45 and West
(163-165 West Road Houston, TX)
3.08 acre Religious Facility & School with 38,600 square feet of existing improvements, situated just off of I-45 in north Houston directly across from Aldine High School.
Acquire, Demolish, and Subdivide site to create two pads for incoming ground leases.
The owners of this property, along with its neighbors (two religious campuses of other faiths), chose not to tie into City of Houston water, sewer, and storm facilities when the area was initially annexed, which made those public infrastructure facilities leapfrog around them all. These three properties, along with the adjacent McDonald’s, chose to create their own water system (West Road Water Supply) and built a small package plant to handle sanitary sewer. This “closed system” limited the sanitary sewer capacity for each site.
The Initial Plan:
As the next closest public sewer line was several thousand feet away, the plan was to join the WRWS and contribute the funds necessary to rebuild the aging sewer package plant and provide the upgrades needed to handle additional capacity created by the two anticipated restaurant/retail users on our site.
Once demolition was completed on our site and the lease was signed with the first tenant, renewed focus was placed on the overall area by other developers, and the adjacent church property was purchased by ALDI, which would tie into the public sewer by bringing it north to their property. Fearing future capacity issues with the package plant, our first tenant chose to begin negotiations directly with ALDI to (a) tie into the new sewer extension, and (b) drain into a new regional detention pond to be built on the Lutheran Inter-City Network Coalition (LINC) property remaining after their sale to ALDI. Our first tenant was unsuccessful in garnering support from other members of the WRWS to share the cost burden of this sanitary/storm tie-in and came back to us for a financial and logistical solution.
Now that our project had been “obligated” to this new costly approach to sanitary and storm sewer, it was up to us to secure a second tenant that had enough incentive to cooperate with and contribute to the logistical effort to make this happen. That tenant was secured, but they just happened to be one of our first tenant’s most direct competitors.
After the initial shock of the idea of co-locating with their competitor wore off, an executive level decision was made by both tenants to waive their standard required restriction prohibiting competitors from landing in the same development. That was the easy part. The true challenge came in pulling all parties together to get it done. Between LCG, ALDI, LINC (owner of the detention pond), and our two tenants, there were 5 sets of decision makers, 5 sets of development/construction teams, 3 engineering teams, and 5 sets of attorneys. Normally, this is not an issue, but in this case where you have two fierce competitors, communication was not always free-flowing.
In order to achieve this particular objective, we needed to have two simultaneous paths of action, the legal and the development. On the legal side, LCG coordinated the creation of the documentation needed to obligate ourselves financially in exchange for ALDI obligating themselves to incorporate our required capacities into their overall construction plans. We also needed a similar arrangement with LINC to acquire rights to drain into their detention pond.
On the development side, the first thing we did was get the engineers talking to each other. It was our intent to have the respective engineering teams come up with a viable plan that not only works for their own respective client’s development, but also for the overall global picture (which required the sharing of information). That plan-level information is not typically shared between competitors, but we made it happen. After a year of conference calls site visits and multitudinous email strings, we finally reached a development plan that accommodated each user’s respective circulation, parking, visibility, accessibility, economic and utility needs.
Once the logistics were worked out, the challenge then simply became all about staying on point and helping our tenants look past the fact that they were co-locating with their fiercest competitor. They needed a little reminder from time to time that while they did not have to locate next to each other, they both agreed to do so and that a certain amount of trust and cooperation would be required to complete their individual objectives.
At Leon Capital, our focus is to identify the obstacles and determine ways to overcome them to achieve our objectives. In this case, the most challenging obstacle was in keeping the lines of communication open, and in a spirit of cooperation. From the engineers, to the deal teams, and finally through the attorneys, we stayed on task and ultimately got it done. These fiercest of competitors finally came together and located not just near each other, but on the very same property, sharing access drives, and even doing some limited construction for one another.
In March of 2018, Chick-fil-A and Raising Cane’s restaurants opened their newest locations at 163 and 165 West Road in Houston, Texas.