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August 20, 2015

3:23 AM

IT’S 10 P.M. ON A THURSDAY AT EMIL BRAGDON’S RESERVOIR BAR AND RESTAURANT OFF OF FORT WORTH’S WEST 7TH STREET , and the place is jammed with patrons watching TCU play baseball on one of the 38 screens.

Across the street at the new Whiskey Garden and adjoining Shot: 30 bar, both new Bragdon creations, customers are indulging themselves and occasionally cannon-balling into the indoor pool with a swim-up bar. Bragdon, whose establishments are among the top sellers of alcoholic beverages in the city, is considering a question put to him by a reporter.

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Why isn’t everyone on the street killing it? It comes down to the “right formula and the right concept,” Bragdon said. “I just want to build stuff at a place that I want to hang out.”

The Cultural District corridor — between the Trinity River and museums, and White Settlement Road and Interstate 30 — is one of the hottest in the city by numerous measures. It generates 1 percent of Fort Worth’s property taxes, even though the 160 acres cover just one tenth of 1 percent of the city’s land area. Development in the corridor, not long ago dominated by tired old buildings, auto dealerships and scrubby vacant lots, surged in recent years with the conversion of several major pieces into apartments, condos, stores and restaurants.

And more is coming. More than 1,800 residential units and at least four hotels - a growing number - are on the drawing board.

Left Bank - a planned mixed-use apartment, hotel, retail and office development fronting the Trinity River east of Montgomery Plaza - is slowly making its way through City Hall after bogging down. Developers of Museum Place, the mixed use village across from the Kimbell Art Museum, say they hope to get underway this fall on their third-phase office building and hotel and have now added a potential full-service hotel to their fourth phase. The group lost an East Coast partner last year over its concerns about Texas’ oil and gas sector, the Museum Place developers say, but is working on lining up necessary equity.

Finally, another developer has contacted the city about a major potential hotel development east of University Drive across from the Modern Art Museum.

Where is the corridor in its maturity? “It’s in its adolescence,” Andrew Blake, development partner for the second phase of the Foch Street Warehouses, a mixed-use development whose tenants include Reservoir. “In reality, it takes time for cities and neighborhoods to evolve. There are still blocks of buildings that are underused.”

“It’s a teenager,” Tony Landrum, president of TLC Urban, co-developer of Museum Place with Fort Worth’s JaGee Holdings and its principals Richard Garvey and Reece Pettigrew, says. “It’s got a long way to go.”

The district certainly has had its share of growing pains. It’s home to several of the county’s hottest, highest-grossing bars. Apartment occupancies are strong, and firms are looking to it for creative office spaces.

At the same time, some number of retailers and restaurants have struggled to get established, most notably in the major West 7th development built five years ago and bounded by West 7th, Foch Street, and University Drive. Parking has been a stubborn problem across the district.

The oncoming addition of more residential, office and hotel rooms - representing people living, working, playing, and staying in the district, one of the city’s designated “urban villages” - is what the corridor needs to support retailers and restaurants, real estate people and others who have a stake in the district say.

“Urban villages have worked best with density; you can live, work, play, dine, all in the same area,” says Max Holderby, the Vestar executive who manages the West 7th development for its owners, Carlisle and Cypress Equities. “We’re a long way from having high density in the village, but I think this is the beginning. There’s a tremendous amount of growth that’s going to occur here in the next 20 years.”

Apartment occupancies in the West 7th development are strong, following broader industry trends across the area. The 480,000 square feet - 537 apartments - are 95 percent leased, Holderby said. Nearby, the new Élan West 7th apartment development has had strong leasing, real estate people say. The Élan developer, Greystar, did not respond to a request for an interview. At Museum Place, the 217 apartments the developers built in recent years are 98 percent leased, and the partnership plans up to 240 more.

The district has 3,200 existing leased or owned residential units, and another 1,800 planned or under construction, including 570 apartments in Left Bank, estimates Phillip Poole, lead development executive at Fort Worth’s TownSite Co. Consulting firm, which has worked projects in the area extensively. It typically takes about 8,000 to draw a full-service grocer, but the district’s growing density should be enough, Poole said. Left Bank has been trying to recruit a full-service grocer to its planned retail site fronting West 7th.

“We should be able to support a grocery,” Poole said.

Office occupancies also are strong. The estimated 648,000 square feet of space in the district is 89 percent leased. West 7th’s 106,000 square feet of office space has been 100 percent leased for two years, Holderby said. Museum Place’s 160,000 square feet of office is 97.5 percent leased, the developers say, and the development’s next phase includes an 80,000-square-foot office building.

Museum Place’s developers see the district being significantly bolstered by the planned, new Will Rogers Memorial Center arena and the growing University of North Texas Health Science Center, which recently struck a deal to open a medical school with TCU.

