentence email has destroyed our hope to develop this property and sent us back to square one.
After receiving this email, I made a plan to go back through the area. I needed to take make grandfather to the Doctor in the area and while he was at his appointment I had time to look for more possible options. After going through almost every street in the desired areas I had one possibility on Carroll Street just across from the redeveloped Target. It was a little farther out than I believe Dr. Forgey ideally wanted but seemed to meet all the necessary criteria. It was a shell of a building that could easily be converted to multi-family or retail. I think it would have been a neat project, the current issue is that the owners believe the land value has sky rocketed due to the surrounding developments. The current asking price is $750,000.00. This is far above are target price range. The property is vacant and it might be worth a call to see how negotiable the owner is.
Dr. Forgey describes the structure of the Studio. The class will consist of a potential commercial real estate development project. The idea is to locate a improved property that can work as a redevelopment site or a undeveloped site. The development must be located within the Fort Worth TIF district near the hospital district or the 7th Street redevelopment. The redevelopment must fit the criteria of having role up doors, a total project price cap of $500,000, and must be suitable for retail/multi-family use. The new development must be similarly able to sustain a development with the subsequent criteria. The students must locate a potential project, obtain financing, work with the city, and maneuver potential issues
Dr. Forgey then outlined his ideal property. The ideal property is an industrial building shell. It will have large role up glass doors to provide a industrial feel while having a new clean look and providing natural light to the interior of the property. The exterior will possibly be landscaped slightly to provide a more urban natural feel or a place to congregate outside. Possibly used as an area to provide a venue for local entertainment. The build-out will be minimal. Potential use of modular bathrooms/kitchen areas are an option, exposed air ducts etcetera to provide almost an industrial loft feel. All to be done as economic as possible while providing a certain industrial/modern feel for the tenants. The ideal property would consists of four units and be interchangeable as multi-family or retail. The retail would potentially be something tenants would be attracted to live near.
After the discussion and obtaining an idea of what Dr. Forgey’s vision was for the project, the class drove to three potential redevelopment sites originally located by Dr. Forgey. The sites were mainly older auto repair shops. Someone suggested the possible environmental issues with redeveloping a former auto repair shop in retail/multi-family. I agree that it would be difficult, but considering the area the city might be open to a redevelopment of such public eye sores. I believe Dr. Forgey’s vision is in line with the cities for the area and because of this, they may be more will to work with us. Of course this is subject to a certain Phase I environmental that possibly could come back so negative no one would ever be allowed to reside at the location legally.
Dr. Forgey then took us to some sites around the hospital district to help us understand the character of the area and to help better our vision of the project. We went to some shops that specialized in selling antique home parts and furniture. It really added to the idea of the area. Then we had coffee at the Paris Coffee Shop, a local favorite in the middle of this revitalized area that is always packed with customers.
After our small trip to these properties, the class reconvened back at the class room. There my group and I discussed ideas on obtaining financing and site selection. Both of which are challenges. It appears that the only present solutions to financially securing commercial property today are cash, SBA, HUD, a considerable down payment, or some joint venture using the present property as collateral. Our options are limited because of the current economic climate. I don’t believe cash is an option and SBA does not apply. I am personally interested in the HUD financing because of the opportunity to obtain extremely favorable terms. The downside is getting a property owner to agree to lockup the right to own a property for a one year while maneuvering through the bureaucracy of obtaining government backed financing. The payoff seems to be tremendous if this can be accomplished. Mark(A Group Partner) and I have scheduled a meeting with a HUD representative to discuss this option. Because of the timing of the class and the timing goal of the project, this option does not appear to be extremely feasible. Though I still remain interested in this option and curious about its potential.
Our group decided to choose a redevelopment project. Our belief was that it would be a little more exciting and financing would possibly be more available. We then took off from the classroom again to pin down a potential redevelopment site.
Initially we toyed with the idea of redeveloping the old Anderson’s Furniture store. We all felt this was a great potential redevelopment and just a neat building in general. We were able to view the interior and came to the conclusion that while a great building, the present condition of the property carries huge redevelopment risks we are not willing to make. The building was also to large of a project and did not have the role up doors Dr. Forgey wanted.
Next we found a property off of Main Street we all felt was prime for redevelopment. The buildings bones were still in great shape. It would need to be completely gutted but we all agreed that if the property could be obtained at a suitable price to support our risk, that it would be a suitable project. As great of a redevelopment project this might be we had to pass on it because the property did not have role up doors to fit the scope of the project.
After that, we located a property on West Vickery. I loved the idea of using this property as a redevelopment project. The property looked vacant and had no signs of present use. It has beautiful older industrial look to it and a area to its side that not only could be used for parking but a multitude of possibilities. The issues were the size of the buildings depth. It seems too large for multi-family units. We played with the idea of using the extra space as storage in order to maximize the square footage. Which is a great idea but begins to make the project more complex. Ultimately we ended up passing on this building because the building was too large a project, the bay depth was too long, and we were not sure how available the property truly was.
Lastly, we were considering a property off of Magnolia which had been an old Auto Repair Shop. It was one of Dr. Forgey’s suggestions and fit the criteria very well. Role Up doors and a proper size project.
With are potential sites in hand we headed back to the class room to present them to the class. Main Street was at the time the groups number one pick, but was shot down immediately by not fitting the role up door criteria. The Vickery property showed some promise, so it was presented to the class as our project.
We then left again to examine each groups sites. Each group showed their sites and presented their development ideas. Our site at the time was the Vickery property, which previously stated was a no go upon closer examination. This brought us to go with Dr. Forgey’s suggestion of the Magnolia property. We then went back again to better understand the feasibility of the Magnolia Street site. The property seemed to fit the criteria quite well. We exchanged ideas on how the property would be split up and ideas for exterior beautification that were excellent. So now we had our property and our ideas and we were on our way to a redevelopment.
Monday 14June2010
Disaster!!! I contacted the broker of 1311 Magnolia and her response is below.
Hi Jerod,
It is for lease only and we have leases out that we expect to execute this week. I'll let you know if that changes.
This one brief two sentence email has destroyed our hope to develop this property and sent us back to square one.
After receiving this email, I made a plan to go back through the area. I needed to take make grandfather to the Doctor in the area and while he was at his appointment I had time to look for more possible options. After going through almost every street in the desired areas I had one possibility on Carroll Street just across from the redeveloped Target. It was a little farther out than I believe Dr. Forgey ideally wanted but seemed to meet all the necessary criteria. It was a shell of a building that could easily be converted to multi-family or retail. I think it would have been a neat project, the current issue is that the owners believe the land value has sky rocketed due to the surrounding developments. The current asking price is $750,000.00. This is far above are target price range. The property is vacant and it might be worth a call to see how negotiable the owner is.
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