West Village and the nearby Knox Henderson district has really taken off in the last 5 years. I remember when we first moved to Dallas in the late 90's. We were going to see my uncle who lived in east Dallas and ended up getting lost in what is that area. Scary. First time I ever saw a real live prostitute and I had to have my mom explain it to me (I was 13). Awkward!

I ended up going to that area last year trying to find some new boots at a place called Cowboy Cool. Cheapest were $350. I decided to go to Langstons instead! So yeah the area is pretty upscale. I would love if the LEVEL apartments become something similar.

And yes anyone whose been to Victory knows that isn't not active at all. When the Mavs or Stars aren't playing its eerily quiet. The architecture is really cold and sterile, nothing like West Village. The only thing in that area is WFAA studios and The House of Blues.

What they've done with Knox Ave, the whole organic redevelopment model, is fantastic. That is a brilliant contrast to the deadness, despite the wonderful splashy starchitecture, of Victory.

The tax increment financing got approved. I think the new rendering looks pretty good, even with the two-tone look:
http://newsok.com/tax-increment-financing-okd-for-maywood-apartments/article/3593216?custom_click=lead_story_title
http://photos.newsok.com/2/showimage/1483486/gallery_photo

Also interesting to note that a second phase to be built out to Walnut is to begin planning as construction starts on the first phase west of Oklahoma.

Also interesting to note that a second phase to be built out to Walnut is to begin planning as construction starts on the first phase west of Oklahoma.

This is kind of a let down since I assumed it would all be built in a single phase.

This is kind of a let down since I assumed it would all be built in a single phase.

I thought that originally it was just announced as abutting Oklahoma, so I was excited to hear about the possible extension to Walnut. There is a building there (that I suppose Bradshaw already owns) that would have to be demolished.

I thought that originally it was just announced as abutting Oklahoma, so I was excited to hear about the possible extension to Walnut. There is a building there (that I suppose Bradshaw already owns) that would have to be demolished.

Yep, my mistake. I read Walnut and thought Oklahoma. So this second phase represent new development to me. If it is the same size a phase one then that will be an additional 139 units, bringing the whole thing to 278. Ok, now I am excited again.

LOL, glad you are excited too. It really would be a large development visually, in that it would span two blocks.

It has the potential to make a very nice streetwall along that side of 4th. The other side of 4th, not so much.

Which building would have to be demolished in phase 2? I guess it depends on the direction of the build. If it runs along Walnut, then that old, tiny house that serves as a home for a car wash. If it runs along NE 4th and run up to Walnut, then that large brick and sheet metal building will have to go.

EDIT: Actually, if it goes along 4th and abuts Walnut, both buildings would have to go.

It has the potential to make a very nice streetwall along that side of 4th. The other side of 4th, not so much.
But, there's not a street going east-west between 3rd and 4th (other than the back driveway to the Brownstones), at least not yet...

But, there's not a street going east-west between 3rd and 4th (other than the back driveway to the Brownstones), at least not yet...

South side of 4th = nice streetwall. North side of 4th - vacant lot and trucking dock =/= nice streetwall.

The tax increment financing got approved. I think the new rendering looks pretty good, even with the two-tone look:
http://newsok.com/tax-increment-financing-okd-for-maywood-apartments/article/3593216?custom_click=lead_story_title
http://photos.newsok.com/2/showimage/1483486/gallery_photo

The design is OK, they can lose the purple colored over hangs though. However the design will compliment Level & Aloft, but I'm starting to get tired of all this stucco...

The design is OK, they can lose the purple colored over hangs though. However the design will compliment Level & Aloft, but I'm starting to get tired of all this stucco...

At that price point I think you will have average construction quality and finish detail. Adds density though and the lower cost housing many want. The design is underwhelming but it is about what we would expect...pretty much a box with balconies and awnings. Not comparable to Level.

I will take a simple design with stucco exterior everytime over an empty lot, comes down to it bring on the stucco just get rid of these empty lots please! This creates more density and if the sales are what everybody is kinda expecting them to be it will spure more devopment w/ more housing more retail more hotel. All around good deal for all.

The apartments will fill a void in the market. I hope it is successful. The design is good. Level 3 is top notch mixed use, that we are lucky to have. This will add to the density and attract more retail and restaurants to Deep Deuce.

I will take a simple design with stucco exterior everytime over an empty lot, comes down to it bring on the stucco just get rid of these empty lots please! This creates more density and if the sales are what everybody is kinda expecting them to be it will spure more devopment w/ more housing more retail more hotel. All around good deal for all.

+1

Step 1 is getting rid of the vacant lots and this project seems to have good urban design. It is pushed out to the street and has structured parking. Once we get all the vacant land used we can start building up.

