To be successful, an adaptive reuse project often needs a strong story. 

Sometimes that story comes in the form of a unique history or architectural features that would be too costly to replicate. That can lead to funding options like historic tax credits or support from a financier who shares a developer’s vision. 

"Most adaptive reuse projects, the developer is seeing something that other people are not," Proxy Property founder AJ Ramler said during Bisnow’s DFW Adaptive Reuse Summit on Aug. 11 at the Hotel Dax in Addison. "That's how they end up buying the property."

However, once the developer figures out the project's story, they have to find a bank that also sees its value. But even that isn’t always enough, which is why Ramler said having an adaptive reuse project’s capital stack just right is often paramount to its success. 

Proxy Property focuses on restoring and reimagining historic and underutilized properties in and around Dallas' Oak Cliff area. The firm recently completed a project in an opportunity zone that also used local government funding from a tax increment financing district as well as financing from the state's commercial property assessed clean energy program.

“Especially on a project that's either speculative or more complex, having enough cushion on all the numbers is really important," Ramler said. 

Revitalizing buildings more than 50 years old can lead developers to pursue historic tax credits, something Merriman Anderson Architects saw firsthand with projects such as The National and The Statler in Dallas, as well as The Sinclair in Fort Worth, team leader Patrick Hazard said. 

Each of those projects turned historic buildings into upscale or luxury hotels, a popular asset class for adaptive reuse projects in DFW. 

The need for high-end hotels is expected to grow in the region as both Dallas and Fort Worth are in the midst of massive revamps of their convention centers. 

Dallas' $3.7B overhaul and expansion of the Kay Bailey Hutchison Convention Center aims to revitalize part of downtown by turning it into a walkable hub. 

Fort Worth began the $606M second phase of its convention center’s expansion and modernization earlier this year. It will demolish the convention center’s arena and replace it with a four-story structure and a ballroom.

"Dallas and Fort Worth both support turning an office tower into multifamily,” Hazard said. “There's still the need for that, but there's the need for hotel keys."

Mixed-use has also emerged as a popular choice to get a green light on an adaptive reuse project. Many cities in DFW have soured on the idea of turning adaptive reuse projects into single-use sites featuring only industrial, data centers or multifamily, Cawley Partners Build-to-Suit Leader Brian Straley said.

Cawley Partners is one of the developers on the Dallas Stars’ planned $3B sports and entertainment district in Plano that will bring two hotels, up to 2M SF of office, nearly 1,000 residential units and more than 200K SF of retail, restaurants and entertainment options to the 90-acre site of The Shops at Willow Bend mall.

Straley said the project will feature the type of high-end development many cities have shown a strong preference for in recent years. 

"Fortunately, right now that is doing well, but land prices have risen so much that it's really hard to underwrite it,” Straley said. 

That difficulty has led to some projects stalling, though Straley predicted that slowdown won’t last much longer. He said he believes more adaptive reuse projects will start moving forward this fall because demand is too high across asset types.

Those that don’t could still see a resurgence in the years ahead, as Straley said he’s experienced changing attitudes about redevelopment sites firsthand. He gave an example of Plano's Planning and Zoning Commission being against any use other than office for the former JCPenney campus in 2019. 

But seven years later, things have completely flipped. The site was set to become a mixed-use project in 2024 before Plano hit pause on the redevelopment plan in October of that year.

Earlier this summer, StreetLight Residential announced plans to turn the 100-acre site into a luxury multifamily development.

"Plano is more pro-business than they've been in the 30 years I've been in Dallas-Fort Worth," Straley said.