Is Hemphill Next?

Fort Worth’s Hemphill Street is a gritty 5.4-mile strip that runs from just south of downtown to Interstate 20, connecting several of the city’s oldest neighborhoods and fronted by a hodgepodge of once-grand, but mostly-intact historic homes, commercial and industrial buildings, apartments, vacant lots, and used car dealerships. Many of the buildings are decaying, boarded up. It’s a huge canvas, the last of the Southside’s thoroughfares to begin to fill in with new color. But redevelopment is slowly elbowing in. In the 2800 block, Colleyville businessmen Calvin East and Matt Spake are rehabbing three early-1900s homes they bought last year for cash and have signed their first tenant, a small private school that took one of the houses. Diagonally across the street, the developer Fran McCarthy, a rehab specialist, has purchased a boarded-up 10-unit apartment building, is setting it up to qualify for the ample tax credits available today for rehab, and plans to sell or redevelop it.

Spake, a home builder and developer, and East, a business development director for a company that sells products to drug stores, tripped across the houses when they were hunting for a site to launch a brewery, a plan they’ve since ditched. The two, who’d never done rehab before, estimate they’re $580,000 in so far, including what they paid for the houses, which total 8,100 square feet and squeeze in between two other old homes, back up to the Worth Heights neighborhood, and face an underwhelming old strip center across Hemphill.

“I told my wife Calvin and I were committed” to buying the properties, Spake says. “She said, ‘well, you need to be committed.’ ”

Up and down the street, other indications of renewal have crept in, most notably on the one-mile length between West Vickery Boulevard and Allen Street, closest to downtown and the piece that’s part of the Fort Worth South economic development nonprofit’s map and the Near Southside tax increment finance district, which subsidizes public infrastructure improvements for development projects. The developer David Motheral Jr. estimates as many as a dozen property sales have occurred in recent months on that segment of Hemphill by entities that are likely to develop the sites, not sit on them as investments.

“Hemphill is what’s next,” said Motheral, who’s gone in with partners from outside the area and purchased a 2.2-acre site at 415 Hemphill – on the street’s far north section - for what they plan as a 220-unit apartment development with ground-floor restaurant and retail space. “We’ve done West Magnolia; we’ve done West Rosedale; we’ve done South Main.” Prices have reached the point on those other thoroughfares where it’s difficult to do traditionally-structured real estate deals and are significantly cheaper on Hemphill, developers, investors, and brokers say.

Complicated Landscape for Developers But the landscape for anybody contemplating a development or investment project on Hemphill is considerably more complicated than it is for those other streets.

Redevelopment of West Magnolia Avenue, West Rosedale Street, and South Main Street all fall under the purview of Fort Worth South, whose well-developed toolbox includes a plan, design guidelines, corresponding zoning, and incentives that fill financial gaps lenders won’t finance in deals, such as street amenities and other public infrastructure. There’s no such toolbox for Hemphill, except for Fort Worth South’s Vickery-Allen segment.

But Motheral and longtime realtor Joan Kline, both credited with leading the creation of what turned into Fort Worth South and its tools, are leading a similar effort for Hemphill as chair and co-chair of the Hemphill Corridor Task Force’s newly formed development committee.

The group, working with the city and a volunteer task force that’s redrawing Fort Worth’s master thoroughfare plan, is first building a streetscape plan for the entire Hemphill Corridor that will address street widths, crossings and intersections, bike plan and other amenities, and access to parks and schools over Hemphill’s several distinctive segments. Motheral’s group will send that to the thoroughfare task force for use as that group’s Hemphill segment; the task force next year is expected to send its entire plan to the City Council for approval. “We need to get the word out as soon as possible to the people that are buying property (on Hemphill) and to the banking community to support us,” said Motheral, who was recruited into his role by Kline, Mayor Betsy Price and City Council member Ann Zadeh.

Once the Hemphill streets plan is done, then the development committee will turn its attention to design guidelines and related zoning for the corridor, Motheral said. But even once that’s in place, the substantial question of how to pay for the street amenities and assist developers financially will remain. The city, through federal and city bond money approved by voters for enhancements in urban villages, is funneling money to street improvements at Hemphill and West Berry Street that are underway. West Berry from Interstate 35W is considered one of Fort Worth’s gateways to TCU. “We’ve got one intersection,” Motheral said.

Part of the street is covered by the city’s neighborhood empowerment zone program, which waives permit fees to qualifying projects in underserved areas. Neighborhood leaders have quietly begun developing the map for a proposed tax increment finance district, a politically sensitive topic, because taxing entities would have to agree to dedicate incremental tax revenue generated by increases in property value to Hemphill projects. And even if they did approve a TIF, the incremental growth - and incentives generated by it - would be years off. Motheral declined to discuss the TIF. “Nobody on our side is going to talk about it,” he said.