Here's an updated graphic showing the location of Phase II and a better quality rendering:

http://www.okctalk.com/images/pete/deepdeuce3.jpg

http://photos.newsok.com/2/showimage/1483486/gallery_large

I like the purple. Just because it's a pop of color in an otherwise neutral environment. The human eye automatically notices these bright flashes of color, and it draws attention and interest. Not that they're spectacular over-hangs, but we've got to get over this love affair with brown and grey. Color is GOOD!

Three questions:

1) Is there any indication that Phase 2 will be mixed use? It appears there are no spots for retail in Phase 1, but if that Flatiron project ever occurs, it would be nice to have more retail along 4th street.

2) Based on Pete's map, are there still plans to fill out the remaining spots of the Brownstone development with Brownstones?

3) Also based on Pete's map, how long before that Opportunities Industry building between Walnut and Central is taken down for development more appropriate to the neighborhood?

Lastly, I think it will be interesting to see what becomes of the city-owned big parking lot between Main and 2nd that was considered for the Convention Center.

Answers:

1) I don't think so. Both buildings would have 2 stories of parking with 4 levels of housing. But remember, there is the Maywood Flatiron proposed for across the street, and that retail project would get a big boost when all these new living units come on line.

2) Yes but it will obviously be a while, as only a few of the 20 constructed brownstones have been sold.

3) I would expect the remaining un- and under-developed properties in DD to be gobbled up in the near future.

Ditto on Pete. My job insecurity is only heightened at the prospect he might go for my job.
;)

People need to understand that EVERY project doesn't need to be "mixed use". That has become the cool term to use, I guess. A mix of uses in the neighborhood is good. A mix of uses in every building isn't necessarily. People don't mind walking a block or two, or a few, to shop, recreate, etc. Let's not get too myopic on what we think is a good project.

People need to understand that EVERY project doesn't need to be "mixed use". That has become the cool term to use, I guess. A mix of uses in the neighborhood is good. A mix of uses in every building isn't necessarily. People don't mind walking a block or two, or a few, to shop, recreate, etc. Let's not get too myopic on what we think is a good project.

Who said every project needed to be? I wasn't thinking mixed use necessarily meant it was a good project, or the absence of mixed use meant it wasn't. I was simply asking the question out of curiousity about Phase 2 because I thought it might mesh well with the planned Flatiron development along 4th.

Anyway, the amount of mixed use development interspersed throughout that neighborhood, in Maywood Lofts, Level Urban, some in Deep Deuce, and the Flatiron, will probably be just the right amount.

I would imagine that they could add some retail to Phase II if there seemed to be the demand.

It will be interesting to see how well the Level restaurant/retail spaces lease up.


I'm really excited by what's happening in Deep Deuce, especially the fact that so much will be done in just 1.5 years. And with it's expected success, I'm hoping it will be a springboard for Midtown, AA and other urban districts to reach critical mass.

Very exciting to see more selection of apartments with underground parking in the core of the city.

So the car wash place is going to go? I know it isn't very fancy looking, but it was kinda neat to see those guys open that place up and make a go of it, back when there was almost NOTHING in the area. I hope they got some good money for their place.

Here's an updated graphic showing the location of Phase II and a better quality rendering:
http://photos.newsok.com/2/showimage/1483486/gallery_large
PETE: thanks for the larger pic!

Works for me, can't say I have any objections with the design as rendered. Does this developer have a good track record on delivering "as rendered"? I like contrasting elements and "character' details. Splashes of color etc. Purple may not be my first choice but depends on the shade chosen etc.

someone with commercial real estate background can help me understand how this deal is profitable for the developers.

Total Investments: $18,000,000
Total Units: 143
TIF: $1,000,000

Construction Cost per Unit: $118,881
Rent Per Unit: $700-1,200

The numbers look really bad from an investment point of view. what did i miss here?

someone with commercial real estate background can help me understand how this deal is profitable for the developers.

Total Investments: $18,000,000
Total Units: 143
TIF: $1,000,000

Construction Cost per Unit: $118,881
Rent Per Unit: $700-1,200

The numbers look really bad from an investment point of view. what did i miss here?

If you take the average of rent per unit of $950/mo x 143 units= $135,850/mo x 12 months = $1,630,200/yr and with an $18,000,000 investment would take them roughly 11 years to see a return on investment, and thats only if they stay 100% leased.

If you take the average of rent per unit of $950/mo x 143 units= $135,850/mo x 12 months = $1,630,200/yr and with an $18,000,000 investment would take them roughly 11 years to see a return on investment, and thats only if they stay 100% leased.

