Real Estate Investment Articles

The key to vital urban redevelopment is enlightened self-interest that matches city father’s vision. This has rejuvenated cities like Dallas, Fort Worth, Denver and Tempe, Arizona. Not just bold public statements by a mayor, but an organic adoption of goals and change that implements this at every level of city government.

The relevance to investors is the mass and momentum that these public private partnerships generate to improve the business and lifestyles necessary to make core improvements stick. Almost universally these downtown redevelopments do not work unless an environment akin to the layers flora and fauna of a healthy rain forest results.

MAKING RAIN
The canopy trees are comparable to grand marquee projects like high-rise office buildings, hotels and convention centers. But these mean nearly nothing until the people show up. Problem with event and office buildings is they are only occupied for the work day or a specific event. Then everyone leaves. Parking structures are mere necessities.

The necessary secondary canopy of smaller less prestigious projects attract people and retail development, then the residential “undergrowth and forest floor fauna” of small mom-and-pop business and street life.


NO PAN TO HANDLE
It is almost an axiom, if homeless people do not want to live there, neither do people with homes and jobs. These forest floor layers are the flora and fauna of healthy urban vitality.

Getting the right street level retail is a studied element of any decent planned redevelopment. Small retail businesses are highly visible and very fragile. Turnover and failures are a bad message to future business owners, prospective shoppers and homeowners. So what works and how do investors benefit?


BENEVOLENT DEVELOPMENT

Denver:
Denver began their redevelopment 25 years ago. They realized razing downtown and replacing some beautiful but rundown buildings was a multibillion dollar expense they could not afford. Recruiting individual and commercial investors was the only affordable option. Today the Downtown Denver Partnership and Denver Civic Ventures are the public private partnerships that have shepherded the many individual and developer plans the have delivered a large and vibrant central business district. Denver has also become a very desirable downtown residential lifestyle destination.

Fort Worth
This town owes its existence as a waypoint on the Chisholm Trail moving beef to Midwest railheads on the way to Eastern meat markets. In 1889 Fort Worth city fathers realized their value-add was packing beef, not just feeding it. Theses larger than life civic and business leader redrew the town plan from stockyard to meat packer.
Today the Bass Family is the basis of that same business and civic leadership that has provided a world class remake of downtown Fort Worth from skid row to a vibrant and successful retail, residential, business and commercial district known as Sundance Square. Begun in 1978 when the oil and gas Bass’ began buying every property they could with the long term goal of a coordinated redevelopment. Today Sundance Square is 38 square blocks of commercial and residential development in the 200-block downtown.

Dallas
Not to be outdone, Dallas, the Perot family and others are leading a similar revival in downtown Dallas. Ross Perot Jr. bought the Dallas Mavericks to anchor a stadium plan and after a fractious battle for approval from the city and competing interests, recovered a 177 acre brownfield utility and railroad site close to the downtown. The American Airlines Center anchors Victory Square development. Added since is the 31-story W Hotel opened in 2006 with 250 rooms and 70 condos. Other similar and extensive multiuse and town home development has followed.

A basic element of the new Victory Square development is that Hillwood Capital (The Perot lead business,) commits to a master lease and population of all of the street level retail, ensuring a viable and sustainable mix occurs.


NEEDING A THERE, THERE
In each case leadership, vision and a common mission has been key to building a thriving community first, versus political careers or profits. The enlightened self-interest creates a place.
This requires substantial investment in understanding potential, planning, investing in changing perceptions and the political will to execute to achieve the vision. The results of Denver, Dallas and Fort Worth downtowns speak volumes. Witness the frequency of the suburban kid who’s first move is downtown.

Phoenix and The Valley of the Sun is a perfect study in how to do this well. Little Tempe is fast moving from a university downtown with bars and T-shirt shops to a very livable urban core for a lot more than students. Just 12 miles apart downtown Phoenix which remains a bleak people free urban desert, that is unless there is a ball game. But game over, people gone.

Tempe used the same playbook as Fort Worth, Dallas and Denver. Attach a visionary council to a powerful group of business people and developers that commit to a very specific community oriented vision. Tempe also realized that city business as usual would stifle the vision. Mayor Hugh Hallman, took that approach with the overriding mandate of “do what takes to solve these to the equal benefit of all the constituents: citizens, city vision and developer.”


CIVILLY ENGINEERED
“When we first entered into this transaction in Tempe,” says Ken Losch, president of Avenue Communities, “we were welcomed by mayor, council and city staff. The spirit of cooperation was infectious: work it out as anything is possible.” Avenue was dropping a unique building into market where this had never be built. Proven urban ideas like single-well scissor stairs (separate but criss-crossed) versus two separate stairwells was not code in Tempe. City research resulted in a code change means a necessary increase in salable square feet. Being in an urban setting lowers the parking ratio additionally because of light rail but at 2.2 per lowrise apartment this did not work in a dense environment. Centerpoint has 1.6 stall per home versus .75 in most cities or New York or Vancouver that do not offer any. “This cements the whole concept of urban walkability,” says Losch. “Our Scottsdale 3rd Avenue Lofts was only 88 homes and being first, we were laughed at. Today nearly 3,000 built or planned units for downtown Scottsdale. The same will happen in Tempe.”

THERE IS WHERE IT’S AT
The first result of this is Centerpoint. It is truly one of the best examples of urban mixed-use high-rise development in the country. As an investor or homeowner, and even if high-rise living and buying here is not in your plans, the benefits already delivered to Tempe, residents and residential home values is evident in price stability and sales rates in the Tempe area. Buying, living and investing when there is a there, is where a desirable lifestyle and values are at.

RESOURCES
Avenue Communities — Centerpoint
www.avenuecommunities.com
480-294-6333