“Long-term, it’s going to be a big generator,” Landrum said.

City Hall will have substantial say in how the remaining big pieces of the corridor develop.

Major utility work in Left Bank, headed by Dallas’ Centergy Retail, is getting underway this summer. The city is still trying to determine what kind of incentive agreement to offer Centergy. Hangups: fire access, expected traffic generation, and the initial $20-$25 million reimbursement for infrastructure costs that Centergy developer West Miller was seeking, Mayor Betsy Price said in an interview. Miller declined to be interviewed, but Price said he has scaled back the amount he’s seeking.

“It’s a great opportunity,” Price said. “But we’re very careful about vetting these projects. We felt (Centergy’s initial request) was too big of an ask. You can’t just give away the ranch in what’s already a hot area.”

On the other end of the district, developer HRI Properties of New Orleans has been working on assembling a mixed-use hotel, apartment, and parking garage site east of University Drive and across from the Modern Art Museum of Fort Worth.

HRI, which in July moved the location of its original attempted assemblage, is proposing a $59 million, 250-room Westin Hotel that would create 150 full-time jobs, according to a copy of its proposal, obtained by FW Inc. HRI would seek $6 million in new market tax credits, and it’s asking the city for a rebate of the city’s portion of the hotel occupancy tax that would be paid over several years. In its proposal, HRI says the hotel would support the new arena and help finance it, because the state’s piece of Fort Worth’s hotel occupancy tax in a radius around the arena is being diverted for arena construction. An HRI executive identified in the firm’s proposal did not respond to requests to be interviewed.

“They made a pretty good proposal,” Price said. “That area desperately needs a hotel.”

There is no competition for resources between the HRI and Left Bank proposals, she said. “If we decide it’s the right thing to do, it could be done,” she said.

Museum Place has lined up its lenders as it works on the necessary equity, Landrum said. The developers wanted to launch the third phase — the office building and 120-160 room hotel — last year, but that was hung up by the loss of the one partner, Landrum said.

“It has nothing to do with this project,” Landrum said. “It has to do with oil and gas. Good projects will always get done.”

The fourth phase will include 200-220 apartments and either a 160-180-room full-service hotel or an office building, Landrum said.

“Probably leaning toward a full-service hotel,” he said. “You could put 500, 1,000 rooms (here), and not make a dent in what Fort Worth needs. The question is where do you put them.”

Museum Place also expects to add another 100,000 square feet of retail across the third and fourth phases. The 75,000 square feet of retail already built in the project is 75 percent leased.

The developers want to launch the third phase later this year, Landrum said. “The fourth phase will follow very quickly,” he said.

The most prominent development in the corridor - the 16-acre West 7th, which opened five years ago on top of what used to be a hodgepodge of uses, including the former Acme Brick headquarters - has had a mix of successes and struggles.

While its apartments and office leasing have been strong, the development’s retail piece, 280,000 square feet, has struggled on the whole and is 82-83 percent leased, Holderby said. Several restaurants and stores have closed, and some restaurants have pared their hours.

Why the struggles? Beyond the need for more residential density in the district, West 7th’s rents are too high, the development’s efforts to limit use of its five parking garages by customers patronizing outside establishments have chased customers and some tenants off, and some of the tenants that have struggled aren’t right for the corridor, real estate people and some West 7th tenants say.

“The real issue here is the rents are too high,” said Rodger Chieffalo, leasing agent for the nearby Foch Street Warehouses, which he said are 100 percent full.

Vestar, manager of the development for its owner, a Carlisle-Cypress Equities-led partnership, is quoting annual retail rents of $33 per square foot - sometimes higher - plus $15 per foot in “triple net” charges for property taxes, insurance and maintenance. Restaurant rents range higher, between the high 30 and low 40s per foot.

The Foch Street Warehouses quote rents of $18-$24 per foot - sometimes more than $30 - with $7-$9 triple nets. The rents at So7 off of Trinity Park are in the mid-30s for restaurants, with $12 triple nets, and mid- to high-20s for retail.

“The (West 7th development’s) rents are not feasible in Fort Worth,” said Chieffalo, who leased West 7th’s commercial startup. Foch Street has certain advantages that let it charge lower rents: lower costs of land and rehab of the existing old buildings, compared to the expense of the West 7th development’s land assemblage and new construction.

The rapid rise in property valuations in the corridor has also put pressure on rents.

The triple net charges in the Carlisle development were $8-$12 per foot three years ago, real estate people say.

Holderby acknowledged the increase in property value and the impact on property taxes, and he also pointed out the cost of the development’s 2,250 spaces in the five garages.

“Parking garages are very expensive to build,” he said. “All of our tenants have free spaces. Those things affect the rents.”

