REAL ESTATE KNOX STREET IS A NEW STREET AND GEORGE BAYOUD IS WHY

GEORGE BAYOUD JR. WAS UNEMPLOYED. AGAIN. In the 14 years since Bayoud found his way into politic. trough a summer internship with Sen. John Tower h : had faced unemployment twice. An introduction to Bill Clements in I97K led to key roles in the futur; governor’s two administrations-as personal assistant during Clements’ first term, and as chief of staff ai d hen secretary of state when Clements muscled his way back in for a second try after four years out of office. Now, here Bayoud was in the final days of Clements’ second term, contemplating his future. The year was 1990.

“What are your plans’?” Clements asked Bayoud over lunch one day at the Austin Country Club. Bayoud, who had ventured into real estate in between terms, buying shopping centers in Austin, wasn’t sure, “Why don’t you go back to Dallas?” the governor suggested. “We’ll buy real estate.”

The two men launched Raven Interests of Texas Inc.. a real estate investments firm, and Bayoud began navigating the uncertain waters of the Dallas real estate scene. “The Cherokees nicknamed Sam Houston ’Raven.’” Bayoud says of the company’s name. “They viewed the Raven as a person of courage.”



Eight years later. Bayoud-the man who remade Knox Street into Furniture Row-blanches at the suggestion that he is a visionary. “I’m sure a lot of people have visions.” he says uncomfortably.

True, but few could have transformed what was arguably the most neglected street in the 75205 ZIPcode into something out of a Martha Stewart dream. Smith & Hawken. Pottery Barn. Starbucks. Quatrine. Norwalk Furniture, Restoration Hardware, AquaKnox, Laura Ashley Home, and Crate & Barrel line up along Knox Street, free-standing temples of commerce beckoning those who worship the good life. Retail analysts now have a name for what Bayoud saw as the logical clustering of like-minded shops in an urban setting, They call it the Main Street-ing of retailing.

“It’s a new application of a proven concept, which is simply clustering shops that would appeal to similar kinds of customers, as you would see in a regional mall where you have an anchor that generates traffic, with other stores nearby that would be likely destinations, as well,” says Ron Witten, of M/PF Research. “Knox Street is clearly in the midst of some very high-income neighborhoods, and that’s been a catalyst.”

The street touted as the new “suburban” shopping district in 1925-the year Highland Park Cafeteria opened-never found a way to capitalize on its location. While Highland Park Village attracted the affluent with its high-end specialty shops, Knox Street offered a mix of family-run businesses that rarely aspired to more than the needs and pocketbooks of the everyman. In 1948. when J. Ray Weir decided to open a furniture store on Knox-in a tiny, 20-by-70-foot space wedged between the U.S. Post Office and Mott’s 5 & 10-he met with banker R.L. Thornton Sr. to apply for a loan. Thornton reportedly looked out the window of his office high atop Mercantile Bank in downtown Dallas and said, “Mr. Weir, I don’t see that street ever amounting to anything.”

Nearly 50 years later, Bayoud saw potential in the decaying vestige of old Dallas known as Knox Street, but he wasn’t the first. The late Michael Roberdeau, a Dallas real estate investor, had been buying property in the area since the early 1980s. But where Roberdeau saw a three-level, mixed-use development with retail on the street and office space above, Bayoud envisioned individual storefronts and a lively street scene with shoppers strolling from one store to another-not unlike Canyon Road in Santa Fe or Worth Avenue in Palm Beach.

In 1991, Roberdeau, a victim of the Dallas real estate bust, filed for Chapter 11 protection. Raven Interests purchased 55,000 square feet of the dilapidated retail space on the north side of Knox and, in partnership with Lincoln Property, bought six acres directly north of the street from the Resolution Trust Corp. Bayoud’s plan: raze the tract homes between Travis and Cole streets and build luxury apartments. Along the northern half of Knox, gut the 1920s brick buildings, preserve the original facades, and then lease to high-end specialty retailers.

“The apartments set the mood of what we were trying to do,” says Bayoud. “We all knew that if we did a good job on the apartments, the retailers would do well.”

Indeed, Dan Weir, president of the store his father founded, says Labor Day 1997 was the single most profitable day in Weir’s 50-year history. The same month Crate & Barrel opened its doors last fall was “our most profitable October-ever.“

“I never dreamed of doing what George did,” Weir says. “We feel like we’ve been shot out of a cannon.”

Forget his initial misgivings about George Bayoud. Besides Weir’s Furniture Village, the Weir family owns the building that houses Highland Park Pharmacy and those occupied by Froggies, the Secret Garden, and Adler Sewing Machine Co. So before ground was even broken on what would become Knoxbridge Apartments and Knox Street Village, the politician in Bayoud knew he needed the blessing of the one retailer who had managed not only to survive but to thrive on Knox.

The day they were to meet. Weir sat in the store’s conference room above Highland Park Pharmacy prepared to hate (he developer with the big plans for his neighborhood. Bayoud arrived with Blake Pogue of Lincoln Property armed with specs. By the end of the meeting. Weir not only gave his blessing to the project, but offered to fumish the model apartment once the project was ready to be leased.