If the Hemphill group can get the tools in place, Motheral predicted a resurgence of the corridor. Without the tools, redevelopment would occur but at a slower pace, because developers would have no confidence their investments would be protected from neighboring renegade development, he said. “If we can do for the Hemphill Corridor what we did here, we’ll essentially be bringing in a lot of businesses,” he said recently over coffee, while sitting outside the popular Stir Crazy Baked Goods cafe, a new tenant on West Magnolia.

The Hemphill group has also been jolted in the last month by word that the city’s costs for the “Hemphill Connector” - a tunnel and new rail bridge that will connect Hemphill directly to downtown between West Vickery and Taylor Street underneath Interstate 30 and the Union Pacific Railroad - have skyrocketed from estimates years ago when the project was first put into the books by voters. The most recent estimate in mid-October was $44 million, with a $17 million unfunded gap.

The expected street link, whose first phase is complete, has already figured into the plans of developers doing projects on Hemphill, particularly at the north end, and Fort Worth South and the city are scrambling to figure out how to deal with the higher costs. A delayed Hemphill Connector, which would better link downtown and the Southside neighborhoods, “is not going to stop (Hemphill redevelopment), but it certainly is going to put a real pinch in doing things all the way down Hemphill; it’s a real inhibitor,” Motheral said. But “even if it doesn’t come tomorrow, as long as we know it’s coming, that’s probably good enough.”

Motheral said a delay won’t slow his project, which he and his partners have put out to bid. “We’re too far along to not continue,” Motheral said. “The pace of anybody else would slow down considerably.”

Whither Hemphill’s Silos? Eddie Vanston, a longtime Southside developer whose credits include the Supreme Golf Warehouse, Miller Lofts, Sawyer Grocery, Markeen, and Leuda-May apartment and mixed-use projects, is one who’s following all of the Hemphill pieces closely. Vanston, who has said he’s being priced out of the Southside by significantly increased real estate costs, confirmed to FW Inc. that he went under contract more than a year ago to buy the massive abandoned grain silo complex at Hemphill and Biddison Street, well down the corridor.

Motheral’s group considers redevelopment of the silo site to be key in what happens to the corridor, because a strong redevelopment would likely spur other re-investment around it.

Vanston’s conceptual plan calls for apartments. But any proposed redevelopment faces significant financing gaps and may never happen, Vanston said. The National Park Service, for one, has agreed to a 25 percent dollar-for-dollar tax credit against eligible costst, but only for the top piece of the silos, where people once worked, Vanston said. The Park Service’s rules otherwise explicitly exclude silos from credits.

Vanston sees the same assets in the Hemphill Corridor as other developers: proximity to strong, established neighborhoods and other Southside corridors that have been redeveloped, downtown, Interstates 20 and 35, many still-existing historic properties, and relatively cheap real estate. “You’ve got neighborhoods that are wonderfully represented; it just seems to be a fertile area and a natural spillover,” Vanston said.

Vanston said he’s received preliminary estimates on construction costs, and there’s a big gap between those and what makes sense with the financial model he’s been able to piece together so far. “It has to make sense; otherwise, you bulldoze it,” he said, estimating demolition would cost $4 million. “Clearly, nobody wants to pay $4 million to clear a piece of land to free up two acres,” he said. “However, that may be the best solution economically.”

Crackhouses and Critters Other projects in the corridor face a more certain future. Developers who’ve been on the street for awhile remember the raw surroundings they faced when they came on it.

Businessmen Brien Culver and Glenn Davidson, who are redeveloping an old commercial laundry at 428 Hemphill into a mixed-use redevelopment called The Laundry on the far north section of the street, are in talks with restaurants and other potential users. Culver and Davidson own the 50,000-square-foot laundry building and an adjacent 4,500-square-foot church. A restaurant lease for the church is drawing near, an entertainment complex and another restaurant is interested in a big piece of the laundry building, Culver and Davidson said. They said Fort Worth South has pitched The Laundry to Whole Foods, which announced last year it would open 1,000 smaller, urban stores nationally; Whole Foods is under construction on a full-size store in the Waterside development off of the Chisholm Trail in southwest Fort Worth.

Culver, who bought the laundry 12 years ago, relocated a DVD distribution business to it from Arlington that he’s since sold, and took on Davidson as a partner, remembers some of his neighbors when he bought the site. Across a side street, “we had two crackhouses, like the thing you see on TV,” he said. The police have since shut those down, he said.

The two say they’re under no pressure to sign leases, because the laundry building is full on short-term commercial leases. “We have the luxury of taking our time,” Davidson said. “We’re generating positive cash flow as we show the space.”