Well sort of. Of course, using that type of math it take a homeowner 30 years to see a return on the investment. You are thinking of "break-even". If they can rent the apartments for more than they pay on the construction loan then they will see a return on the investment in the first month.

Well sort of. Of course, using that type of math it take a homeowner 30 years to see a return on the investment. You are thinking of "break-even". If they can rent the apartments for more than they pay on the construction loan then they will see a return on the investment in the first month.

It will not open 100% leased, so it all depends on their break-even. At first the maintenance, etc. is less too though. Timing maters on such things like utilities costs, etc. And, there is a difference between positive cash flow and profitability.

Well sort of. Of course, using that type of math it take a homeowner 30 years to see a return on the investment. You are thinking of "break-even". If they can rent the apartments for more than they pay on the construction loan then they will see a return on the investment in the first month.

Home ownership can't compute ROI as it isn't valued like an ongoing investment and does not provide positive cash flow. And, there is no assurance it will be worth more at the time of sale than when you buy (see today's real estate market). Can't compare commercial real estate with home ownership.

If you take the average of rent per unit of $950/mo x 143 units= $135,850/mo x 12 months = $1,630,200/yr and with an $18,000,000 investment would take them roughly 11 years to see a return on investment, and thats only if they stay 100% leased.

You forgot to factor in management fees,vacancy, repairs/maintenance, taxes and insurance which would take up at least 40% of gross rent. And this number will increase as the property ages. I must have missed something big here. There is no way this deal makes sense for seasoned investors/developers.

I can't make the numbers work, either.

With income producing properties, they are typically valued on capitalization rate. Cap Rate = Net Operating Income / Value.

To get NOI you have to subtract operating expenses from your revenue (rent) and the industry standard in residential properties is that the operating expense ratio is 45%. In other words, 45% of all your income will go towards vacancy, maintenance, taxes, insurance, etc.

So, if you take 1.6 million in annual rent and subtract out 45% you get a NOI of $880,000. Divide that by $17,000,000 and that is an annual return of 5.2% -- and that's assuming no debt service, i.e. an all-cash deal. If you are borrowing 80% of the cost at 5%, this property would not break even.

A good annual return on this type of property would be around 10%.

The only way I can see them making a substantial profit, is if they let the property appreciate in value over the next 5 years, and then sell the complex, prob making a $2M-$3M profit.

The only way it would appreciate is for rents to go up substantially.

I am assuming the $18 million doesn't cover the 140 units in phase II. When I was looking at an apartment in San Jose the strucutred parking wasn't free either. I think it was about $50 per month.

It's all about financing! They are using HUD financing, which fixes the interest rates for 40 years and loans up to 95% of the investment.

Simple math (much more complicated than this):

Potential Monthly REVENUE- $140,000
Guesstimated Monthly Expenses- $40,000
Estimated Monthly Debt Service- $75,000
Potential Monthly Profit- $25,000

Granted, I have no idea what the actual numbers are, but the deal works. And yes, the real payoff will be upon the sale of the property years down the road.

It's all about financing! They are using HUD financing, which fixes the interest rates for 40 years and loans up to 95% of the investment.

Simple math (much more complicated than this):

Potential Monthly REVENUE- $140,000
Guesstimated Monthly Expenses- $40,000
Estimated Monthly Debt Service- $75,000
Potential Monthly Profit- $25,000

Granted, I have no idea what the actual numbers are, but the deal works. And yes, the real payoff will be upon the sale of the property years down the road.

So if operating expenses are indeed 45% as is normal, it makes expenses $63,000 and leaves your calculation of potential monthly profit at $2,000, not $25,000. So, it is a break-even venture if things go well.

Also, we have not factored in the cost of land, which would have to be a couple million more.

Also, we have not factored in the cost of land, which would have to be a couple million more.

they have had this land for a long time .. and with all the other projects that they have put up .. i'm sure the land cost factored in is very small

they have had this land for a long time .. and with all the other projects that they have put up .. i'm sure the land cost factored in is very small

What amount is "very small"? Are you just speculating or do you know the cost? What is the amt.?

We can ignore the numbers for a seccond and just have to look at the City and HUD's perspective. It's a long term investment; this development will add another vital piece to create a vibrant downtown. Once we have a high density downtown, we will attract even more developments in dt and eventually bring more jobs and more tax dollars. Again it's a long term investment and the question is..is it worth it?

So if operating expenses are indeed 45% as is normal, it makes expenses $63,000 and leaves your calculation of potential monthly profit at $2,000, not $25,000. So, it is a break-even venture if things go well.

