April 22, 2015

Fort Worth Needs More Hotels

Fort Worth's hospitality goes beyond that tip of the hat and a warm greeting; the hotel market is heating up and ready to blossom with more projects in the works, we learned at Bisnow's 5th Annual Fort Worth State of the Market event Tuesday at the Omni Fort Worth.

Downtown Fort Worth Inc president Andy Taft (left, with Freese & Nichols' Kirk Millican) says Fort Worth's hotel room occupancy averages about 10 points higher than the national, with more than 70% occupancy on any given day. With a new convention center (the existing one will be razed) planned for Downtown, there's more animated talk from developers looking to try to get closer to the convention center as well as Sundance Square. The historic St. Clair building on Main Street will be transformed from Class-C office into a hotel. There is a lot of innovation going on with hoteliers who are interested in being close to Sundance and the convention center, he says.

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Dowdle Real Estate president Lynn Dowdle (right, with Southern Land Co's Todd Marchesani) says a recent study indicates that Fort Worth needs up to 2,000 new hotel rooms to meet the demand. The average daily rates are up, as well as RevPAR and occupancy rates, she says. Those are big cues for full-service boutique hotels to look for space. She's working on deals in Downtown, 7th Street and in the Medical District, but kept mum on the deets because of confidentiality agreements. But, she says there's more full-service hotels on their way Downtown.

IPA Texas director Drew Kile (right, with Southside Bank's Mark Cundiff) says his team is marketing multiple properties across Fort Worth as well as a development tract in the Trinity Bluffs neighborhood. Multifamily demand is strong with most properties in the heart of Fort Worth experiencing only single-digit vacancies. The pipeline of new multifamily projects is slowing, which has triggered rent and revenue growth in Fort Worth, too, he says. Drew says the Near Southside area has demand for product, but difficulty getting enough land together to create a viable project. He also feels the new Tarleton campus coming south of Fort Worth will create a demand for multifamily in that area, as well.

JLL Fort Worth managing director Todd Burnette (right, with Rising Property Co's Kevin Avondet and JLL's Pat McDowell) says he hasn't seen the suburban office market this tight in his 30 years in the industry. Vacancy is at 2% for Class-A in the ‘burbs, which is forcing some companies to look to Downtown for office space. Architecture firm Huckabee will relocate from its Hulen Street offices to two floors in Burnett Plaza (801 Cherry St) this summer. As companies are expanding (Fort Worth added 33,000 jobs last year), they need the amenities to recruit the younger workforce and that will drive more businesses Downtown, too, Todd says. As space begins to fill, you'll see rents go up, as well.

Sundance Square may be poised for new projects, hints Sundance Square president and CEO Johnny Campbell (right, with Embassy Suites Fort Worth Downtown's Bridget Shelton). He says hospitality is brewing and the next frontier will be residential. Sundance has been striving to round out its retail mix to add more offerings beyond restaurants and entertainment for a more balanced growth. He says the daunting task of backfilling the vacant Barnes & Noble space has now ended with the Cheesecake Factory opening in one part and the recent announcement of H&M planning a four-level 30k SF store in the balance of the space. The plaza's opening has triggered more families coming Downtown, too, with the weekend movie series jumping from an average of 500 attendees to more than 5,000. 

Retail development on the west side of Fort Worth—think Chisholm Trail—will come, but right now the big barrier to entry is the lack of residents, says The Woodmont Co chairman Stephen Coslik (right, with Frost Bank's Larry Chilton). The full impact of the Chisholm Trail toll road is probably five years out, he says. He was surprised, he admits, to hear that Neiman Marcus plans to anchor the Clear Fork mixed-use project. He says Simon (who is going to manage the retail portion of Clear Fork) is wooing Louis Vuitton for the project. That high-end retailer will be the key to making that area a luxury retail project; otherwise, it will be more like University Park Village, Stephen says.

Trademark Property Co managing director and chief investment officer Tommy Miller (third from right with fellow panelists) says Trademark is hoping the first Whole Foods in Fort Worth (at the firm's Waterside project on Bryan Irvin) will attract fashion and specialty retailers around the gourmet grocer. He'd like to see the project be a supercharged community center that is as much a gathering place for local residents as it is a shopping center. He's also anticipating more retail coming to the Alliance Town Center. As Hillwood develops more multifamily around the project, there is a desire to develop a specialty retail Main Street-type shopping area in the project with fashion retailers. But, that is still probably three to five years away, he says.

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The origin of the phrase "batten down the hatches" comes from sailors using wood nailed over lower openings of the ship to protect the crew from storms brewing on the open waters. We're doing something similar in anticipation of the impending storms. tonie@bisnow.com