Fort Worth South has asked Culver and Davidson to consider adding residential to their space, but, with hundreds of apartments under construction on the street and nearby down Pennsylvania Avenue at South Main Street, “we would like to be the project providing the things residential needs,” Culver said. Culver isn't worried about the status of the Hemphill Connector, just up the street from his project. “The connection we have (via South Jennings Avenue) isn’t bad,” he said.

Real Estate Values, Rents Creeping Up Up the street, Quorum Architects this summer sold its headquarters building at West Vickery and Hemphill to the Fort Worth auto dealers and entrepreneurs Will Churchill and Corrie Watson, who in the last year parked profits from the sale of their Honda dealership and a downtown tract in several Near Southside properties.

Quorum principals Scott Wilson and Bill Blankenship remember what the building looked like when they bought it in 1999. “There were two- and four-legged occupants,” Blankenship said, referring to the homeless people and animals living in the dilapidated building. “In equal numbers,” Wilson said.

The 17,650-square-foot building, an old Southwestern Bell telephone garage, was a wreck inside. They installed a new roof and new systems, rehabbed the interior, kept a piece for their offices, and leased the remainder to other tenants, including the Pavlov advertising agency.

It cost them more than $1 million to get into the building, they recalled. They sold it for about $200 per square foot, compared to the $21 per foot they purchased it for, they said. Quorum is now a tenant of Churchill and Watson but interested in another site or building of about 6,000 square feet, they said. They’re not sure they can find it on the Southside. “This area has been picked over,” Wilson said. “It’d have to be an oddball,” Blankenship said.

Elsewhere on the street, real estate prices have increased with greater interest in Hemphill but are still considered reasonable compared to the Near Southside’s other corridors and other hot corridors in the city. Culver and Davidson estimated land prices in the far north section of the corridor, where the most sales have occurred are at $27-$30 per foot, four times higher than when Culver bought The Laundry. That compares to what brokers say are asking prices of $35-$40 per square foot for land in the rapidly redeveloping South Main corridor.

That should lead to stable rents, real estate people said. The Laundry is marketing itself at $19-$21 per square foot in rent, plus “triple nets” for extras such as property tax. By contrast, the highest base rents in Fort Worth’s West 7th corridor run more than $30 per foot. “We don’t have the demographics; we don’t have the amenities in place yet,” said Steve Relyea, the Fort Worth broker marketing The Laundry. Down the street, East and Spake are marketing their properties at $16 per square foot in rent, plus triple nets, but they also pay for water.

Picking Up Steam   Elsewhere in the corridor, entrepreneurial redevelopment projects have picked up steam.

At 2001 Hemphill, several blocks south of Allen, Tom Law Jr. and attorney Veronica Chavez Law, husband-and-wife principals in a commercial real estate services firm, have been working on rehabbing an eight-unit, 4,800-square-foot 1929-era apartment building since they bought it in March 2014. They expect the project to be done in January. Inside, the couple has installed new electric, plumbing, flooring, and fixtures in the apartments, all one-bedroom, one-bath. Exterior improvements included accent lighting. “That was an immediate sign (to passersby) that something big, big enough, was going on there,” Tom Law said.

Across the street at 2100 Hemphill, bordering the fast-gentrifying Fairmount neighborhood, owners Richard and Chandra Riccetti have been rehabbing a historic complex of three residential buildings they renamed The Bastion. They rehabbed the first building into a restaurant and cooking class and event venue run by Chandra Riccetti, and the second building into five apartments now recently rented. The third building, fronting Hemphill, will either be residential or office. “We’re thinking of moving in ourselves,” Richard Riccetti said. “Residential is a hard play on Hemphill right now. We might as well just move in there.”

Riccetti quickly leased the apartments at $1.15-$1.20 per square foot per month, less than prevailing rates in Fairmount, popular for its Bohemians and adjacency to West Magnolia’s bars and restaurants.

But “I can sleep at night,” said Riccetti, whose tenant mix includes retirees, school teachers, and a city planner. “It’s good to have tenants. The property has life again. It’s a great investment. Chandra has her restaurant. For a buy-and-hold investor, this is a great location.”

Riccetti has helped assume the leadership of the Hemphill Corridor Task Force with David Cantu-Crouch, who’s chaired the task force for two years and drawn more neighborhood leaders in. Keeping the neighborhoods unified once the details of the thoroughfare plan develop may be a challenge, Cantu-Crouch said. But the task force’s meetings are regularly attended today by representatives from the several neighborhoods that line the street, including Fairmount, Ryan Place, South Hemphill Heights, Shaw-Clarke, Jennings-May St. Louis, Rosemont and Worth Heights.

The task force wants a plan for Hemphill that unifies the neighborhoods, including drawing both sides of the street, which was once narrow before the city widened it decades ago, which leaders say led to its decline, together.

“We’re making an effort to step into a leadership role, instead of saying, what is the city going to do for us,” Cantu-Crouch said.