A Dallas real estate investment group hopes to transform its rebounding retail center into an upscale commercial hub by replacing some of its shops with a hotel and office space.
Southwest Properties Group, Inc. is drawing plans to exchange a 22,000 square-foot retail building on the south side of Village on the Parkway for a full-service hotel and a 300,000 square-foot office building, said Raul Toledo, executive vice president of Southwest Properties.
The 300-room hotel is likely to front along the Dallas North Tollway, with the office building to its east, said Cliff Booth, Southwest Properties president and CEO. Initial plans also call for a 1,000-space parking garage between the hotel and the office building, plus 270 units of new luxury apartments along Montfort Drive, he said.
The three retail tenants in a current Village building would be relocated to other parts of the center to make way for the new structures, he said.
Southwest Properties has commissioned several architectural plans for the 33-acre development, Booth said. It hopes to finalize a development plan within six months and start construction in early 1999.
Booth estimated the project would cost more than $100 million.
“Nothing is definite,” he said. “But we think this is strategic land with great long-term, mixed-use potential.”
The 375,000 square-foot shopping center was rezoned for hotel and office space when Southwest Properties purchased the Village from Metropolitan Life Insurance Company in 1995, Toledo said.
“In the last year we’ve started to see a lot of walk-in business, and it’s only going to get better with a hotel and office building,” said Debbie Grischow, manager of L’Image Salons of Dallas, one of the first Village tenants. “The new owners have really turned us into a destination center.”
It’s a transformation that’s been a long time coming.
Village on the Parkway broke ground across from Prestonwood Town Center in 1979 to accompany the first Dallas location for Sakowitz department stores, which opened two years later.
At the time, the Galleria mall was little more than a pipe dream and Prestonwood was the hottest retail destination in North Dallas.
The Village retail center quickly reached nearly 100% occupancy with an assortment of high-end restaurants, apparel and gift retailers.
But the center’s success was short-lived.
By 1986, Houston-based Sakowitz had gone bankrupt and abandoned its 127,441 square-foot Village store. The Dallas economy crashed. And to make matters worse, the shopping center lost its main entrance due to construction on the Dallas North Tollway.
“A lot of people assumed that when Sakowitz went down, the whole center went down, because we were then called “Sakowitz Village”, said Judy Mason, owner of Diamontrigue of Dallas, which has maintained a store in the shopping center since it opened. “It was pretty empty here for a while,” she said.
Desolate is more like it. At one point, occupancy at the once-vibrant Village dropped below 40%. Only three of the original tenants remain at the shopping center.
MetLife foreclosed on the property in 1989 from Dallas developers Martin Tycher and Irwin Grossman. Five years later, it finally signed a new tenant for the former Sakowitz space: national housewares retailer Bed Bath & Beyond.
The shopping center was less that half leased when Southwest Properties bought it in 1995. The real estate investment group poured nearly $30 million into purchasing and improving the property, Booth said.
Some of the changes seemed small, like a new sprinkler system, brick-paved sidewalks and carefully arranged, lighted landscaping to improve the center look and buffer the Tollway buzz.
Others were long-awaited necessities, like angled parking spaces to encourage regular traffic patterns and new, easily accessible entrances marked by highly visible towers, said Jon W. Wales, II, vice president of The Weitzman Group in Dallas, which leases the Village center.
Southwest’s mission, Wales explained, was to create a high-end lifestyle center comprised of distinctive local retailers. Rent at the Village starts around $20 per square foot, he said.
“It just feels good when you come in here now,” said Diamontrigue’s Mason. “There’s so much synergy with people strolling around the shops and eating outside at the restaurants.”
Village tenants also credit the rapid development of office space and luxury apartments along the Dallas North Tollway for the rebirth of the shopping center.
The Village is currently 85% leased, with well-known draws like Blue Mesa Grill and Communication Expo.
A Spanish-style restaurant, DeTapas, is slated to open this month. Geoffrey’s Fine Furnishings and Decorative Art, a new concept created by former Weston Carpet and Furniture staffers, will also open its first 7,500 square-foot shop in the Village this year.
But across Belt Line Road, Prestonwood Town Center’s owner has also commissioned architectural plans to redevelop the ailing mall into a sprawling hotel and office complex.
Some sources wonder if the market is strong enough to support two new first-class hotels. Before the Adam’s Mark, developers had not built full-service hotels in Texas in 10 years because of their high cost and lengthy construction schedules, said John Keeling, senior vice president of PKF Consulting Inc. in Houston.
A five-star, full-service hotel costs about $170,000 per room compared to as little as $35,000 for a limited-service property.
“But I think you’ll find that whoever comes out of the ground first is likely to pre-empt the other hotel,” said Arlie Taylor, a Dallas-based hotel investment advisor.
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