- DICKSON FLAKE: In Lafayette's lobby.
It might seem odd that a family-owned real estate company from Northern California would end up mounting one of the largest redevelopment projects in downtown Little Rock.
But take a closer look at Tower Investments, aka Stephen Marks, his wife and five adult children, and the project fits right in with the eclectic range of developments they’ve already tackled.
The company, based in Woodland, Calif., owns properties in 15 states coast to coast. Their holdings run the gamut — residential, retail, hotel, commercial, industrial, agricultural, even a nursing home in Georgia and a 1,200-acre island in the Mississippi River.
They wound up in Little Rock, Alex Marks said, because of economics.
“We have been in the South for a few years, because we’ve seen the prices of the coasts get so inflated,” said Marks, a senior vice president at Tower. “The South has, we think, been under the market and has a lot of room to climb. We saw the opportunity specifically there in Little Rock because like all towns throughout the U.S., the resurgence of downtowns has come back. It’s a beautiful block there, the River Market’s been booming, and it’s time for it to continue to move down Main Street.”
More specifically, they bought some land through an auction and met Johnny Mitchum, former owner of the Lafayette and Arkansas buildings.
“We ended up buying the buildings from him,” Marks said. “We still remain good friends with him.”
Tower Investments paid a total of $3.87 million for virtually an entire square block in downtown Little Rock, between Main and Louisiana and Capital and Sixth streets — the Lafayette, MM Cohn, Kahn, Arkansas and Boyle buildings. They plan to turn it all into a condo/office/retail complex called Lafayette Square; work began in February on what will be condos in the Lafayette building. That phase should be finished this month, Marks said.
Phase two, which includes tearing down the back two-thirds of the M.M. Cohn, Kahn and Arkansas buildings to put in more parking spaces, is scheduled to start in the middle of 2007. (Tower Investments also owns the downtown YMCA building, but has no plans for it at this point.)
The Marks family founded Tower Investments in 1991, but Stephen Marks had been in real estate long before that. He started as a cattle rancher with his father, and eventually branched out into real estate.
“In being able to look at a cow and say ‘that’s worth x amount,’ it’s the same with a piece of dirt or a building,” Alex Marks said. “You buy it for x, put y into it, and sell it for z.”
After cattle ranching, Stephen Marks got involved in other ventures, but they all led back to real estate, his son said.
And the five Marks children (a sixth isn’t in the family business) all have tried other ventures as well. Alex Marks was in the high-tech industry for 12 years before joining Tower Investments. His siblings include a former teacher, two attorneys and a former doctor.
“We can always go back to doing other things, but the opportunities [at Tower Investments] were more appealing to each one of us,” Alex Marks said.
Part of that appeal is the challenge of turning a failed venture around.
“The project has to be fun for us to do it,” he said. “We don’t buy buildings that are 100 percent leased up — we buy buildings that are 0 percent leased up. And because of the value we do add, the resources, we can pull it together very quickly and analyze and move and close. Sellers love that. That’s usually where they’ll offer a deal at an attractive price to us.”
The company often ends up in a kind of trail-blazing environment, Marks said, being the first company into an area that’s ripe for redevelopment.
“An outsider can often see things the local folks just don’t, because we are in 30 different markets and we see trends a lot of local folks won’t,” he said. “We see where people are moving and why. Because of the diversity of our holdings, we can know when companies are moving, too. What comes with those are jobs. The horizontal range that we have complements each other.”
Each Marks family member has a specialty, Marks said, although they do overlap. He’s the residential expert, and oversees projects in Tennessee and Arkansas. Tower Investments typically hires a local company to handle the day-to-day aspects of a development.
“We’re not an absentee owner, but we utilize experts in local cities that know the municipalities, zoning laws, the board members in the county and city,” he said.
In Little Rock, that person is Dickson Flake.
“They’ve been a delight to work with,” Flake said of the Marks family. “The two things that have impressed me the most are, they absolutely do everything they say they’ll do, and second is, their whole culture is dedicated to creating value in a property. They’re not passive owners. They’re always looking for opportunities to create more value.”
If the entire Lafayette Square complex can be completed as planned, Flake said, it will be a “tremendous catalyst” to draw more development south along the Main Street corridor.
It will also be a break from the high-priced luxury condos that are popping up around downtown. Units in the Lafayette building will start around $160,000.
“We’re hitting the younger and older markets,” Marks said — young professionals who’ve saved enough for a down payment and could buy a condo for about the same cost as renting an apartment, and older people who are downsizing from a larger house and might be in the market for smaller housing in two different places.
Flake said he definitely sees a need for less expensive new housing in downtown.
“There is a limit to the depth of the luxury market,” he said. “Typically these markets are shaped like pyramids, and the market should be considerably larger in that mid-range tier.”
Flake said he hadn’t heard of Tower Investments until they contacted him about managing the Lafayette Square project. At the time, he was also representing the city in the sale of the YMCA building, so he had to look into Tower’s track record in order to recommend to the city Board of Directors whether or not to sell the building to the company.
“We got strong, positive recommendations everywhere we checked,” he said.
As for construction, Marks said a couple of slowdowns due to the difficulty of getting supplies have delayed the project several months already.
He wouldn’t say how many Lafayette condos have been pre-sold — just that the company is “very happy with where we are.”