The Ugly Road To 98%

Owen Hannay an architect by trade now an advertising business owner, was kind enough to discuss his massive property undertakings. Hanna brushed the dust off his architecture pencils, rolled up his sleeves and got to work on the historic Awalt Building.


The problem with renovating most older buildings is the things you can't see with the naked eye. The Awalt Building is no exception. For example the buildings soil is made up of red clay and problematic water leaks. Hanna said that this created a major issue when working on the buildings visage. In addition to this Hannay stated that true concrete grows courser over time making it more difficult to manipulate. Owen Hannay said that the wood in the historic property creates better sound barriers than properties that are majority concrete. The wood somehow absorbs the sound barriers. In addition to that wood is easier to manipulate one can simply take a chainsaw to it and make the desired adjustments.


He also mentioned that citizens often resist the destruction of age old land marks. Developers in tune with this choose to demolish properties often in the wee hours of morning or night. Property owners can stay under the radar by requesting permits to demolish a fraction of their buildings structure and then they demo large quantities. In general there is no recourse for this action as they own the properties and once the damage is done its done.

Owen also informed us about the historic property/LEED designation dilemma. Although LEED is pro recycle old metals, local supplies, and etc. Anything you remove from a historic sight must remain somewhere on the site. No faux anything onsite. The guest speaker said anything new is new. Modern design elements and historic elements not only coexist but play off each other. Sounds similar to what you need to receive LEED designation. One would assume that there would be some common ground between the two, one would be very wrong. Historic buildings do not have the best energy saving features. Hannay pointed out their old windows are terrible for energy savings but are mandatory to receive property historic property designation. In the future there maybe some marriage of the two worlds but I would not advise you hold your breath.

The historic designation brought Hannay & Co $500,000 worth of tax credit however they chose to only use $14,000. He stated in hind sight it would be better to immediately monetize them and receive 65% =$325,000.


Being a successful business owner, architect, and now developer he stated this was the role of the architect;

1. Concept plans
2. Create construction drawings
3. City planning management
4. Tax credits appointment management

After conquering the huge hurdle of being rejected by 24 banks, using receivables from a prayer and sling shot, facing fire department issues, and a myriad of rehabilitation issues today the building is 98% leased. Its tenants include lawyers due to its proximity to the courthouses, a high traffic McDonald's, and Chipotle.

When asked if he would do it all over again Hanna replied now.

Site Selection

Jason Glater, Jerod Mund,  and I continued our search to find an ideal property. We stumbled on a restaurant and former tire shop owned and listed  by Mr. Buddy Baker on Hemphill. The building and the neighborhood behind were deemed historic. The tire shop was well equipped with 4 garage bays and also a fenced area with grass and a few trees. There were more than enough parking spaces and it was only about five minutes from downtown. The ceilings had a tin finish and the floors consisted of a smooth surface. The historic designation concerned us a little bit due to the strict reputation the Fairmont Historic District has earned over the years. With no need to own the restaurant I called up Buddy Baker and left a message asking him would he be willing to sale or lease the tire shop separately.

If he would agree to lease the property we would want to do it for the bare minimum for an extended period of time say 10-20 years make renovations and in essence sub lease the property to earn a substantial return on investment over time. Jerod Mund is a commercial real estate broker with Sperry Van Ness and he made an interesting point. Jerod stated that commercial real estate brokers do not put a lot of weight on the calls the get on properties during the weekends. He stated that these calls tend to be from people who just happened to see the property on the weekend driving by. Mund also said that out of the calls he received throughout his years as a broker no weekend inquiries were ever closed.

Day 1 - Being Flexible

Commercial real estate is only as valuable as the end user is willing and able to pay per square foot. Therefore having the ability to transform a property’s use gives the owner/investor lower risk due to the larger pool of prospective tenants. Dr. Forgey charged our class with finding an affordable property that could potentially be used for as retail, small office or residential space. In addition to this the property must have garage doors. These original glass doors will be removed and replaced with modern glass garage doors which will create not only natural light but also a very appealing look. See http://www.glassgaragedoors.com/ to view additional unique styles. 






We should strive to be sustainable as possible and opting to use concrete floors, walls, if present and leaving any non threatening duct work exposed, while maximizing the rooftops. I will be working with classmates Jason Glater an experienced mortgage banker and Jerod Mund, a Sperry Van Ness commercial real estate broker. 

The ideal  property must be located in the Fort Worth's medical district near the Historic Fairmont neighborhood or West 7th in Fort Worth. Both areas have consistent rising property values. Although Dr. Forgey showed us some examples such as 558 Hemphill and 701 Pennslyvania locating an afordably priced property proves to be somewhat of a challenge. We will have to find financing for the project exploring all sources including City of Fort Worth initiatives, conventional programs, and HUD programs. Any environmental issues, zoning limitations will be addressed with the proper city departments. This project will be very detailed all renovations, construction costs, and reused materials, are to be throughly explained in the presentation. We will also use current true rental rates for retail as well as residential properties such as htttpwww.oldbuilding.com

Jason, Jerod, and I looked at several properties. Some where too big or so old their foundations were sliding. No amount of bolts or puddy could keep them from declining. One buildings 2nd floor was so thin we thought there was a chance we would fall through. Other properties layout did not meet the specifications the instructor wanted. We would have ideally wanted to retrofit 801 S. Main. The building was across the street from a boarding house and next door to an auto shop. It was very old and boarded up. We assumed we could get a great deal from the owner as the property appeared to be somewhat abandoned. When we approached Dr. Forgey with our potential diamond in the rough he informed us that he was very familiar with the property having personally toured its interior. Dr. Forgey told us that the remediation costs would be far to great.

The Fairmont/Near South Side area has strict historic guidelines that can drive up the price on certain properties. In this area however is a blend of older renovated historic properties and new townhouses. Some buildings have been purchased for specific end users who want the area and the property types. However these buyers and or builders may not all have specific ROI's they are after.