March 21, 2015 | Hanah Cho | Dallas Morning News
During his search for an office to launch a co-working space for business lawyers, Jim Chester toured buildings along Central Expressway and was close to signing an agreement when his broker suggested he take a look at one more tower.
That building turned out to be the one at 211 N. Ervay in downtown Dallas, which had been dormant for almost 20 years. After an extensive renovation and upgrades costing $14 million, the building opened last July. Since then, it has become home to numerous tech startups and entrepreneurs.
The entrepreneurial atmosphere also appealed to Chester.
“We looked at the space and saw what the [developer] was doing and got a really good vibe of how they were really committed to revitalizing downtown not with big corporations but with startups and entrepreneurs,” said Chester, an attorney whose new business incubator, Venue, will occupy two floors.
Behind the strategy to create a startup ecosystem at the building, dubbed Alto 211, is Mike Sarimsakci. The businessman is part of the Eastern European investing group Alterra International Holdings, which bought the 18-story tower in 2012.
With the average office rent downtown at $22.35 per square foot last year, it is an expensive proposition for many cash-strapped startups to be in the city’s core business district.
But Sarimsakci is using a combination of unconventional financial incentives and amenities to attract startup founders and creative professionals to the building, which is marketed as a “tech mecca.”
For starters, Sarimsakci requires no letter of credit, personal guarantee or corporate guarantee.
E. Smith Realty Partners’ David E. Ditchman, who was Chester’s broker, said the lack of a collateral demand is “incredibly rare.”
“Securitization of a lease in some form or fashion is standard,” said Ditchman, who became Alto 211’s listing agent after closing the leasing deal for Venue.
Second, Sarimsakci recruited the co-working space Dallas Fort Work to move to the downtown tower. Shared office space is popular among entrepreneurs, software developers and other technology freelancers, who pay $99 a month for full-time access.
Moreover, under a program geared toward cash-strapped startups, entrepreneurs can lease a private office with rent starting at $900 a month. The lease requires no long-term commitment. But stay for a year and Sarimsakci will provide a credit for the full year of rent in exchange for leasing a bigger office space, an incentive for startups that eventually get funding or generate revenue.
Startups in the Alto Starts program also get access to the building’s resident experts, such as Dallas Fort Work owner Oren Salomon and Nile Tuzun, Alto 211’s creative director of design.
And unlike most corporate office towers, Alto 211 has an art gallery and even a mascot: Jax, an 8-month-old mastiff who has his own Twitter account.
‘I’m betting on them’
In less than a year, Sarimsakci has secured occupancy for 65 percent of the nearly 179,000-square-foot tower. The building’s lobby is reserved for several soon-to-open retail operations: a 7-Eleven; a Turkish furniture shop, Koleksiyon; and a cafe bar, The Foyer, which is now a lounge area.
Sarimsakci admits he’s taking a gamble in doing business with startups, but he sees his strategy as a long-term play. “I’m betting on them, and they’re betting on me,” said Sarimsakci, who oversees properties in Dallas and San Francisco.
The tower, with its aquamarine facade, was built in 1958 by Leo Corrigan. It has been mostly vacant since 1995.
Alterra purchased the building in December 2012. The city of Dallas approved $2 million in tax increment financing, which was used for environmental remediation, demolition and facade restoration. (The same investment group also plans to remake the empty 500 S. Ervay building next to City Hall.)
Alterra looked at various uses for Alto 211 before seeing potential for the tower as a hub for entrepreneurs. Sarimsakci said he saw downtown starting to transform into a place to work and live, thanks to efforts by the city and organizations such as Downtown Dallas Inc.
“Our vision was to bring people from one particular area: creative types and high-tech entrepreneurs,” said Sarimsakci, who has also gotten involved in the Dallas startup community as an investor.
In July, the Dallas accelerators Tech Wildcatters and Health Wildcatters became the building’s first tenants, which Sarimsakci described as “a game changer.”
From there, word spread. Tenants now include the digital marketing firm Agency Entourage, the tech developer Velocis and the health startup Make My Plate.
The online travel organizer Traxo moved in on the fifth floor in November after looking at several other locations downtown. Traxo previously had an office in the same building with Tech Wildcatters and Health Wildcatters at a former church in Uptown.
“Tech Wildcatters and Health Wildcatters moved just a couple of months before we did; we came on over to become part of that and create a startup community,” Traxo CEO Andres Fabris said.
Not being tied to a long-term lease and not providing collateral were attractive features, Fabris said.
Compared with other downtown buildings, Alto 211 had competitive rent, with the build-out expenses included in the leasing rate, Fabris said.
“It became an easy decision,” he said.
Faux grass, tire swing
Traxo worked with designer Tuzun to create an office that is playful and sophisticated. The 5,500-square-foot office includes a boutique hotel-like reception area, a conference room and an open-layout work area.
“We are creating an experience for our tenants. The experience is different for each tenant,” said Tuzun, who works with each of them. “You come in here and you know the space has personality.”
The open-concept space for Tech Wildcatters and Health Wildcatters, for instance, features bold colors and retro furniture. The reception area includes faux grass carpeting underneath lounge seats, a tire swing and a red telephone booth.
Chester, too, believes he got a good deal, considering that the Venue incubator is taking space on the 16th and 17th floors, upper levels that are generally more expensive than lower floors.
Being downtown never crossed Chester’s radar. But the more he and his co-founder Jeff Martin thought about being downtown and among other entrepreneurs, the more it made sense, Chester said.
The tenants of Alto 211 are potential clients for the type of lawyers who would work at Venue, Chester said, like those specializing in securities, real estate and taxes.
“If you think about all the incubators and co-working in that building, these startups don’t need big law firms,” said Chester, of Chester Jeter Siekierski LLP in East Dallas. “Startups need guys we’ll have at Venue.”
Chester is now working with Tuzun to build out the two floors, with plans for a late spring launch.
“This little oasis and building with this retro cool vibe, it hits all the cylinders of what we’re doing,” Chester said.