Downtown office building conversions
The NY Times has an interesting piece on converting downtown office buildings to residential use, with a focus on Dallas (Planetizen abstract). Houston also seems to have a vacancy problem downtown. Why aren't we seeing more of these conversions, especially in non-class-A space?My guess? I think building owners are counting on $60 oil to create strong office demand in Houston over the next few years, and they're holding out for commercial leases. On the other hand, I think most owners have given up on downtown Dallas, which doesn't seem to be attracting much commercial interest, even with it being the focus of quite a large light rail network. The companies up there are far more focused on the newer suburban town centers in Frisco, Grapevine, Flower Mound, Las Colinas, and others (Las Colinas just got the new Fluor HQ). At David Crossley's Livable Houston meeting last week, we heard a presentation on the Westchase District improvement plan (great vision with realistic implementation), and they mentioned how impressed they were with the suburban business centers they toured in the Metroplex, but they also acknowledged the weakness in downtown Dallas.
The other cities they mention - Ft. Worth, LA, Chicago - also have commercially-weakening downtowns as corporations move to "suburban villages" with big, new, affordable housing and easier commutes. There's even been a lot of debate in New York about whether the ground zero redevelopment should really be more commercial (low demand) or residential (high demand).
I'd love to see more residential development downtown, but not if it's a sign of weakening commercial demand. Hopefully we'll see demand for both be high, and maybe even get some new towers.
(side note: I'm headed to San Antonio and Austin the next couple of days. Probably no posts until Friday.)
posted by Tory Gattis @ 8:46 PM
14 Comments:
Tory,
First, there must be demand to convert the use. Second, the net present value of the anticipated revenue from the new use, including the cost of conversion must exceed that of the estimate to maintain the current use.
If any of the building owners, or developers speculating on the trends considered such, they likely would have hired someone like me to perform a feasibility study with an absoption projection.
Unlike the worthless study taxpayers paid $100K+ to PKF for the Convention Center Hotel bonds now secured by the City employees undefunded pension fund.
If you have not noticed buildings being converted, that means it is not profitable to do so at this time.
Now, if you have METRO snatch these properties, using taxpayer funds, and partner up with favored developers, and issue revenue bonds along with giving them generous tax abatements, grants and other incentives up front and off the top, you will see lots of action - empty converted buildings (TOD's) taxpayers funded to match the unsafe, unreliable and underutilized tram.
today's New York Times has an article about the negative impact of skyways and underground walkways on downtowns, and there's a quote from the mayor of Dallas that fits David's comments...
"'If I could take a cement mixer and pour cement in and clog up the tunnels, I would do it today,' said Laura Miller, the mayor of Dallas, referring to the city's tunnels. 'It was the worst urban planning decision that Dallas has ever made. They thought it was hip and groovy to create an underground community, but it was a death knell.'"
re: downtown development
We may not be getting much downtown development, but we are getting quite a bit of Midtown residential development.
RE: Tom Bazan said...
Gee, Tom-there was nothing in the article about taxpayers, bonds, METRO,tax abatements,grants-or anyone hiring you ["If any of the building owners, or developers speculating on the trends considered such, they likely would have hired someone like me to perform a feasibility study with an absoption projection."]. See Tom, it's not always about your endless rants aginst METRO. Sometimes it's just a well written artilcle about free enterprise. Jump on the "tram", Tom. It's leaving the station.
NMAINGUY,
"Gee, Tom-there was nothing in the article about taxpayers, bonds, METRO,tax abatements,grants-or anyone hiring you"
I guess you see what you want to see.
This is what I saw in the story:
--snip--
The city is eager to unload its outmoded office stock and is serving up tens of millions of dollars in tax incentives for construction, exterior renovation and landscaping.
--snip--
Now they have scaled back the plan, in part because they are seeking federal tax credits and must conform to the National Park Service's standards - the park service runs the Federal Historic Preservation Tax Incentives program - that developers preserve the historic quality of a building.
"We couldn't do this" and still be eligible for the $20 million tax credit, Ted Hamilton said in an interview, as he surveyed the original drawings.
***********
Where is it written that in order for any developer to redevelop a property, that they must get into the taxpayer's knickers to force us to take the risk, and allow them to keep whatever rewards after reelection contributions to the politicians and under-the-table gifts to the bureaucrats?
"...and under-the-table gifts to the bureaucrats"
Do tell. Who's on the take?
The "city" owns none of these properties: "The city is eager to unload its outmoded office stock and is serving up tens of millions of dollars in tax incentives for construction, exterior renovation and landscaping." But what about this statement from your post: " Now THEY have scaled back the plan, in part because they are seeking federal tax credits and must conform to the National Park Service's standards - the park service runs the Federal Historic Preservation Tax Incentives program - that developers preserve the historic quality of a building." Are the "they" you refer to in your preceding paragraph the "city" or are you refering to the following paragraph where Ted Hamilton admitted "We couldn't do this" and still be eligible for the $20 million tax credit. I just don't know what to think, Tom.
Perhaps if some of those developers had the same opportunities to get into my "knickers" as you have-"Mr. Bazan's realty consulting firm has been certified as a Minority, Disadvantaged Business Enterprise (M/DBE) by the City of Houston, Texas, since 1992"[http://www.bazan.net/bazan.html]-
they would prevail in sucking additional taxes from people like me and the others in this forum. Just a thought. By the way, has the "city" had any luck with these properties?
wow! typical... against all subsidies except his own.
From recent news reports, Spellman (Mayor's Office) and McGilbra (Building Services) have plea-bargained with the feds.
Time will tell if others will be brought to justice.
The Brown Administration treated Houston as the Duvalier's treated Haiti, to where Houston became "Port-au-Plunder."
Even the Houston Chronicle, rabid Brown Administration supporters, reported these revelations.
Getting certified as a Minority busines doesn't get you squat.
Being one of the few favored minority businesses gets you rich.
The city gives the lucerative contracts to whomever they wish.
The City assignments I typically get are from City Council recommendations. I have made no contributuions to any of the members currently sitting on City Council.
In these assignmnets my duty is to the taxpayers of the City.
my b.s. detector tells me that if you're so against "waste," then registering as an M/DBE makes you a hypocrite regardless of whether you've been as skilled as others at making it pay the bills.
It seems quite a stretch to associate one who registers as a minority with waste, and then to label them a hypocrite is absurd.
Coming from an anonymous critic who has no factual support for the allegation is inappropriate in this or any other forum for that matter.
...registering as an M/DBE so that you can take advantage of wasteful set-asides from the plutocracy...
The City program was established in order to encourage the big dogs to share some scraps, and asks that they "try" and utilize minority small business when possible, up to about 19%, the goal is not mandated, and seldom met.
I never received any "set aside" contract as I provide professional services which is exempt from the rule.
And I'm Catholic too.
Bigot on anonymous.
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