Fashion Model

January 2004
Fashion Model

Perseverance and ownership involvement helped create made-to-measure space for clothing wholesalers


Dallas Business Journal by Christine Perez, Senior Writer


Late last spring, when a group of fashion wholesalers asked Mitch Traub and Wyatt Russo to find them some showrooms pace downtown, the 20-something Wietzman Group brokers were immediately jazzed about the idea.


Little did they know how difficult and complicated the search would be.


“It required a great deal of perseverance,” Russo said. “Initially, our naivety kept us going. We didn’t realize there had been several other attempts to do this before.”


The outcome of the brokers’ quest, Fashion Industry Gallery, opened earlier this month within Southwestern Plaza at 1807 Ross Avenue in Dallas.


Already, the first 50,000-square-foot phase is sold out; a planned second phase will take the project to 100,000 square feet.


About 35 fashion wholesalers began moving into permanent showrooms on Jan. 16. A further 15 have leased temporary space for FIG’s first buyers’ show, which will be held Jan. 22026 and is one of seven shows the center will host this year.


Most of the tenants are coming to FIG from the International Apparel Mart, a 40-year-old icon along Stemmons Freeway that’s slated to close in 2004. About one-third are new to the market from Los Angeles, said John Sughrue, CEO of Dallas-based Brook Partners, which owns Southwestern Plaza.

“These are downtown people, fashionistas who don’t like malls or the suburbs,” he said.


“They liked our smaller urban and urbane setting. Its like going to a boutique hotel instead of a chain, or a boutique theater in stead of a megaplex.”


In early 2003, after Dallas Market Center officials announced plans to shutter the International Apparel Mart and move tenants to a new $20 million, 1 million-square-foot apparel area within the adjacent World Trade Center, a small group of wholesalers began exploring downtown options.


Initially, they focused on the abandoned Mercantile complex on Main and Commerce streets. But because the plan would have required tenants to occupy temporary space for up to two years while the building was being redeveloped, that deal died in early May.


Soon after, the fashion tenants called Traub and Russo and said “We don’t have much time. Go find us a building.”


But not just any facility would do.


“They were looking for something with sex appeal,” Russo said. “They wanted to create an exciting experience for their buyers; something with open space, windows, a park, parking and access to hotels.”


“We were able to narrow the field very quickly because they were asking for specific things Dallas typically can’t deliver.”


The property that fit the bill was Southwestern Plaza, a five-story, 250,000 square-foot former home to Southwestern Life Insurance Co. Situated between the Fairmont Hotel and the Dallas Museum of Art, the facility also offered large 50,000 square-foot floorplates.


Sughrue, a Dallas real estate investor, had purchased the building in 2000 with the goal of redeveloping it into a data center space. But after the bursting of the tech bubble a year later, he repositioned the property into a multitenant office building.


Given market conditions – office vacancy downtown is nearing 30% -- Sughrue has had good success. Between FIG and several large leases – most notably to Beck Group, which took a full floor last year – only about 30,000 square feet remain available.


T.D. Briggs and Joel Pustmueller with Peloton Real Estate Partners handle leasing of Southwestern Plaza for Sughrue.


When they first learned of fashion concept they liked the idea, but knew it would be difficult to pull off.


“What made this thing so complicated was that it wasn’t just one tenant, where you’d deal with a CEO and a CFO, but a group of individuals who wanted to band together,” Briggs said. “In other words, there were a lot of cooks in the kitchen.


“We had a meeting with John and the guys from Weitzman and said, ‘This deal is going to take a lot of creativity and ownership involvement. This is not leasing 101.’”


In addition to the large number of leases needing to be hammered out, there were other challenges. Unlike traditional office users, the fashion wholesalers would require a large amount of common space, extremely high finish out and amenities such as a lounge and a café – all of which would require higher lease rates and cut into the landlord’s profits.


Sughrue also would have to be willing to produce merchandise shows, which involves leasing space to temporary exhibitors and working out the logistics of having up to 1,000 buyers traipse through the building seven times a year.


As luck would have it, Sughrue had taken on nontraditional projects in the past, including developing Magnolia Theatre, an independent film house at Lemmon and McKinney avenues. Still, he needed some convincing.


A turning point came when Sughrue and Russo took a trip to Los Angeles and toured Newmart, a boutique fashion center near the huge California Apparel Mart.


“The developers of Newmart had taken a vacant manufacturing facility, completely filled it with 100 tenants and had a waiting list of 150 trying to get in,” Sughrue said. “When we saw the possibilities in Los Angeles, piled on to the core tenants in Dallas, we knew we had a financeable deal.”


But just as the pendulum was swinging positive on the landlord side, the tenant group in Dallas began to fall apart.


“We were representing the tenants, but they were representing themselves individually, too,” Russo said. “It was like salespeople representing salespeople. They were getting pressure from Dallas Market Center and needed to make decisions. Mitch and I knew this was a deal that could transform the fashion industry. We had to deliver.”


Meanwhile, Sughrue had received approval from his bankers and began moving forward with plans to create what amounts to a shopping center within his office building. Once the tenants saw things taking shape, they began to commit to the project.


FIG’s first phase has showroom space on the 50,000 sauqre-foot first floor, and a 25,000-square-foot merchandise mart on the basement level. The two floors are connected with spiral staircases to give an open feel. Phase 2 will involve an expansion to the second floor.


Beck Group designed the project and Dallas-based Turner Construction Co. served as general contractor.


With the first round of leasing at FIG complete, Russo and Traub have moved on to other projects. Russo is wrapping up a big downtown headquarters renewal from Neiman Marcus. Traub has left Weitzman to join The Retail Connection, a competing firm.


Sughrue has formed a division within Brook Partners led by J. Gavin Smith to lease and manage FIG going forward. More than 200 fashion lines are represented in the first phase, including Trina Turk, Ya-Ya, Tracy Reese, Tommassini, and Tommy Bahama.


“It’s the first group of tenants I’ve come across who are willing to pay a premium to be downtown,” Sughrue said.


“Four key ingredients make it work: design, location, programming, and quality of service. We think its going to be a powerful success, both commercially for us and for the fashion industry in Dallas.”