FEATURE ARTICLE, MAY 2006

TAKING ON TEXAS
Forest City Enterprises makes a strong entrance into Texas with two important projects in Dallas/Fort Worth.
Lindsey Walker

Forest City Enterprises — a Cleveland, Ohio-based real estate company that is known for creating such innovative developments as Victoria Gardens in Rancho Cucamonga, California, and Stapleton in Denver — has set its sights on Texas. With two major projects underway, and one more on the horizon, the company is taking advantage of its expertise in urban development and is building live/work/play environments that will make a difference in their communities.

The Mercantile Block Redevelopment

With a strong reputation for successful public/private partnerships and more than 80 years of experience under its belt, Forest City is tackling one of downtown Dallas’ biggest eyesores: the former Mercantile Bank Building.

Known to locals simply as the “Merc,” this 31-story tower, which dates back to the 1940s, is part of a dilapidated area in downtown Dallas’ central business district (CBD) that has stood vacant for more than 20 years. Last winter, however, Forest City entered into an agreement with the city of Dallas to redevelop a total of nine vacant buildings in the CBD into residential apartments, condominiums and retail space — once again making the Merc an important part of downtown Dallas’ skyline.

The $250 million mixed-use/adaptive re-use project, which is bounded by Main, South Ervay, Commerce and St. Paul streets, will take the four-building, 1.1 million-square-foot Mercantile Bank Complex, the Continental Building and the four-building Atmos Energy Complex and turn them into a sophisticated, luxury living environment that is unlike anything else in Dallas.

According to David Levey, executive vice president of Forest City Residential, Dallas is starting to see what many other cities across the country have already realized — as the urban core goes, so goes the urban area. “For so many years, cities turned their backs on their downtowns and concentrated their development efforts on suburban developments,” Levey says. “The downtowns and urban centers then started to deteriorate, and the cities began to see that if the downtowns died, the cities would ultimately die as well.” Forest City’s hope is that, with the help of the city of Dallas, the Merc redevelopment will create a much-needed revitalization in the CBD.

“This is going to be a catalyst project for downtown Dallas,” Levey says. “If you take a look downtown, this area is a big block of stopped development because nobody wants to be around the Merc. Yet, we’re going to activate it.”

Creating a residential base right in the middle of downtown Dallas, the Mercantile Block will feature approximately 375 apartment units, 30,000 square feet of retail and 450 parking spaces for the residents. The project’s second phase, the Continental Building, will feature approximately 137 condominium units and 10,000 square feet of retail. The third phase, the Atmos Energy Complex, will offer approximately 200 units.

The redevelopment also will feature a number of upscale, unique amenities for its residents. From a health club to a business center to conference rooms, the project aims to provide its residents with everything they need in arm’s length. “The building itself will be an amenity,” Levey says. “There will be wonderful terraces and terrific views of downtown. It will have all the amenities you would expect, and then some.”

The typical resident that Forest City foresees inhabiting the Mercantile redevelopment is someone who wants to live on the edge a little bit, according to Levey. “Our target market are people who are looking for a really fun, different experience from what they can get in a traditional, three-story walk-up,” he says. “I think it is going to attract somebody who wants an urban experience, and we will provide that in a very positive and sophisticated way.”

With such a large block of vacant and dilapidated buildings — more than 1 million square feet — Forest City has encountered its fair share of problems thus far in the redevelopment process. “This was a very tough deal to put together,” Levey says. “From buying the building to environmental problems to putting the public incentive package together, this was one of the most difficult jobs I’ve ever worked on.”

Despite the difficulties, Levey believes this project will be a resounding success for Forest City and for the city of Dallas. “We are on the right part of the curve for Dallas, and we are very confident,” he says. “We have a lot of work to do, and it is not easy. But, we find that if you build something really nice and execute it well, people are going to come and live downtown.”

Dallas-based BGO Architects is providing architectural services, and Dallas-based Hensel Phelps Construction Company is the general contractor. Completion of the Mercantile Block redevelopment is expected by 2007.

The Shops at Broad Street

Forest City is developing The Shops at Broad Street in Mansfield, Texas. The 1.2 million-square-foot open-air  center will be a part of a 100-acre mixed-use project.

“We need to create a place for Mansfield,” says Brian Jones, chief executive officer of Forest City California West Coast Commercial Development. “That’s what we’re in the business of. We’re very good place-makers.”

Situated at the northeast sector of Highway 287 and Broad Street, The Shops at Broad Street will benefit from a very accessible location. As the main connection to Dallas/Fort Worth and the South Tarrant County areas, Highway 287 will provide shoppers with easy access to the center. And, because of the region’s high growth, Jones believes that this project is a much-needed asset.

“The Dallas/Fort Worth area is an incredibly good area to look at because of its growth, and it’s been a very good market for the last 20 years,” he says. “[Developing The Shops at Broad Street] was a no-brainer.”

Designed by RTKL Associates, the center will reflect a classic village environment with a focus on streetscapes and gathering places — helping to create a true town center for Mansfield. “We’re an opportunity-driven development company, and our focus is not only to look at the great markets, but the great communities,” Jones says. “This is a great community.”

Phase I of The Shops at Broad Street is scheduled to break ground this fall.

Texas-size Goals

With the Mercantile Block redevelopment and The Shops at Broad Street in full swing in the Metroplex, Forest City is looking ahead to where it wants to go next in Texas, which, according to Jones, is one of the states the company has targeted for 2006. “There are three states that we have identified as having very high growth rates: California, Florida and Texas,” Jones says. “The last state for us to actually penetrate is Texas, and we believe Texas is a great state to work in.”

Levey agrees. “There is great business climate and economic growth, and that’s what we look for,” he says. “In addition, there’s a political climate that wants to use the power of government to help spur development.”

Forest City’s long-term goals for Texas mirror its corporate goals: to find opportunities to develop innovative and exciting projects and to provide maximum long-term value to the communities in which the company works.

One such opportunity lies in Frisco, where Forest City recently announced its plans to develop a 132-acre commercial mixed-use project at the intersection of the North Dallas Tollway and the Virginia Parkway interchange. The RTKL Associates-designed development will feature a combination of major retail anchors, entertainment venues, specialty stores and restaurants.

“We are really excited about being in Texas,” Levey says. “We are looking forward to becoming part of the state’s business, social and political community.”

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