Brady Wood, a partner in the development since its inception, said it’s a small miracle that the development has survived. “We opened up in the face of a downturn,” he said. “It’s fortunate that it survived at all.”

The trend toward urban living will propel the district, he said. “People want to live there.”

Fort Worth restaurateur Jon Bonnell, who opened Waters Fine Coastal Cuisine two years ago in the West 7th development, was originally open seven days a week for lunch and dinner. He’s since closed on Sunday and Monday and pared the lunch service to four days a week.

That’s similar to what he did at his Bonnell’s restaurant in southwest Fort Worth, he said, “We take the periods that are most productive.”

Bonnell is optimistic more traffic will materialize as development continues. “It’s all coming,” he said. “Somebody’s breaking ground every day.”

At Thirteen Pies on Crockett Street in the development, general manager Amanda McFarland said sales have been up in the last several months following a down year in 2014, which she attributed largely to completion from new restaurants in the city. The restaurant, open five years, had grown each of its first three years, she said.

Thirteen Pies, which launched a lunch service two years ago to fine-tune a business model for a new restaurant in Atlanta, has struggled with the lunch business but is building momentum with it among professionals, business lunches, and the “ladies who lunch” crowd, she said.

“We have a great group of regulars,” she said. “They know the food’s going to be great every time, and we’re going to have an unobtrusive service.”

At Wrare, a home decor and gift store in the West 7th development and one of three that Adrian Wright owns in Fort Worth, Wright expanded three years ago to 6,000 square feet from 1,000.

Wright, whose five-year initial lease comes up for renewal this summer, isn’t sure what he’ll do next. He says the development has lost its hot vibe.

“Wrare will remain in business,” he said. “Location to be determined.”

Wright points to Fort Worth’s burgeoning South University Drive area as a strong location, with the Apple-anchored University Park Village and the emerging Fresh Market-anchored WestBend development on the other side of University.

“It’s a big draw for everybody,” he said of University Park Village. “You can shop there. And I think it’s going to be that way across the street.”

Adequate parking remains a problem throughout the district, with the rapid development, ordinance changes several years ago that eliminated parking requirements for commercial development, and absorption of previously available parking by new development.

The West 7th development last year opened its garages to all users for free daily until 5 p.m., with no validation, which its tenants and others in the district cheered. The development called the new policy “Good Neighbor”; Holderby said he has a surplus of space during the day, and the change made sense.

The development “has enough parking for our customers,” he said. “We don’t have enough for the whole neighborhood.”

Bonnell, McFarland and Wright all said Vestar’s parking solution was a strong move.

“I’d like for the gates to come down” completely at the development’s five garages, “and our restaurant has lobbied for that,” McFarland said.

The parking problem is likely to create a market for development of new parking facilities in the Cultural District, said Arty Wheaton-Rodriguez, a city development project facilitator. “The market’s going to be there,” he said.

Cultural District leaders have been pushing for consideration of transit circulators that would connect downtown and the Cultural District and other popular points, such as the Near Southside.

The Cultural District Alliance, the nonprofit economic development organization for the near West Side, has also proposed changes to the city’s guidelines for the district that, among other things, would re-constitute a parking requirement.

But that means “you’re asking (new) developers to solve the issue you created,” Wheaton-Rodriguez said.

At Museum Place, the developers expect to double the existing 900 spaces over the final phases, Garvey and Landrum said.

“We are going to make sure we can park everything,” Garvey said.

The Foch Street Warehouses have their own parking problems. The development sets aside reserved parking for its retailers daily until 7 p.m. Property managers try to be on the lookout for violators, Blake said.

When that happens, “we tow their cars,” he said. “But somebody’s got to be watching when it happens.”

Bragdon, who owned and sold several nightclubs in Dallas and Fort Worth before opening Reservoir in November 2012 and Whiskey Garden in May, expects the district’s popularity to keep growing.

He compared it to Dallas’ hot Uptown, and he said he’s trolling for other sites in the district.

“I’ve got a really cool seafood concept; I’ve got a really cool bar concept,” he said. “It’s just finding the right shell.

“I really feel like I can go into and create something that needs to be created,” he said.

A Night Out With Reservoir’s Emil Bragdon

Age: 39

Owner: Reservoir, The Whiskey Garden, Shot: 30, Fort Worth’s West 7th corridor.

High school memory: “We grew up really poor. In ninth and 10th grades, there were three full families living in my apartment.”

First jobs in restaurants: “I started as a busboy and a dishwasher.”

Education: San Angelo and Irving schools. Culinary school, Dallas.

First deal: Atticus restaurant and bar, Denton, $160,000, financed with loan from mother and savings from a job in beverage management.

