Texarkana Project Expected to Propel Downtown Growth

David Peavy, who is developing the 1894 City Market project in downtown Texarkana, Arkansas, thinks the city is on the “brink of being able to recreate itself.”
David Peavy, who is developing the 1894 City Market project in downtown Texarkana, Arkansas, thinks the city is on the “brink of being able to recreate itself.” (Anita Peek)
The Hotel Grim in Texarkana, Texas, was completed in 1925 but has been vacant for many years. Construction to transform the Grim into apartments is expected to be finished by the end of 2020.
The Hotel Grim in Texarkana, Texas, was completed in 1925 but has been vacant for many years. Construction to transform the Grim into apartments is expected to be finished by the end of 2020. (Anita Peek)
The 1894 City Market in Texarkana, Arkansas, is a mixed-use project developed by David Peavy.
The 1894 City Market in Texarkana, Arkansas, is a mixed-use project developed by David Peavy. (Anita Peek)

After a decade of hope and false starts, the revitalization of downtown Texarkana achieved a breakthrough with the sale July 31 of the historic Hotel Grim to a housing development group.

“The city has always thought that downtown development rested on the Grim,” Lisa Thompson, public information officer for the city of Texarkana, Texas, told Arkansas Business.

“It’s the largest building in downtown. It’s at every point in our skyline. It just kind of cast a shadow on downtown that we felt like, until it was lifted, would impede further progress.”

Cohen-Esrey Development Group of Overland Park, Kansas, plans to spend $25 million to rehabilitate the eight-story 103,200-SF Grim (named for Texarkana businessman William Rhodes Grim), on the Texas side of downtown, into 93 affordable apartment units.

Tom Anderson, managing director of Cohen-Esrey Development, the development division of multifamily housing company Cohen-Esrey, said he understands the challenge of taking on the derelict Grim, vacant since 1990 and home most recently to a group of feral cats.

“I’m a sucker for a big challenge,” he said. “This is the kind of project that we do. We’ve done a number of these historic, adaptive reuse projects in different places around the country.”

Anderson also understands the importance of the project, calling it the “cornerstone of everything that’s trying to happen in downtown Texarkana.”

And there is a lot trying to happen in downtown Texarkana, much of it having to do with housing and with the retail businesses that rooftops attract.

► The area has seen the development of a number of loft apartments in the last decade, such as the Buhrman-Pharr Loft Apartments and the Lofts of Texarkana, comprising two historic, four-story former commercial buildings on Third Street on the Arkansas side of downtown.

► In recent months, the cities of Texarkana, Texas, and Texarkana, Arkansas, have amended their zoning regulations to allow the development of small, single-family homes downtown.

► The city of Texarkana, Arkansas, is considering creating a 14-block entertainment district downtown, which would allow the open carrying of alcohol from one establishment to another, an option made possible by a new law, Act 812, passed in last spring’s legislative session.

1894 City Market

Another boost to downtown growth has been David Peavy’s development of the 1894 City Market at 105 Olive St. on the Arkansas side of the state line. It’s a multipurpose reuse of one of the city’s oldest buildings, a warehouse previously known as the Ritchie Grocery Building, originally the Texas Produce Co.

Peavy, Texarkana born and raised, is the owner of electrical contractor Artex Electric and a real estate developer, primarily of new retail centers. What became the 1894 City Market is his first effort at redeveloping an older building.

“You could see the architecture of it and see the beauty behind it, even though bricks were literally falling out of the walls,” Peavy said. But the building had “that look” that he loved and it was in the right place — by Union Station and the Texarkana rail yards, “the heritage of Texarkana,” Peavy calls it. “Texarkana was founded by the railroads.”

Developing the building, he said, was “really one of those things where something needs to be done and who’s going to do it? You say, well, I might as well do this. You get into it and then you start not trusting anyone else to do it because you want to do it the right way.”

The three-story 40,000-SF brick and masonry building, like the Hotel Grim, is on the National Register of Historic Places and, also like the Grim, had been vacant for many years before Peavy took on its renovation a couple of years ago, a project that he expects to complete in the next six months. “It will be a true transformation.”

It now houses an art gallery, which moved from another location in February 2017, as well as five completed apartments on the ground floor and one completed unit upstairs. Peavy is working to finish 12 additional loft units upstairs. He also envisions the building housing retail, office and event space.

