Monday, June 29, 2015

Building blocks: Likely Oak Lawn HEB site shows how investors, developers piece parcels together

It can start with a knock on the door, a letter in the mail, or both.
Property owners in older parts of town are being made offers they can’t refuse. Without empty land to purchase, investors and developers have to create their own clearings to build new projects.
If you have a lot of money, you can quickly put acreage together even in a densely developed part of the city.
We followed two blocks in Oak Lawn that were bought up over the last year. There’s one holdout, but after the land is ready, HEB’s Central Market has confirmed that it’s interested.
OGM Group, whose address is the same as a San Antonio-based law firm, has purchased 11 residential and commercial properties from 15 owners in Oak Lawn since August.
It bought a Taco Bueno, townhomes, apartments and businesses in two adjoining city blocks in the neighborhood sandwiched between Uptown Dallas and Highland Park. The blocks are on Lemmon and Bowser avenues between Throckmorton and Reagan streets. Together, the properties are on the Dallas County tax rolls for $7.75 million and make up about 3 acres.
OGM isn’t talking. A spokeswoman for Central Market, Heather Senter, said HEB is considering adding the property to its portfolio of land holdings in North Texas. But, she said, “they are still in the very early stages of evaluating this particular opportunity.” Plus, the property is “still being assembled and still in active real estate negotiations,” Senter said.
Only one property owner hasn’t sold to OGM. Nickos Panousopoulus, a Greek-American cobbler who runs Nicko’s Shoe Repair, owns the two-story building at 3900 Lemmon. He says he is considering an offer.
Taco Bueno, on the corner of Lemmon and Throckmorton, closed June 1 after selling to OGM in December. It was an older building that didn’t have a drive-through, and the company is looking for another Oak Lawn location, a spokesman said.
There are still tenants with leases to be dealt with.
La Madeleine at 3906 Lemmon has no plans to close, a spokesman for the Dallas-based restaurant company said.
Ron Berlin, a Dallas real estate investor, sold the two-story building that houses La Madeleine and a dozen other small businesses last fall. Berlin didn’t respond to requests to be interviewed.
It’s not clear from the secretary of state’s office incorporation filing who owns OGM. Paperwork lists “managers” Stephen Golden and Ami Gordon, who are partners in the San Antonio law firm of Golden Steves Cohen & Gordon and have done work for HEB. Gordon hasn’t responded to interview requests.
Anonymity is a big part of the process.
Carol Morrison was the first person to sell to OGM. Her former residence at 3929 Bowser is one of four New Orleans-style townhomes at the Villas of Franconia that were built in the late 1990s. The three others face Throckmorton.
When she was approached, Morrison said, she was told that the buyers were accumulating rental property in the area.
Her advice to others: “Don’t let them rush you into a decision. They’ll dangle a carrot and then say it’s going to be off the table soon,” Morrison said. She realized too late that she had been priced out of her longtime Oak Lawn neighborhood. She has now bought a home in Addison.
OGM increased its offer to Morrison a couple of times by $10,000 each time. She was paid more for her house than she asked for, but she still regrets not doing more homework. “My home needed some work, but it was quality construction and high-end finish out,” Morrison said. “It breaks my heart that it’s going to be torn down.”
The sale closed Aug. 1, and the buyers gave her free rent through the end of the year. She moved out in January.
The timing of OGM’s offer was good for Sabu Varghese of 3512 Throckmorton. He tried to sell in 2013 but pulled it off the market because he and his wife were adopting a child. “We didn’t want to change our address and complicate the paperwork,” he said.
OGM also offered Varghese six months of free rent after the Aug. 6 sale. The adoption was finalized in November, and the family is building a house in Frisco.
“All through the process, they were very accommodating to our situation,” Varghese said.
An aging building on Bowser that had five individual condo owners who all sold in August has a chain link fence around it now. So does the Image Arms Apartments, which was cleared out of tenants quickly when it was sold in September.
Fighting the city
Putting these deals together often means dealing with a person who is not ready to sell.
Panousopoulus, who says he’s “about 90” and doesn’t want to retire, has been running Nicko’s Shoe Repair for 25 years. He intends to open a new shop on Oak Lawn Avenue if he agrees to sell his corner two-story building and the parking lot behind it.
He’s also running into problems with the city of Dallas.
Two years ago, he was told by the city that he had to make repairs to the exterior of the building. He installed new siding and a roof that cost him more than $30,000.
Now the city of Dallas Water Utilities department has turned off his water and told him that he owes more than $5,000. He was told he has a leak that would require tearing up his foundation to fix.
“I’m afraid they are going to create more serious problems if they break up the foundation,” he said.
Panousopoulus has a court date in July about a new citation for operating a “substandard structure.” Last week, at a required appearance for the charge that comes with a maximum fine of $2,000, Panousopoulus declined an option to pay a reduced $200 fine.
“I want to tell my story to a judge,” he said.
Panousopoulus believes the city is harassing him. He keeps good notes and records.
When asked why he doesn’t sell and make all these problems go away, Panousopoulus said, “I like to work. If I don’t work, I will die earlier.
“I need the activity,” he said.
Assembling land this way is going to become more common, Dallas real estate broker King Laughlin said. In the 1980s, Laughlin secretly bought land along North Central Expressway for the huge Cityplace development.
“When you have a fully developed city, nothing gets built on raw land,” Laughlin said. “You have to put it together to get enough to do anything. That’s the nature of urban development.”
The Cityplace acquisition took years and was over 1,000 transactions, he said.
“The key to all land assembly is you care only what your average price is for the whole thing,” Laughlin said. “You may pay $100 per square foot for one property and $20 for the one next door, and it all works out just fine.
“It’s not so much what you pay for these urban sexy locations,” he said. “It’s can you get it at all?”   
Maria Halkias and Steve Brown/ Dallas Morning News