Rover,
Don't want to pick on you at all, but that math is VERY simple. There are a number of different factors that change these cash flows dramatically (i.e. depreciation, particularly accelerated for residential properties). NO developer would assume the risk of building anything (let alone a phase 2) with a breakeven scenario as best case.

The point I was making...some above posts were looking at $18MM as cash in the deal, when in reality, the developer will have closer to $250-750k (after TIF funds are applied) in the deal.

It would be interesting to see the full pro forma on this project or something like Level or The Edge.

With TIF funding and HUD involved, I bet they are out there in public records somewhere.

The point I was making...some above posts were looking at $18MM as cash in the deal, when in reality, the developer will have closer to $250-750k (after TIF funds are applied) in the deal.

This is where people get a little confused. The Federal Reserve is a debt based monetary system. 95% of the money in this deal doesn't exist unless there is a deal - it is created from thin air at the time the loan originates. The developer has 40 years to pay this loan back at a low interest rate. Throw in some future hyper-inflation and these guys will look brilliant.

Rover,
Don't want to pick on you at all, but that math is VERY simple. There are a number of different factors that change these cash flows dramatically (i.e. depreciation, particularly accelerated for residential properties). NO developer would assume the risk of building anything (let alone a phase 2) with a breakeven scenario as best case.

The point I was making...some above posts were looking at $18MM as cash in the deal, when in reality, the developer will have closer to $250-750k (after TIF funds are applied) in the deal.

I understand and my post wasn't to create an accounting or finance lesson. However, there is a difference in cash flow and profitability. I would be shocked if this is a break-even - the developers are way too smart to do that.

So, what you are saying is that the developer is only putting up less than 5% down and costs to start-up are financed?

So, what you are saying is that the developer is only putting up less than 5% down and costs to start-up are financed?

Yes, I believe so. The $18MM cost almost assuredly incorporates all costs associated with the project. HUD will lend on all costs associated with the project.

FHA insured mortgages are limited to the lessor of several criteria. People often refer to HUD projects as being 90% loan to value, but this isn't exactly correct. This percentage is actually a loan-to-replacement cost, not loan-to-value. And the limit was 90% for many years. The "new" limit is 83.3%. The Maywood project falls under FHA's "old" underwriting criteria, and the 90% figure applies. However, this is only one of several criteria that could limit the mortgage amount. More often than not the mortgage will be limited by the project's ability to debt service, which is a factor of NOI. True "market value" is not a factor on FHA new construction projects. This is often difficult to understand for those that are used to conventionally financed projects. But FHA underwriting has it's own unique rules.

FHA allows for the construction draws to convert to permanent financing upon completion, with up to 40 year amortization. Land acquisiton, construction costs, as well as many of the soft costs are all mortgageable items.

My point is that this project will easily cash flow, and it is much more complicated than a simple LTV analysis.

I like the wooden posts along the edges of the edifice. Reminds me of a really cool project that I saw in the old town of Tallinn, Estonia. If they wanted to keep the look subtle, and the costs down but still go with something durable like actual stucco, perhaps limestone would have been a good alternative? The wooden parts would have really popped, very tactile, eye-friendly.

http://img690.imageshack.us/img690/9392/dscn2135d.jpg

In Steve's story it said that those corners will be steel actually, but point taken about the contrast in materials.

Oh, well if it's supposed to be steel, very well then. Lol I didn't realize that.

I agree, the only projects that semi compliment each other are the Deep Deuce apartments and Block 42. There should have been a design review committee implemented in Deep Deuce similar to the one in Bricktown, to regulate some type of design style/standards in Deep Deuce instead of letting developers just do anything.

Disagree. Look what the freedom has brought!! and the restriction in Bricktown has yielded little.

I disagree also. I love the variety of buildings in the area. From the classic historical building or school, to traditional-styled apartments and townhomes, and more recently some nice modern structures; albeit pretty safe in design.

Any updates re this project? Just thought I would give it a bump, since there have been no follow up announcements in a couple months...

Any updates re this project? Just thought I would give it a bump, since there have been no follow up announcements in a couple months...

I was going to ask the same; I only know that it was slated to start this fall, so hopefully within a month.

Deep Duece is going to be crazy busy once they start on these. Hopefully stage 1 moves fast and they can get stage 2 underway shortly after! Really excited about what Deep Duece will look like in 3 years!

I've heard and seen nothing on the site except for some soil testing a few months ago. Deep Deuce projects seemed timed to maximize the blowing of red dirt and noise. It reminds me of when my children got the chicken pox. Each got sick just as the previous child was getting well. Ah well, both are simply growing pains and hopefully construction will be over soon enough.

no activity...

I have heard absolutely nothing on this project, and it does worry me a little, although the developer is solid. He had financing, right?