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FOR TEXAS DEVELOPER, DENTON PROJECT IS A FAMILY AFFAIR

By Steve McLinden

This Rayzor has a distinct edge.

Perched at the northern point of the Golden Triangle, in Denton, 30 minutes north of Dallas-Fort Worth where interstates 35W and 35E rejoin, is a 400-acre-plus site that has been a gleam in the eyes of retail developers yearning to reshape an understored landscape.

But for decades the land’s owners, the Rayzor family, had rejected suitors for the hilly, bucolic tract, known as Hillview Ranch. The family sought a match that suited its civic consciousness. Then in April it was agreed that Dallas-based Allegiance Development and Austin-based equity provider Torreón Capital would buy the parcel. The site is destined to become one of the most important retail-anchored developments in the state, the developers say.

According to plan, the acreage, which sits on both sides of University Drive (Highway 380), is to yield two shopping centers totaling 1.7 million square feet and an array of other uses. Rayzor Ranch, as the project is called, will contain single-family homes, offices, an amphitheater, two museums, a multiplex, at least two hotels and a 30-acre development for seniors are on tap too.

The master plan, which the family scrutinized closely, is expected to take nearly a decade to complete, although the retail components will be ready sometime between late next year and mid-2009, according to the principals.

Most retail developers can recount horror stories about deals that went askew when the owners of family plots objected to the planned uses. But Rex Paine, a partner and co-founder of Torreón Capital, says Allegiance’s vision was especially sensitive to the Rayzors’ concerns. “Being able to do what the family wanted and still design the property the way it’s been designed — that’s what made this project work,” he said.

The process of piecing together a plan palatable simultaneously to the family, the lender, the city and other interested parties took only four months. “The fact that we could shake hands on an agreement relative to the quality, density and layout for what will be one of the best mixed-use developments in the country, and did it in 120 days, is remarkable,” said Joseph Gampper, Allegiance’s president.

That the site was still available is equally remarkable, says Charles Gilliland, a rural-land expert and research economist at the Real Estate Center of Texas A&M University. Most such ranches have been broken up and parceled off, he says, because developers can seldom afford them en masse.

As development branches farther out into the exurbs, the emotional attachments to such old homesteads are waning, says Gilliland. “Most of that sentimentality only remains with older family members,” he said. “It’s the younger ones who are already living in other places, like Dallas and Austin, that feel they have better things to do than keep this land that has provided them little return.”

In 1999 the family talked with the eventual developers of the Golden Triangle Mall about building on that Rayzor tract, though the builders later opted for a site four miles away, says Doug Elliott, grandson of ranch founder J. Newton Rayzor. A few years on, the family retained New Urbanist architect David M. Schwarz to help with land planning and related issues. Those ideas are going into the Rayzor Ranch project, though Schwarz is no longer involved, says Elliott.

Several stipulations written into the contract are to kick in should development proceed in a manner not befitting the family’s ideal, says Elliott, who is overseeing the development of a children’s museum and a second museum on the site. But it is unlikely there will be a problem, he says. “Allegiance was serious about accommodating our concerns and agreed with us that this development needed to be something special,” he said. “We were very conscious that when we finally did dispose of the land, it would become a real asset to Denton, not just liquidation. We wanted to respect the wishes of my grandfather, who was a big advocate for the city.”

“It was clear the family looked at this as part of their legacy,” said Gampper.

Of course, not every family land deal proceeds this smoothly. Take the case of Ruby Watkins, of nearby Arlington, Texas. For years Watkins rebuffed offers from the family of Curtis Mathes, whose Mathes Corp. was known for high-end home entertainment systems, to buy her seven-acre chicken farm on South Cooper Street, long after it became apparent that surrounding tracts would convert to retail use. In 1981 Watkins and her husband turned down $1.5 million for the land from Homart Development Co. After her husband’s death, Watkins spurned a $3 million offer, according to Arlington historian and columnist O.K. Carter. Eventually, the Mathes family resold about 100 acres on three sides of the Watkins estate to Homart, which then built The Parks at Arlington mall, now owned by General Growth Properties.

