New Owner of 1401 Elm Reassures Council Committee That He Will "Deliver" on Promise

1401elm111.jpg
Photo by Justin Terveen
For the first time since news broke that 1401 Elm was off the market, the city council got to hear all about the project -- one its new owner says could be a "tipping point" for downtown. Turkish investor Mukemmel "Mike" Sarimsakci, who purchased and plans to redevelop the 1.5-million square-foot former First National Bank building at 1401 Elm Street -- the largest vacant building in downtown Dallas -- presented his plans to a very receptive Economic Development Committee this morning. He was joined by Karl Zavitkovsky, head of the Office of Economic Development, who flipped through a slideshow of the building's history and future as Sarimsakci and architect Jerry Merriman chimed in with specifics.

And in the end, council members Tennell Atkins, Ann Margolin, Sheffie Kadane, Jerry Allen and Delia Jasso supported the city's allocation of $30 million in tax increment financing (TIF) redevelopment funds. City council is expected to approve the funding next week.

"I think this is a great opportunity," Atkins said. "People will be glad to live, work and stay in downtown."

The $30 million in TIF funding, plus another $21 mil in historic tax credits, brings the city's planned contribution to the project to more than $50 million. Some Friends of Unfair Park have chimed in with concerns that Sarimsakci may not fully realize or be able to sustain the planning and financial burden involved with a project like this.

Sarimsakci assured the committee that's not the case, insisting that his company, Polimeks, has diverse investments and the know-how to complete a project of this scope. Zavitkovsky said this project will fill in a sizable chunk of the 5.5 million square feet of vacant downtown office space, as well as create jobs and add living space.

Several times throughout the meeting, and afterward in a chat with Unfair Park, Zavitkovsky made it clear that this project presents very little risk to the city and to tax payers. The TIF dough, after all, is contingent on the project meeting certain conditions -- including an investment of $125 million, established square-footage for retail, office and residential space, and the restoration of public observation decks.

"The obligation of the city TIF ... doesn't go live until they complete what they're supposed to do," Zavitkovsky told Unfair Park. "They have to perform for the public to have any obligation."

Zavitkovsky said he's confident that the Turkish investor, with his fresh perspective, global contracting experience, and deep pockets, is the right man for the job. "It's a big building. Market conditions can change ... but right now, I feel good," he told Unfair Park.

Other investors backed away from the building because it needs significant asbestos abatement and because nine separate ground leases are difficult to negotiate, but Sarimsakci is negotiating with several of the building's lease holders and feels he has the money and the desire to do what it takes to revive 1401 Elm "as quickly as possible".

"I love that building," he said.

"We're trying to have a fast design and a fast construction," Sarimsakci told the committee. He hopes the ground-level retail spaces will be up and running in a year, followed by the floors of office space in 18 months, and, finally, the 520 or so apartments.

"We are used to large-scale projects," he said of his global contracting company. "When we make a promise, we deliver a product," he said. "I think a project like 1401 could be a tipping point [for downtown]."

"I think it's going to be great," Kadane said.

Atkins asked whether the required 10-percent affordable housing component would be spread throughout the building, adding that he'd prefer to see it dispersed. "We haven't made that decision yet," Sarimsakci said, but he added that he would be willing to disperse the affordable units that would rent for about $1,000 to $1,200, as compared to other units, which are planned to average around $2,000 to $2,500, depending on the market.

Margolin said she thought rents seemed "really, really high," but said, "This sounds like an exciting project."

"So, funding is basically in place?" Jerry Allen asked.

"Yes," Sarimsakci said, of the more than $130 million in private equity, loans, grants and tax credits it will take to get the building running.

As for the building's restoration and environmental remediation, estimated at $30 million, which the city will repay incrementally, Allen asked, "Do you feel comfortable with those figures?"

Sarimsakci said he got the best rates he could manage and that he was comfortable with the amount. And if it happens to cost a little extra on his end, he joked, "What's a million dollars between friends?"

Allen described the building as a "jewel," using Sarimsakci's word, and said that his company is "poised to polish that jewel."

"We look forward to the grand opening," Allen said.

My Voice Nation Help
37 comments
Sort: Newest | Oldest
US175guy
US175guy

"Affordable" = $1000??

I'd probably have to work 2-3 full-time jobs to keep that rent payment up.

Nunya
Nunya

Great. More "upscale" apartments in downtown. *sigh*

More apartments at this price point is not gonna produce the density that they're trying to get there. How many middle class people can afford $2500 for RENT? My mortgage is less than half of that and less than a mile away.

Rangers100
Rangers100

"How many middle class people can afford $2500 fot RENT?"

That depends on how much they want to be in downtown. Are they willing to, say, live 2 families in a 3-bed, 2.5-bath? Many families in NYC do. Welcome to real city life. Squeeze in. Get tight. Enjoy the community.

Ed D.
Ed D.

Darn near everybody in Paris speaks French but that's not what makes it a "world class" city. Manhattan's crazy real estate prices are a function of supply and demand on a tiny island at the heart of the largest city in the nation, not a craving for "real" city life.

You seem obsessed with the form of urban living over its function. If there's a reason for people to want to live downtown, they will find a way and a downtown culture will develop. You can't just graft on a few decorative touches from other cities and expect people to pay double for the privilege of making your personal dream come true.

Rangers100
Rangers100

Not sure to whom you're responding, but I never said you could do that.

And based on your posts here, you don't appear to know Manhattan and NYC very well.  Just FYI.

Grumpy Demo
Grumpy Demo

Still a bunch of BS with no substance, as I said before:

Where's the "list of his properties, the "big things" he's done and what's his track record doing urban rehab and adaptive reuse?"