Texarkana’s open air market, Second Saturday Trade Days, is now held in front of the building.

The five “plaza” apartments downstairs are occupied, Peavy said. “I’ve had people fighting over them since they opened” in spring 2017, he said. Those two-bedroom units range in size from 790 SF to 950 SF with rental rates ranging from $775 to $850 monthly. The loft apartments range in size from 670 SF to 1,440 SF, with rates from $800 to $1,575.

Developing the project “happened slower than I wanted it to happen because of the financing,” Peavy said. “That’s a very difficult thing on older buildings.” After reviewing his projections and plans for the development, Peavy said, one bank told him, “We just don’t believe in downtown.”

Peavy said that he appreciated the honesty, but it didn’t deter him. He used about $750,000 of his own money and borrowed against his paid-for retail properties to finance the start of the 1894 City Market project.

Once the gallery space and the five apartments were leased and producing income, Peavy returned to the banks seeking funds to finish the upstairs units and the rest of the project. “I was turned down by a lot of different banks,” he said. “Basically, I felt like I was on ‘Shark Tank’ about 100 different times.”

Arkansas Federal Credit Union of Jacksonville, however, came through for Peavy, providing enough funding for him to complete the project. And he will be applying for historic tax credits.

In addition to the 1894 City Market, Peavy has located a former Santa Fe Railroad Pullman lounge car across from the building on East Front Street.

The rail car now houses the Flying Crow restaurant, which opened in July.

“What we’re trying to do is create a little campus down here,” Peavy said. He’s also created an outside dining area by the rail car. The railcar and the restaurant have been well-received, he said. “Everybody just loves the ambiance of eating in the train.”

Important to the Community

For its part, Cohen-Esrey will be seeking to finance its transformation of the Hotel Grim using a number of sources, including loans from the Housing & Urban Development Section 108 program, the Environmental Protection Agency, the city of Texarkana, Texas, the Texas Department of Housing & Community Affairs and Cedar Rapids (Iowa) Bank & Trust, along with federal and state historic tax credit equity and federal low-income housing tax credit equity.

The apartments at the Grim will be restricted to tenants earning up to 60% of the area’s median income.

Cohen-Esrey Development hopes to complete construction by the end of 2020, start leasing the apartments by early 2021 and have leased out all units by the summer of 2021, Anderson said.

The Grim, designed by Little Rock architects George R. Mann and Eugene John Stern, was once “the hub of downtown and community activity” in Texarkana, according to its National Register registration form.

The effort to rehabilitate the hotel was begun in 2009 by Jim Sari, a developer based in Winston-Salem, North Carolina, who initially sought to use mixed-use affordable housing tax credits for financing. But the complex project encountered a series of hurdles and Sari brought Cohen-Esrey aboard a year ago.

At Sari’s invitation, Anderson visited Texarkana, “and I could really see how important this project was to the community,” he said. In talking to downtown businesspeople, Anderson saw that redeveloping the Grim could be a catalyst to downtown development.

In addition, he was highly impressed with David Orr, director of planning and community development for Texarkana, Texas, and his staff. “I knew it was going to be a hard project,” Anderson said, “but I was encouraged by the level of commitment and support and cooperation that everybody I met exhibited.”

‘It’s Coming’

Jeff Sandefur was a pioneer in bringing loft apartments to downtown Texarkana, opening up his eight units in 2000-01. He had lived in Austin, Texas, and had seen how historic preservation can spark urban economic development.

That kind of development in downtown Texarkana has moved at a “snail’s pace,” Sandefur said. “But it’s coming.”

Demand for downtown housing is growing, he said, as are rents. Downtown Texarkana has about 400 primary residents, Sandefur said, and the addition of residents living in what will be the Hotel Grim Lofts will bring more demand for the kind of services provided by dry cleaners and restaurants, which will in turn attract businesses to downtown. “Businesses chase rooftops,” Sandefur said, “so our downtown neighborhood is getting a 20% boost in roofs. It’s impressive.”

Sandefur hopes that the Hotel Grim project will give local lenders more confidence in downtown projects.

Peavy — citing native son Ross Perot, for one — said Texarkanans are “independent-minded. They don’t like to follow the trends.” And, he added, the cities’ shared downtown has lagged behind others, like Little Rock, in terms of development.

But things are changing.

“Texarkana,” Peavy said, “is just now on that brink of being able to recreate itself.”