Scott Nishimura Special Projects Reporter
When the Fort Worth Business Press set up shop at 501 Jones St. in 1988, downtown Fort Worth was rarely thought of as a prime destination – for dining, for shopping, for … well, for much of anything. Stores were closing, buildings were boarded up, there was little night life beyond the eclectic Caravan of Dreams music venue and there was definitely no residential presence. The Bass family’s landmark Sundance Square development was barely off the drawing board. “You either get better or you get worse,” said John Roach, then-CEO of Tandy Corp. “We were on the ‘worse’ end.”
Bring on the dreams. Downtown’s resurgence – and the subsequent spread of development to West Seventh, the Near South and North Side – has been one of the most spectacular chapters in Fort Worth’s growth story the last quarter-century. Back then, it was an idea just emerging as a plan: A premium office market, people living downtown, Cowtowners surging into the city center for work and play, a burgeoning hotel inventory … Today, it’s reality: • 3,000 residential units, about two thirds built for rental, boasting a downtown population of 5,600. • 2,642 hotel rooms – up from 1,630 – fueled by several projects, including the 2009 opening of the Omni Fort Worth Hotel. • An estimated 56,300 people working in downtown offices, according to the economic development nonprofit Downtown Fort Worth Inc. (The organization has no downtown workforce numbers for 1988). • Class A office occupancy of 94.8 percent at the end of 2012, compared to 90.9 percent 10 years earlier.
With Ed Bass leading the charge and the cheers, the Bass family has been downtown’s major benefactor, now owning 35 downtown city blocks and more than 4 million square feet of space under the Sundance Square umbrella. The $67 million Nancy Lee and Perry R. Bass Performance Hall at 525 Commerce St. – opened in 1998 as “the last great concert hall of the 20th Century” – owes its existence to Ed Bass’ vision and fundraising prowess. The hall, built entirely with private money, is home to Fort Worth’s symphony, opera and ballet as well as the internationally renowned Van Cliburn piano competition and a variety of concerts and shows. “Everybody knew what to do with the downtown,” said Bob Bolen, the city’s mayor during the late 1980s. “They knew what was successful. But very few people knew how to do it.”
The city was a strong public partner. Under the leadership of Bolen and subsequent mayors and city councils, Fort Worth kicked in with a public improvement district in 1986 and a tax increment finance district 10 years later that helped clean up the area, provided free parking and more police, and put on events like the Main St. Arts Festival. Other private money moved in. Omni Hotels, for one, opened the Omni Fort Worth Hotel. XTO Energy founder Bob Simpson bought and renovated eight historic buildings for his company’s office use. Banking’s expansion, the oil and gas industry’s takeoff, and the removal of several large buildings like Simpson’s from the inventory led to the office market surge. Along the way, downtown parlayed bad news into good. The Bank One Tower, slammed by the 2000 tornado, was turned into condos, boosting downtown’s residential inventory at the same time it removed office space. The tornado’s destruction of a church led to Pier 1’s purchase of the site and construction of a headquarters tower. And there was the phone call that Sundance Square CEO Johnny Campbell took in 2004 from a broker representing an Arlington homebuilder who wanted to move downtown.
Campbell was about to lose Pier 1 and another major tenant from the City Center, the Bass’ twin-tower office colossus. “We had no prospects whatsoever,” he recalls. Along came D.R. Horton, the homebuilder. “It was like an instant reset,” Campbell said. “Occupancy just started going up and up and up.” Ed Bass declined to be interviewed for this article but accepted an award recently and attributed Sundance Square’s success to several factors: “One, the power of an idea – the right idea – to have a lively 24/7 environment in which to work, live and play. Two, great partners like the city, the county, Downtown Fort Worth, Inc., the chamber, the property owners and merchants. Three, a fabulous management team to operate it, and four, you – the people of Fort Worth and Tarrant County. If we’d built it and you’d not come, we wouldn’t be the place to be.”
How far has downtown come? The top piece of Downtown Fort Worth Inc.’s every-10-years strategic plan in 1993 was to persuade people to live downtown. This year’s just-approved plan calls for better educational opportunities for people living and working downtown. “So you can see the progression,” said Andy Taft, president of Downtown Fort Worth Inc. The new plan also calls for another 2,500 downtown residential units in the next 10 years, and 7,500 more in the “greater downtown” area that includes West Seventh, the Trinity River Vision-Trinity Uptown development, the Near South Side, and the area labeled Near East. At the recent opening of the new Sundance Square Plaza, Bass mused about the possibility of a high-end boutique hotel and high-density urban living on property his family owns east of the Sundance core. “We believe that is what is being asked for right now,” said Campbell. “We’re thinking of hotels and urban, walkable central business district living.” On whether the residential units would be for rent or sale, Campbell said, “I think that’s an open question. I think rental property has a higher market than for sale; that’s one of those things that could change at any time.” And how many units is not yet clear.
