Thousands of apartment units were planned for downtown Fort Worth. What happened to them?
November 22,2024
See full Fort Worth Star-Telegram article by Harrison Mantas here.
Downtown Fort Worth has been poised to add thousands of new residents thanks to condo and apartment projects promised over the last few years.
The 27-story Deco 969 brought 302 “ultra luxury” units to the eastern edge of downtown. The Hardin, which sits on the southwest corner of Henderson Street and Rio Grande Avenue, will transform the old Public Market building into 199-units of senior housing along with a restaurant and commercial space.
But a handful of promised projects have yet to take flight with some lots sitting empty years after well-drawn renderings were released to the public.
Experts, developers and downtown advocates said some of these delays are just a normal part of the development process, however, interest rates, pandemic delays and market timing are also playing a role.
While some projects will inevitably fall by the wayside, developers are being patient while they wait for more favorable market conditions before breaking ground on their projects.
WHAT WAS PROMISED?
Roughly 3,000 units of apartments or condos were expected to be built by 2022. Some like the Burnett Lofts and the Huntley — on the southwest and northeastern edges of downtown — have added much needed housing to the urban core.
Several projects — including 1000 Weatherford, the Worth, the Kent Lofts, and the Jones — have yet to materialize.
1000 Weatherford was first envisioned to be a 18-story tower straddling North Lexington Street. The project was then scaled back several times before the original developer sold the property to Miami-based developer Resia in January 2022.
Resia, which is also behind the 12-story tower development called The Jones, wrote in an email to the Star-Telegram that developing 1000 Weatherford is part of the company’s future development strategy.
The Jones, which Resia now calls “Calhoun,” is making steady progress through the city’s permitting process, a Resia spokesperson wrote in an email to the Star-Telegram. The developer recently submitted plans to the city to begin construction work, and made two filings with a state licensing board stating construction at 1000 Jones St. will begin around April 2025.
The building is expected to have 408 units, according to plans submitted to the Downtown Design Review Board in July 2022. A temporary commercial grading permit was submitted to the city on Oct. 18.
“Resia remains bullish on Fort Worth and is excited about the Calhoun project,” the company spokesperson said. The company expects to start two years of construction in the second quarter of 2025.
“Once completed, we’re confident it will be a fantastic Transit-Oriented-Development that is expected to significantly activate the area,” the spokesperson said.
The Worth was slated to bring a 30-story luxury condo tower to the corner of North Henderson Street and West Bluff Street.
The project got the green light from the city’s Downtown Design Review Board in 2018, but never got off the ground. The land was sold to the Paradox Church in August 2023, according to Tarrant County deed records. The property now serves as the church’s parking lot.
Representatives for the developer did not respond to a request for comment from the Star-Telegram.
The Kent Lofts, at 130 East Lancaster Ave., were slated to bring 248 units to a plot that was once home to a Frank Kent Chevrolet dealership.
However, the 2.52 acre parcel was listed for sale around May 2023, and is still on the market, according to listing agent Cameron Deptula.
The Kent Lofts’ developers are waiting for interest rates to come down while also observing the development of Texas A&M Fort Worth and the performance of the recently opened Deco 969, said Andy Taft, president of the downtown advocacy nonprofit Downtown Fort Worth Inc.
CONSTRUCTION COSTS UP 37% SINCE 2020
Interest rates and construction costs are making it hard to develop, Deptula said.
The cost of construction materials have increased by roughly 37% since March 2020, according to the Federal Reserve Bank of St. Louis.
Interest rates for construction loans are in the double digits, forcing developers to seek higher rents to account for higher costs, said Sriram Villupuram, an associate professor in the finance and real estate department at the University of Texas at Arlington.
“If the rents don’t pencil out, then developers are going to wait until they get what they want,” he said.
The average rent for an apartment in downtown Fort Worth is $1,574, and the average size is 847 square feet, according to the most recent data from RentCafe. That translates to a rental rate of around $1.86 per square foot.
Developers are looking to get rental rates closer to $3.75 per square foot, Deptula said.
The new Deco 969 tower has an average rent of $4,783 and an average size of 1,237 square feet, which translates to a rental rate of roughly $3.86 per square foot.
Projects need to get around a 30% rate of return in order for developers to move forward, Villupuram said.
Rent growth has also slowed both nationally and in the Metroplex, said Caitlin Sugrue Walter, a senior vice president of research at the National Multifamily Housing Council.
Growth in rents peaked for the Metroplex in early 2022, according to data from real estate research firm CoStar. Downtown rents have been flat since early 2021, according to data from Downtown Fort Worth Inc.
This looks like a temporary trend, because there still is a high demand for housing, Walter said.
She also said insurance premiums have added costs for developers. Property insurance increased an average of 26.4%, according to the multifamily housing council’s 2023 risk report.
The largest payouts for insurance claims came from 2021’s winter storm, according to the report. If the rent won’t cover the costs of the project, it’s going to be harder to get financing, Walter said.
NOT DEAD YET
Until the land has been sold, you can’t count on a project being dead, said Villupuram, the UTA professor.
“Development is patient money,” he said. If a developer thinks they’ll be able to get a better price for the land or will be able to develop a project when conditions change, they’ll sit on a property without developing it, he said.
There are projects all the time that get announced, but never get built, said Downtown Fort Worth Inc.’s Taft.
“But until a developer tells us, ‘Yeah, we’re not going to do that,’ we don’t take it out of our pipeline of projects,” he said.
DART Interests, which bought the former Fort Worth Central Library building in 2022, is in the market conducting pre-development research, Taft said.
“Just because it hasn’t been done, doesn’t mean it isn’t going to be done,” he said.
WHY DOWNTOWN NEEDS PEOPLE
Downtown has seen more visitors, thanks to the addition of 550 hotel rooms since 2020.
However, adding more residents will go a long way toward adding more businesses, Villupuram said.
More foot traffic helps existing businesses, but also encourages companies to locate downtown, because new apartments will give employees a place to live, he said.
Creating a more walk-able neighborhood downtown will also help businesses by reducing the amount of space dedicated to parking cars, Villupuram said.
“Cars don’t go shopping. Cars don’t go to restaurants to eat. You need families and people,” he said.
Taft was bullish about downtown’s prospects.
Occupancy rates are high, demand is high, and there are no market factors slowing development downtown, he said.
Location Mentioned: Deco 969