The mall opened in 1988, but Watkins continued to live on her land for years, tending to the garden while the mall, a few open-air centers and some 70,000 motor vehicles per day gradually hemmed her in. The offers — and the rejections — continued. In 1993 Watkins’ daughter moved the ailing woman to a retirement facility and sold the lot, which is now home to a Barnes & Noble, a Jared jewelry store and a Razzoo’s Cajun Café.

The Rayzor family was adamant that any big-box retailers would have to build on the north side of the highway instead of the historic farm tract where the Rayzors once roosted inside a Colonial home.

That was no problem for Allegiance. In fact, Wal-Mart Supercenter and Sam’s Club have signed to build on that north tract. Three traditional anchors (still to be determined) will moor the 1.1 million-square-foot Rayzor Ranch Town Center. Also penciled in are a 325,000-square-foot fashion center for mid-to-upscale women’s clothing, a 16-screen theater and a 23,000-square-foot bookstore.

A 12-story hotel is going up too. “There’s not even a full-service hotel in Denton,” said Randy Holcombe, executive vice president of Allegiance’s retail and development division. “The pent-up demand is amazing.” Holcombe, who once handled leasing at General Growth’s Stonebriar Center Mall, in Frisco, Texas, compares Rayzor Ranch to mixed-use Summerlin Town Center, Las Vegas, another General Growth project.

Also planned are a 90,000-square-foot convention center and businesses to complement the new Denton Presbyterian Hospital already at the intersection. There will be a senior campus with independent-living services and specialized care facilities. About 125 acres of mainstream residences, including town homes and luxury apartments are slated too. “This is unique, because we are working on five or six categories of real estate here,” said Gampper.

Area demographics are shaping up nicely. Denton’s population has jumped from just over 80,000 in 2000 to about 100,000 currently, making it one of the state’s fastest-growing cities. Over the next five years, the residential base within 10 miles of the site could grow to nearly 200,000, with a daytime population exceeding 60,000, says Herb Weitzman, CEO of The Weitzman Group and Cencor Realty Services, both based in Dallas. “That combination of daytime population with a strong residential will attract quality [lifestyle] restaurant and retail uses,” Weitzman said. He speculates that there is a who’s who of retailers and restaurants angling to settle at the intersection, which is probably the strongest in the Denton market.

Right now residents must travel 20 minutes or so to Lewisville to patronize the likes of Best Buy or Bed Bath & Beyond, Weitzman says. Though a new SuperTarget and Home Depot are about to open in Denton, the city “remains underserved in terms of the major retail drivers in today’s market,” he said.

Meanwhile, housing development continues at a breakneck pace around Denton as rising home prices around Dallas and Fort Worth drive buyers north. Dallas-based developer Stratford Co., Arizona developer Aperion Communities and the partnership of Tomlin Investments and Highland Capital Real Estate Advisors have contracted land around Denton for as many as 20,000 living units in total, according to those firms. Additionally, the city is home to the University of North Texas (enrollment 22,000) and Texas Woman’s University (enrollment 11,200).

“We have a unique situation,” said Torreón’s Paine. “Denton is not a brand-new city like Frisco, so we have a very well established community in place as well as all the new growth.”

The only hitch may be traffic flow, says John S. Baen, a professor of real estate at North Texas University who has studied the Rayzor property. There is still no main north-south arterial road going through the tract, and the 380 expansion may not be adequate to accommodate east-west traffic, he says. And Baen expects the city bureaucracy to be slower than Allegiance had anticipated. Yet Gampper says he is confident that most of the road work, including the funded expansion of 380 and work on frontage roads near the site, will be completed when the project opens and will be ample for the needs of Rayzor Ranch.

Baen says the potential positives of the huge parcel outweigh any negatives. “This is a premier property that has been lying dormant for a long time,” Baen said. “The timing in the sale of the property is absolutely perfect. I think it maximizes what it is worth as a raw land piece. Because it is intact, it’s like a blank easel. You can paint whatever picture you want.”