Bayoud then hired Dallas architect Larry Good, of Good Fulton & Farrell. They abandoned their initial plans to restore the buildings when they discovered many of them were beyond salvaging. Instead, they decided to gut the buildings and preserve the facades, maintaining the pedestrian scale of the street. Electrical lines were installed underground, and trees were planted along the sidewalk.

Trying to attract high-end retailers to an area under construction, three miles from Highland Park Village and five miles from Preston Center, was not unlike staging a political campaign for a comeback candidate who. however well-intentioned, was still up against seasoned competitors with impressive records. Despite its promises. Knox was a candidate with a questionable future.

And yet Bayoud had a couple of factors working to his advantage: Demographics showed that 35 percent of households within a five-mile radius of Knox had an annual income of S5u\000-plus. Research also showed a growing market for luxury apartments among empty-nesters and affluent singles between Knox and the Uptown area.

It was only after Bayoud was turned down by a string of trendy clothing retailers who seemed demographically suited to an urban setting like Knox-Gap, Armani Exchange, and Fitigues, among them-that he began to look at Weir’s in a different light. Some would argue that Weir’s is as much a vestige of the past as many of the tenants Bayoud and Co. were trying to evict, but the numbers pointed in a different direction. Weir’s, as it turns out, does more volume per square foot than any other furniture store in the country, according to industry insiders. Bayoud revised his plan and began targeting high-end home furnishing retailers, using Weir’s as his drawing card.

“I brought George three or four tenants willing to pay rent, and he rejected all of them,” says real estate broker Lawrence Attaway, of United Commercial Realty, which represented retail tenants in what would become Knox Street Village. “The retailers on the street at that point, Knox Street Pub and Ice House, thought he was the big bad guy. bringing in nationals and messing up the character of the street. But George wanted retail, not drinking establishments. With the exception of Highland Park Village, Knox is the only place in Dallas where you have a street scene with people walking from one shop to another.” Bayoud rejected Leather Center, Water Street Seafood Company, even Mi Piaci, which Attaway admits “would’ve been sexy, but George didn’t want it. The character of the street before was restaurants. He wanted furniture retailers.” Specifically: Pottery Barn.

Word had it that Pottery Bam was looking to open in Dallas. With an eye on luring the tony home furnishings company, Bayoud signed the first lease on Knox Street with Brinker International. Chili’s and Grady’s were not exactly the one-of-a-kind restaurants Bayoud envisioned for the new Knox, but Brinker offered one thing one-of-a-kind restaurants didn’t: good credit. Leasing to Brinker gave Bayoud the luxury of holding out for the retailers he wanted.

“We used to argue about tenants, and George, to this day, says, ’Maybe if 1 lad it to do over again, I wouldn’t do Chili’s,’” says Larry Good. “In his heart, he wanted to do a restaurant that would be unique to Knox, not a chain. But that would be a non-credit tenant, and he would have to put them in business. He took the logical approach.”

The pursuit of Pottery Barn, meanwhile, dragged on for more than a year. The retailer had rejected Knox Street twice by the time the president and the chairman of the company (which is owned by Williams-Sonoma) traveled to Dallas on a scouting trip in 1993. They looked at one site in the Plaza at University Park and another at NorthPark Center. It was only on the insistence of Bayoud and Atta-way that they looked at Knox. They showed them the proposed site for Pottery Bam, pointing out its proximity to Starbucks, which would be next door, but more importantly its proximity to Weir’s, On prior visits, the brokers representing Pottery Bam saw Knox Street as too unconventional and sorely lacking national retailers. The president and chairman, however, liked the Main Street quality of Knox.

“The point is to get the person who owns the company in front of it,” says Attaway. “The owner can take more of a chance on a location. They saw it as an edge location.”

Bayoud secured the deal by offering a number of incentives, including a generous tenant-improvement allowance.

Pottery Barn and Weir’s quickly became Bayoud’s one-two punch. Six months after Pottery Barn signed its lease, Smith & Hawken signed a lease for the old On the Border space. (Bayoud didn’t own the space, but the parking lot in back.) In quick succession, Quatrine and Norwalk Furniture signed leases.

In 1995, Sarofim Realty Advisors of Dallas made an offer for Knoxbridge and Knox Street Village. Bayoud declines to disclose terms of the sale, although published reports estimated that the property went for more than $30 million. Sarofim, meanwhile, completed development along the north side of Knox, leasing the building that used to house Highland Park Cafeteria to AquaKnox and Laura Ashley Home, and the corner lot (at McKinney and Knox) to Crate & Barrel. Many of the neighbors say the scale of the new Crate & Barrel is all wrong for Knox Street, but they’re not complaining about the traffic it’s generating. Indeed, now, it seems, everyone wants a Knox Street address. Even, reportedly, the Gap, who, uncertain of the future of Knox, turned down Bayoud at a time when all he had to show was a street under construction and a set of demographics. Representatives with the Gap told Bayoud, “It’s great that Weir’s is across the street, but we’re selling clothes.”

Not, apparently, on Knox. ID