What started as a house-hunting venture turned into a multimillion-dollar mixed use downtown development project.
When Samuel Scarborough moved back to Tyler in late 2016, he hoped to live downtown. Problem was, there were no open spaces and a two-year long waiting list.
The demand was there, and the Scarborough family decided to meet the need themselves.
On Wednesday, the Tyler City Council approved a contract with the family to sell a portion of the former King Chevrolet property for $539,055. The 3.75-acre tract is west of the T.B. Butler Fountain Plaza, between Ferguson and Erwin streets, adjacent to City Hall.
The city has owned the property and portions of the surrounding area for about 10 years. The city incrementally purchased 14 parcels, just over 9 acres, across from City Hall in 2008 and 2009, with the vision of it becoming a second downtown square with mixed use properties and downtown loft apartments. The total purchase price was $2.1 million, according to city records.
City officials have said they purchased the land not intending necesarily to turn a profit upon its sale, but instead hoped to have a say in its development and vision for downtown.
“There’s an authenticity to downtown,” said Scarborough, president of Scarborough Realty Partners who is leading the loft project. “There is no other place in town that has that history to it. Whatever is old is new again, and people and millennials are looking for more authentic things. I think people will be excited to be in a place where they can be downtown and go out and walk.”
The plan is to build West Park Downtown - a three-story, 96-unit multifamily development. The plan includes 45 one-bedroom units on the ground floor and 51 two-bedroom units, which will be two-story townhome style apartments, Scarborough said.
There’s 4,800 square feet dedicated to retail space, and .75 acres will be a dedicated green space for residents.
The lofts will add about 150 people to downtown, Scarborough said.
The project, designed by Butler Architectural Group, represents a $12 million investment in downtown Tyler by the Scarborough family of Tyler, principals of Princess Three Partners and the developers of the project.
The single bedroom apartments likely will be 800 square feet, and the two bedrooms will come in between 1,100 and 1,150 square feet.
The buildings will be built in the brownstone style, which is common in Chicago and New York. The style typically has a staircase, with a stoop, leading from the street to the front door, which is usually the second story.
The purchase contract will become valid after a 60-day feasibility period, where the developers will look at rezoning the property, platting it and getting an environmental review. Developers are aiming to have the project complete in 18 months.
There are no property tax abatements or other financial incentives from the city attached to the project, and the developers have committed to spending about $32,000 to improve streetscapes from the square to the development on Ferguson and Erwin Streets. That includes added lighting and landscaping.
The Scarboroughs owned and managed the Broadway 707 Apartments, 117 W. Phillips St., for 15 years but sold it earlier this year. Bright red brick and white trim distinguish the apartments, which are visible from Broadway.
The Scarboroughs are successful in the oil and gas market as well as real estate. Their oil and gas firm, Princess Three Operating, is based in Henderson, but the family has a real estate base in Tyler.
Scarborough said the group has experience managing multifamily developments, but this will be the first one they build from scratch.
“We have been here since 2003, and we are not looking to build these and sell them,” Scarborough said, adding there will be a full-time property manager on site. “We are looking to be a part of downtown.”
There’s demand for downtown living.
Beverly Abell, with the city’s main street department, said she quit keeping a waiting list years ago, but she gets calls about downtown living availability almost daily.
Word of mouth is the best way to get into a downtown property.
“I call it my No. 1 unrequited request,” Ms. Abell said. “Space is at a premium downtown, and any kind of housing is very much desired. There is a real trend of people wanting to rent first these days, and this certainly accommodates that.”
It also hits Main Street’s target market - people who want walkability, authenticity and diversity.
“Downtown is still that rare creature called a neighborhood,” Ms. Abell said.
John O’Sullivan Sr., with Tyler Lofts, said he has maintained a 98.6 percent occupancy rate on his downtown properties for 20 years.
O’Sullivan has 35 properties, and is working to add another 10. That includes eight units on top of the New York Store, at Spring and Erwin, and two more in a project to refurbish an old gas station into apartments at the back of the Smith County Jail, at Fannin and Elm.
O’Sullivan said there’s room for more.
“I think it’s a good move - anything that helps bring more activity downtown is a good thing.”
Mike Butler with Butler Architectural Group has been working on downtown restoration projects for years, and said he’s been waiting for a specific moment.
“I always thought there would be a certain number of projects that will create a land rush downtown,” he said. “I don’t know if this will be the trigger, but every one we do helps a little bit downtown. This one is big enough that it will make a larger impact than the small spaces being done one at a time.”
But, Chris Burrow said the local buy-in is important to a successful downtown. Burrow is the vice president of the land advisory group of Henry S. Miller, the Dallas-based brokerage firm listing the King Chevrolet property.
“What you’ve seen is local people who are very passionate about downtown Tyler taking a risk to do new projects - not purely from a profit standpoint - but because they truly want to improve downtown,” he said.
Examples include the Fair Foundation, which donated the land where the new parking garage sits. Garnet Brookshire and Andy Bergfeld who took on the refurbishing on the People’s Petroleum Building, with Rick Eltife who opened Ricks on the Square when there was little commercial activity in the area, and now with Mayor Martin Heines refurbishing an aging shopping center south of the parking garage - where the new East Texas Brewery takes up residence.
“You see this around the country, that it takes local people who are passionate about their community to make it successful,” Burrow said.
Now, the Scarborough family is taking a chance on building lofts.
Burrow said he’s been talking with a few high-end boutique hotels that are interested in the property west of Scarborough’s new lofts. He estimates a deal could come through in six months to a year.
“It’s hard to get the first group in an area to take the risk, but once you see a major project of this nature, it leads to other projects,” he said. “I expect it will lead to other projects beyond this property.”