Opportunity on the side of the road

William E. Stonaker's project next to Highway 287 in Mansfield garners TAR's William C. Jennings Award for commercial transaction of the year.

by Marty Kramer   The idea was to put together about 25 acres alongside a highway in Mansfield to sell as a "restaurant row" type of development to an interested party. Sounds fairly routine until you throw in the complication that the highway had no service road along this property. Some residential land also needed to be rezoned as commercial. Oh, and then there’s the minor detail that someone had already tried to accomplish a similar feat in exactly the same spot and failed.

None of these or a handful of additional challenges dissuaded William E. Stonaker, CCIM, SEC, of Wilson & Stonaker in Grapevine from tackling this project. "In development, you have to have a vision, and you have to be able to roll with the changes," says Stonaker. Now his vision is not only being realized near Highway 287 in Mansfield, it earned TAR’s William C. Jennings Lone Star Award for the top commercial transaction in the state.

Developing a hunch
Mansfield first caught Stonaker’s eye in 1997. He saw an area with fast growth and plenty of higher-income residential areas that had been overlooked by retail and commercial developers. In this community of approximately 30,000, there are no major restaurants (other than fast food) or major hotels and very little quality retail and professional space.

With a good hunch about the possibilities of the area, Stonaker went to work, researching and laying the groundwork for the Mansfield Highlands Project.

Property with no access in an unproven market
The first hurdle was a substantial one. Stonaker had to convince an investor group to acquire four tracts of land with no street access in an unproven market. The three banks that owned the land had foreclosed from the previous developer. Stonaker knew his business plan–and, ultimately, the execution of it–had to be better than the previous one.

Stonaker brought together four investors, plus himself, to form Mansfield 287 Ltd. The prospective partners’ interest grew after they viewed the property and went to lunch. They wanted to scope out the competition to a "restaurant row" in Mansfield. Stonaker took them to the only option besides fast food joints: the salad bar at a local supermarket. When they saw other professionals eating at the salad bar, they knew the project held great promise.

Another challenge Stonaker met was getting the sellers to let Wilson & Stonaker tie up the land long enough to do the engineering to see if the project would be financial viable.

Putting the pieces together to get a road built
The plan started to fall into place in May 1999, when Mansfield 287 acquired 15 of the 33 acres necessary to the project.

Just when the development was gaining momentum, it hit a stumbling block.

For this project to stand any chance, Stonaker would have to find a way to extend the Highway 287 access road one mile so it existed next to the property to be developed. An agreement with the Texas Department of Transportation for the city of Mansfield to build the service road fell through. So Stonaker tried to renegotiate the contract price for two of the remaining tracts of land based on this new information. Unfortunately, the sellers refused to see that the economics of the project had changed.

The Texas Department of Transportation had estimated that the service road would cost $150 per linear foot if they built it, and the city of Mansfield estimated they could build it for $75 a linear foot.

Stonaker began looking for some alternatives for building the service road adjacent to the property. In August, the city of Mansfield secured a commitment from Tarrant County to build the roads for the cost of the materials only–approximately $50 per linear foot. The county would supply the labor and equipment; Mansfield 287 would pay for materials.

This accomplishment was the first of several that really put the project on solid ground. Stonaker had remained in touch with the banks and heard that the seller of the largest tract was being acquired and needed to clean up all the REO in its portfolio. Stonaker was able to acquire that tract for 60% of the original price. Then, the seller of a three-acre tract also agreed to a reduced price if the deal could close quickly.

Going door to door in the neighborhood for support
Two residential lots were a key to the Mansfield Highlands project, and they remained a challenge. Because of the topography, the two lots in question were not suitable for construction of homes, and no residential developers were interested. Mansfield 287 refused to take possession of those lots. They had to be sold to another entity.

To further complicate matters, the neighborhood would have to support rezoning portions of the highway overlay zone from residential to commercial. The residents in this area are very vocal and aware of what is happening in their area. As with many communities, rezoning land to commercial status in Mansfield is not the most popular subject.

Stonaker knew that the project could easily be derailed by this zoning issue. So he went door to door. "If it gets killed, I want it to be on the merits of the deal," he says, "not on rumors." He told residents who he was and outlined his plans, explaining that this project would increase property values, not decrease them. Stonaker eventually gained the residents’ support for the zoning.

The bulk of the residential land was sold to two neighborhood residents to serve as a buffer between their homes and the commercial land. These tracts are being re-platted to include them into the property owners’ existing lots. The proceeds from these sales were material in funding the rezoning costs.

Moving ahead
The service-road addition is scheduled to start in July or August 2000 and should be completed by the end of the year. "Everything is full speed ahead,"says Stonaker. He has been talking to four restaurants and one hotel about the property, and several people are interested in office buildings as well.

Stonaker projects that office sites in the area sell for $5-$7 per square foot, hotel sites for about $7-$8 per square foot, and restaurant sites for $12-$15 per square foot.

Though the Mansfield Highlands Project is well on the way to completion, Stonaker remembers several occasions when he walked into David Hauser’s office at First American Title and saw all the plats up on his wall color-coded to distinguish the various stages of activity. "There were so many different pieces of property up on that wall," Stonaker says. There were times I wanted to throw my hands up in the air and forget the whole thing. But it became a challenge more than a money-maker."

Now that many of the biggest challenges have been successfully met, Stonaker is looking forward to the future of this development. "Now we’re into the fun part," he says.

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