“We know there’s a market there, and the depth of the market is hard to define,” Campbell said. Sundance’s office space is 91 percent leased, Campbell says. Except for retail in two new buildings, including one where “we’re holding out for apparel,” retail occupancy is 100 percent. And, he says, Sundance’s 118 apartments are 93-95 percent leased. The Basses developed the Americana Hotel – now the Renaissance Worthington – in the late 1970s, connecting it to the newly built Tandy Center. They built the City Center towers in the early 1980s and spent years filling them. In 1980 and ’81, Sundance renovated its first two buildings at Sundance Square – “Blocks 41 and 42,” which today include Razzoo’s, Riscky’s Barbecue and Haltom Jewelers. The family’s plan picked up steam in 1991, with the opening of the AMC Sundance 11 – downtown’s first movie theater in decades. In 1992, the Basses opened the 12-story Sundance West residential building, with 59 apartments. The Sanger Lofts and retail building rehab and 10-bed Etta’s Place bed and breakfast followed in 1993 and 1996. In 1996, the Plaza Block opened with the nine-screen AMC Theatre and Barnes & Noble bookstore. The 12-story Chase Bank building on Throckmorton Street arrived in 2002 and the 16-story Carnegie office building on West Third Street in 2008. In 2011, ESPN chose Sundance Square as the network’s production headquarters for Super Bowl XLV. And in 2012, Sundance announced it would build three more buildings – the Commerce Building, The Westbrook, and The Cassidy – and the Sundance Square Plaza.
The plaza supercharges Sundance Square, Campbell said, adding a highly convertible, “programmable” space that will draw traffic. “We’ve had an open expense account called Sundance Square Master Plan for 30 years now, and it’s still not closed,” Campbell said. Campbell, a Houstonian who spent years working for the Rouse Co. at festival marketplace developments like Baltimore’s Harborplace, said Fort Worth’s central business district has benefited from major intangibles such as the city’s focus on downtown, close highway access, a historic courthouse and the “Fort Worth Way” of doing business. In numerous other major cities, “you will look around and see these little satellite downtowns,” Campbell said. “In Fort Worth, you don’t see that.”
The small area – downtown is framed by the Trinity River, Interstate 30 and Interstate 35 – has helped the focus, adds Bill Thornton, Fort Worth’s Chamber of Commerce president. “These constraints have allowed us to really focus on a geography that’s manageable,” Thornton said. The downtown public improvement district, in which property owners in the zone agree to pay extra above their property tax so long as the money stays in the district, generates about $2 million per year. The district – Texas’ first after the city pushed a bill through the Legislature with the backing of Tandy Corp. and the Basses – has paid for amenities such as cleanup expenses and subsidizes downtown patrols. The city’s downtown tax increment financing district provides free parking. Additionally, money from the Public Improvement District does not go to produce Downtown Fort Worth Inc.’s Main St. Arts Festival.
The development of downtown’s premium office market was aided by the removal from the inventory of properties such as the Tandy Center, Bank One Tower, the Neil P. Anderson building, and several buildings purchased by XTO for the company’s own use, Taft said. Downtown’s office inventory went from 9 million square feet in 2002 to 7 million in 2006, and back up to more than 10 million by the end of 2012, according to Downtown Fort Worth Inc. and real estate firm Grubb & Ellis.
Class A rents downtown averaged $28.44 per square foot at the end of 2012, compared to $21.45 in 2003, they estimate. “You saw a decrease in the inventory and a compression of the office market,” Taft said. XTO or its predecessor company Cross Timbers has purchased seven historic buildings encompassing more than 800,000 square feet of space since the early 1990s, renovated them and converted the space for its offices. Six were downtown, and a seventh, the Swift Building, was in the Stockyards. XTO purchased an eighth building – the Texas Building – and imploded it. ExxonMobil, which later purchased XTO, now owns all of the property. “That was very painful to give those up,” said Joy Webster, XTO’s project manager on the building renovations. Webster says XTO didn’t sense it was impacting the office market by removing inventory. “It was a byproduct,” she said. “We were running out of space.”
XTO paid $300,000 for its first building, the 186,000-square-foot Waggoner, in 1991, she said. Cross Timbers entered the building as a tenant in 1996. It was in disrepair, and the company, in exchange for signing a long lease, won provisions pertaining to maintenance. “If they didn’t do (the maintenance), then we could take our rent money and do it ourselves,” Webster said. “They didn’t, and we did.” Of the purchase price, “we’ve kind of cost-averaged it out with all the other deals we’ve done,” and the numbers still came out well, she said. Simpson is now renovating the former Fort Worth Star-Telegram building at 400 W. Seventh for the offices of his newest venture, MorningStar Partners. MorningStar recently purchased a restored three-seat airplane that legendary Star-Telegram Publisher Amon Carter used to ferry newspapers and mail to West Texas and plans to hang it inside a 20,000-square-foot museum under construction in the building, Webster said. Webster says Simpson will own the property individually, not through the company. “We don’t want to lose another building,” she explains. “It was too painful.” Downtown hasn’t been without its share of mistakes as revitalization proceeded. Overpriced condos, for example, languished. “What hasn’t worked is where developers missed the market,” Taft said. “Those units found the market. They were adjusted in price until they sold.”
Going forward, downtown faces big challenges, business leaders say. On the south end, Fort Worth has commissioned a study of its Convention Center and hotel supply and demand due to be completed in March. Keys in the study: What to do about the convention center’s aging arena – about a third of the center’s area – and how to add more full-service hotels. One of the goals of renovating the Convention Center: to increase its ability to hold two large meetings simultaneously, said Bob Jameson, president of the Fort Worth Convention and Visitors Bureau. The arena holds “no ticketed events, no concerts, and it’s not being used the way it was designed,” Jameson said. Downtown’s ability to draw retail continues to develop. “Our restaurant inventory is very strong,” Taft said. “The holy grail for downtown is the soft goods and apparel retail. We have a very good start at Sundance Square. We need more office workers, conventioneers, day trippers and residents. We can work very hard to recruit retailers, but we need to have the market to support them.” Sundance’s soft goods business has improved, Campbell notes, citing the Joseph A. Bank men’s store. “It does real well,” Campbell said. “We’ve grown a little, and we can do apparel retail now.”