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GlobeSt.com EXCLUSIVE: Forest City Plying $100M-Plus CBD Plan
By Connie Gore
Last updated: November 17, 2004 07:57am

DALLAS-Forest City Enterprises Inc. has gone hard on contracts for roughly 1.4 million sf of longtime vacant vintage space in the Dallas CBD. Though the redevelopment hinges on city assistance, the Cleveland-based master craftsman of urban projects is shooting for a late 2005 construction start. "The two deals will be over $100 million," David J. Levey, executive vice president for Forest City Residential Group Inc., tells GlobeSt.com. His plans for the Mercantile complex, four empty buildings with close to 1.1 million sf on one block, and its neighbor across the way, the 304,860-sf Continental Building, call for 400 to 600 apartments and a spattering of gallery-type, specialty retail.

RTKL Associates Inc. of Dallas is working on the design as Levey and team work through a complicated due diligence and continue talks with city officials about contributing to the redevelopment plan. Levey says the goal is to close the sales with Spire Realty of Houston and Glenn Solomon of Dallas by mid-2005. Sources confirm there has been preliminary discussion about expanding the $108-million tax increment financing coffer by another $50 million. Most of the funds from the initial seed money to revitalize the downtown have been committed although a small chunk was in place at one time for the Mercantile complex, which Spire Realty bought in 2000 from Principal Financial Group of Des Moines. Less than a year later, Solomon paid close to $10 million to Principal for the Continental Building at 1810 Commerce St.

Levey says the Forest City plan calls for a mix of renovated Art Deco space and new product, for sale or for rent, interspersed with "festive" retail. The centerpiece to "the Merc," as it's known around town, is a 359,348-sf, 31-story building at 1704 Main St., built in 1942 and the only US high rise that rose during World War II. The rest of the block holds a 347,037-sf structure, built in 1958 at 1807 Commerce St.; 213,270-sf, 55-year-old building at 1802 Main St.; and 116,322-sf building, which rose in 1972 at 1808 Main St.

Levey says Jack Gosnell with United Commercial Realty in Dallas spent a year selling Dallas' story to the Forest City decision-makers, whose forte is repositioning distressed urban neighborhoods into successful mixed-use developments. The talks started with "the Merc" and then included the Continental, which comes equipped with 380 underground parking spaces and a connection to the pedestrian tunnel system linking most of the CBD buildings. Levey says there are numerous hurdles to jump before the sales can close. "Dallas has great potential," he says. "I think Dallas is one big urban center and it's just slow in coming along." The project, which still is without a name, won't become reality without the city's help, he says, citing the high price to buy and develop a mixed-use project of the Merc's magnitude. "It just can't," he stresses. "The economics are what they are."