Since he hasn't presented anything by now, the safe bet is there is none. I guess, a Trump wanna-be mini-me who try and flip the property over the next five years, see hotel, high school across from Plaza of the Americas, etc.

Damn, I love it when I get to quote myself.

CrookedDTownCronie
CrookedDTownCronie

Hello Mr Turkish Investor,In case you didn't know, you need some minority workers to renovate this sucker.I would be happy to provide my services as a director of Wai-Wize subcontracting.Let me know at your earliest convenience if you are interested.

moderndrift
moderndrift

"The $30 million in TIF funding, plus another $21 mil in historic tax credits, brings the city's planned contribution to the project to more than $50 million."

Unless I misunderstood the above sentence, Historic Tax Credits are a Federal incentive program, so the city would not contribute that portion. They have a program for abating city taxes on historic proerties, but I can't imagine that getting anywhere near $21 million.

Montemalone
Montemalone

Will this finally make Dallas a World Class City?

John_McKee
John_McKee

"Affordable" units aside, that would make it one of the most expensive rental apartments in Dallas. I'm sure having the highest units in Dallas would have some appeal but finish out, amenities and services are going to have to be great to command that kind of rent.

SchluderStrip
SchluderStrip

Sadly, thats about on par with a lot of highrise luxury apartments.  If you want your jaw to drop, try checking out the rents on The GlassHouse tower in uptown or the ParkPlace tower by Northpark.

@whodunnit I would never refer to the Mosaic in the same breath as the word luxury.  On its best, newest day, it was nothing better than a nightclub turned apartment... the fact that the owners stopped doing background checks on new residents for most of last year didnt help things.

John_McKee
John_McKee

That's my point though, it's competing with buildings designed as first class, amenity filled residential buildings from the ground up, this is a converted office tower, it's really got to distinguish itself if it wants to compete and an office conversion is going to make it all the more difficult.

It's interesting, they are being forced by the city to close down the biggest things it has going for it, tunnel access. If I worked in a building downtown with tunnel access and you told me I could rent an apartment and walk to work everyday in an cool tunnel I'd rip the application out of your hand.

EastDallas4Life
EastDallas4Life

" lives filled with public arts, architecture, history, walkable urbanism, public transit, etc. " Sounds like Dallas to me!!!

Ed D.
Ed D.

I had no idea that "walkable" was not a critical aspect of "walkable urbanism". Does it even count as living downtown if you're sleeping inside a building, like a suburbanite, instead of right out on a park bench?

Rangers100
Rangers100

No you wouldn't.

People live in cities b/c they enjoy lives filled with public arts, architecture, history, walkable urbanism, public transit, etc. The tunnels are simply a place for suburbanites to hide while downtown for work. If you really wanted urbanism you would live in it already.

Downtown_er
Downtown_er

Sorry, you cant compare rents in uptown to downtown. Apples and oranges my friend. 

Rangers100
Rangers100

Ha. Whatever.

Anyone that would move out of downtown b/c he can't take being asked for spare change shouldn't be in a city at all. He should be in a burb, going to bed at 8 every night.

downtown resident
downtown resident

Our fellow downtowners are flocking to uptown. Between the panhandling and vagrants everywhere.  Residents are harassed just walking outside their buildings.

replay
replay

amen........Downtown only wishes it could command Uptown rents........

whodunnit
whodunnit

.......and we've all seen what happened to Mosaic.

Downtown_worker
Downtown_worker

Since Gables took over the Mosaic, most of the riff-raff is out and the building is over 90% occupied.

EastDallas4Life
EastDallas4Life

Thanks, robot. Tell us once again, how leased is it? 80%?

Rangers100
Rangers100

Great. Not sure what that changes about the fact it's currently 90% leased. But thanks.

Guest
Guest

They lost nearly 1% of their residents in a single minute. By this time tomorrow, the place will be completely empty.

Grumpy Demo
Grumpy Demo

Correct, after they bought it from the lender who foreclosed  and wrote down the loan by millions.

Rangers100
Rangers100

I live at The Mosaic. The Gables has completely turned the place around. It is 90% leased.

Rangers100
Rangers100

Are you?

I live at The Mosaic and have stolen a glimpse at an internal spreadsheet (just 1 week ago) showing the building at 89.3% leased.

downtown resident
downtown resident

Are you blind?  obviously, you don't really live at Mosaic.

whodunnit
whodunnit

sure.........and I saw a pig fly by the other day too......honest injun.

Ed D.
Ed D.

He's negotiating with "several" of the landowners? Fascinating.

replay
replay

Predictable......very predictable.

AngelOf14
AngelOf14

Yeah, Zavitkovsky is in a contest to see how many projects he can get approved that have no chance of being built. Helps him with his quota. 

AintNoSunshine
AintNoSunshine

I see lots of problems here, but I am very hopeful he pulls it off. It will only enhance downtown. I cant believe he has gone public with all of this, without havin the ground lease's either under contract or purchased. Suicide in my book, but thats just me. If I was one of the land owners, my price just doubled or tripled after reading this article. 

Once again, I wish him well, even if he is making rookie mistakes. But hey, "whats millions among friends?" Its just money Sarimsakci, no biggie.

Marks Powers
Marks Powers

Could you explain this better...?  Are you saying he does not own the ground floor or that he will not be able to negotiate the ground floor leases?  "without having the ground lease's either under contract or purchased."Please describe better who owns the ground floor and/or why it will be difficult to lease now that he has purchased 1401.  Thanks.

RTR
RTR

He doesnt own the land under the building! One of the largest, if not the largest cancer for a real estate deal. 

Now Trending

Dallas Concert Tickets

From the Vault

 

Loading...