There has been a lot of speculation lately about the dreary, seven-story Faulkner Tower office building at 6220 Gaston at Paulus. The questions generally revolve around: Will the owner sell and for what price, and what is the building going to be in its next life?
The first question now has an answer.
Building owner Jerry Biesel is a seller at $6 million; Ebby Halliday agent Rob Biesel has listed the building, along with the Paulus parking lot.
Ok, second question. At that price, what will be the next use for that prominent corner?
Grant Guest of Perry Guest Company had the site under contract in 2015. Although not willing to share what his contract price was, Guest’s plan was to use the hard corner for a retail/restaurant use with a national retailer/restaurant that could afford steep rent and then build residential along Paulus. Guest’s plan meant tearing down the existing structure, which is impossible until 2020, Guest says. At least, it’s impossible unless you want to end up in court facing the owners of the building’s rooftop antenna leases, which don’t expire until 2020. A straight residential deal without free-standing retail on the corner may also be doable, Guest says, but in any event, the existing building would have been razed in his plan.
Dustin Schilling of Caddo Holdings bought the Lakewood Towers office buildings across the street in 2010 and spent $4 million in renovations. Caddo rode those improvements and an economic recovery to increase rents substantially and then sold the buildings to Houston-based Highland Resources in 2013, delivering “strong returns to its investors,” according to the Caddo’s website.
“We talked to the (Faulkner Tower) owner a couple of times,” says Schilling, an East Dallas resident, “but we were deep into Lakewood Towers and felt it was a conflict to engage on another deal.”
Caddo’s success with Lakewood Towers proves that “there is absolutely a market for quality office space in Lakewood.” The question, of course, is how much on top of $6 million would it take to convert Faulkner Tower from dreary to desirable?
At $6 million, the per square foot (psf) price for the building is $175 psf. With lobby, elevator, HVAC, exterior façade and interior office finish capital costs to spend, the cost per square foot invested could fall between $250-$300 psf. As much as we love Lakewood, this ain’t Uptown when it comes to office rents needed to make those numbers work.
What about a boutique hotel? That sounds cool — having coffee or a late-morning breakfast in a lobby café with an East Dallas vibe.
Here’s what Marty Collins, CEO of Gatehouse Capital and a Forest Hills resident, says about that idea. Collins is a respected national developer of W hotels and other brands. His Dallas projects include the W in Victory Park, and a Home2 Suites by Hilton under construction in the Baylor medical district.
As much as Collins would like to see a boutique hotel in Lakewood, “I’m not certain of the demand base. I don’t see much corporate group or corporate transient demand so that leaves the leisure transient like weddings and family reunions,” Collins says. “I might have added travelers needing to access the medical district around Baylor, but there are three hotels near Baylor under construction now, including mine.”
Finally, he says, “We underestimate the toll the summer heat takes on leisure travelers visiting Dallas, so I am scratching my head on this site as a hotel.”
So back to the second question: What use is next for Faulkner Tower?
An office redevelopment seems expensive to execute, and hotel demand for that location looks shallow. My bet is that Biesel sells the property for close to his price, and the old landmark comes down in favor of a residential project, but not until 2020, which is really not that far away.
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