Subsequent deals: Opened Cameo and Mantus clubs, Dallas, and Vice, Fort Worth and sold them all, 2008-2013. Opened Reservoir in 2012 for $2 million, using proceeds from Cameo sale, family loans. Reservoir, a top-grossing alcoholic beverage seller in county at $3-4 million per year. Opened $3 million Whiskey Garden and adjoining Shot: 30 in May. “I predict this is going to (perform as well) as Reservoir.” Trolling for other locations in West 7th area.

How he financed Whiskey Garden: Three managers invested with Bragdon, who sold his Lamborghini for $200,000 to put the deal over the top.

Pitches he gets: “I get pitched a lot of concepts and a lot of investors. The problem is a lot of these investors have their own formula. I have my own formula.”

What he does off the clock: Owns and flies two prop airplanes. “I haven’t watched TV in nine years.”

Where he lives and what’s in his living room: Refurbished airplane hangar he bought at Hicks Airfield in north Fort Worth in 2013. His airplanes sit in his living room.

What’s Up in the Cultural District

By SCOTT NISHIMURA

Here’s an update on some of the big pieces of real estate in the Cultural District corridor between the Trinity River and museums:

LEFT BANK

What it is: Planned 34- acre development fronting West 7th on west side of Trinity River. Developer West Miller of Dallas’ Centergy Retail plans 570 apartments luxury hotel overlooking the river, retail with a grocery store, and other uses. The apartments are expected to go first.

What’s new: Miller has obtained city approval to move water, sewer, and storm water lines, with work expected to begin in late August or early September.

Centergy in late June signed off on required financial guarantees for $6.4 million in water, sewer, paving and drainage work. Still unresolved is the question of long-term fire access to the site, which will lose access from the north once construction now underway of the Panther Island bridge at White Settlement Road is complete. City officials are working on multiple ideas.

Also unclear is what’s next in talks between Centergy and the city on an economic incentive deal. Miller’s initial request of more than $20 million to defray infrastructure costs was too much, Mayor Betsy Price said (see main story) in an interview. Miller, in talks with apartment developer Wood Partners and hotel operator Valencia Group of Houston, declined to be interviewed.

UNIVERSITY DRIVE ASSEMBLAGE

What it is: Developer HRI Properties of New Orleans has been trying to assemble property east of University Drive across from the Modern Art Museum of Fort Worth for a possible hotel, apartment, and parking development. An HRI executive over the project did not respond to requests for an interview. The latest proposal: a 250-room Westin hotel with 15,000 square feet of meeting space and 228 parking spaces. HRI is asking the city to help subsidize the project with a rebate of the city’s share of hotel occupancy tax.

MUSEUM PLACE

What it is: Mixed-use development across from the Kimbell Art Museum has built 217 apartments, 39 condos, 160,000 square feet of office space, and 75,000 square feet of retail over its first two phases. The office is 97.5 percent leased, retail 75 percent, and apartments 98 percent, Reece Pettigrew, Museum Place’s CFO, said. Forty-five percent of the condos have sold.

What’s new: Two phases to be built remain, including 80,000 square feet of office, 100,000 square feet of retail, and 225-240 apartments. Two hotels are now in the mix for the final two phases; the developers say they have added a potential second hotel. The third phase includes an 80,000-square-foot office building and 120-160-room hotel, most likely limited service. “Our goal is to kick that off this year,” codeveloper Tony Landrum said. The fourth phase would include the remaining planned apartments and a 160-180 room, full-service hotel or office building, Landrum said.

NEW TOWNHOMES Linwood Park: Phase 2 of Village Homes redevelopment of residential lots into townhomes for sale expected to kick off in September. Village Homes has sold 32 of 40 homes in Phase 1.

NEW TENANTS Lucky Strike: PMG, a fastgrowing digital marketing agency whose headquarters is in the West 7th development at 2821 West 7th, is expanding again. It’s signed a lease for onethird of the 19,000-squarefoot , adjoining, former Lucky Strikes bowling alley space.

Bike shop, coffee shop at So7? Barre Code, a franchise-owned Pilates studio, has signed a lease for a 2,200-square-foot space facing Trinity Park. Peter Jacobsen, the Woodmont executive over commercial leasing for the property, says he’s also working on leases for a 4,000-square-foot bike shop and a coffee bar. So7’s 15,000 square feet of office space is 100 percent leased, and its 55,000 square feet of retail is 75 percent leased.

WELCOME TO THE NEIGHBORHOOD

Fort Worth, Texas. The 16th largest city in the United States. Named “one of the great art destinations in the world” by Vanity Fair. Named “1st in the nation as a place for entrepreneurs” by Entrepreneur Magazine. Home to the TCU Horned Frogs, the Cultural District, Hell’s Half Acre, and some of the hottest neighborhoods in Fort Worth. Here, we profile 25 of the most walkable, buyable, livable, growable and, most importantly, lovable.