I started the next class on Commercial Adaptive Reuse. We had a little class and then we went out touring downtown Fort Worth.
We each took a building from www.fortwortharchitecture.com. I had the Hilton Fort Worth. The Hilton’s main claim to fame is as the last place JFK stayed. It was also interesting to read the history since it’s building in 1921.
At one point, they’d demolished the lobby to make two floors, added a ballroom, added an atrium and reopened the lobby, built an annex and then not included that annex in one of the series of rebrandings. The annex is at the other end of the sky bridge you see in the picture. There’s currently no one occupying the annex and I saw a couple of listings for it on a commercial brokerage site.
After lunch was more interesting. We visited a developer who offices with an architect just south of downtown – Eddie Vanston. We were able to get some insight into the use of the Historic Tax Credit as well as the New Market Credit.
Eddie has taken a few industrial sites in the area and renovated them into mixed use retail and loft apartments.
Some things we learned on the tour are that:
- You don’t have to meet building codes or be ADA compliant for historic redevelopment projects.
- Industrial sites are easier to work with because they often have large open spaces inside the building envelope.
- South Fort Worth has one of the best TIFs around.
- There’s still a lot of demand for affordable housing. In this case the product tends to appeal more to creative types of people since the spaces aren’t standard apartments.
- The Historic Tax Credit can be complicated to work with if you aren’t familiar with it. Eddie tried a couple of times to use it unsuccessfully until he partnered with another group that knew how to use it.
- The New Market Credit may not be funded in future years due to common use against the original intent.
- HUD financing is often used too in these kinds of projects.
That’s keeping with what I’d heard earlier about the fact that most loans these days are government backed. I’m not sure how extensive that is in commercial but my understanding is that something like 95% of residential loans are now government insured.
Another interesting fact is that Eddie stated he gets his equity out of project within a year. He seems heavily involved with the contracting and property management as well so no doubt his costs are kept down.