On-going downtown development projects

[enough]

re: cordish residential tower:

without qualification, more new housing downtown is to be celebrated.

however:

1 - how can a building that is getting $10m in public incentives be characterized as "market rate?"

2 - subsidizing new housing with the expectation that the increased supply will cause rents to rise enough to attract other developers who won't want incentives? that makes my head spin.

ps - time to spin this off into a separate topic?

[earthling]

^Posted this in another thread..

Downtown rentals might have to hit near $2/sqft before more hirise residential can be built w/out any form of incentives. Low rise like Market Station can maybe be built for under $1.50/sqft w/out incentives but likely not more towers.

Up to $10M incentive is small potatoes over 30 years for a 300+ unit hirise compared to the total cost of maintenance the City would have to spend to support a sprawling suburban neighborhood of 300 homes for 30-50+ years - roads, sewers, water, power, etc. For a hirise, they support less than 1 sq block. In that sense, we shouldn't mind reasonable incentives as long as it goes towards infrastructure and not directly in pocket of developer. TIF garages are also reasonable but only if they include free public parking as well.

[pash]

.

[kboish]

1 - how can a building that is getting $10m in public incentives be characterized as "market rate?"

2 - subsidizing new housing with the expectation that the increased supply will cause rents to rise enough to attract other developers who won't want incentives? that makes my head spin.

1) "Market rate" refers to unregulated rental prices. It has nothing to do with how the building's construction was funded.

2) The expectation ("hope," really) is that there is demand for housing downtown at higher prices than anything is priced at right now. But developers are quite sensibly loath to risk building something for which there's no demonstrated, measurable demand. If city subsidies get Cordish to build a new residential tower, and if it fills up at high prices, other developers might take that new information and decide it supports the decision to build more new housing units downtown.

The prudence of doling out millions to a private developer along the lines of 2) is debatable. But the city has many other irons in downtown's fire, so there are many ways the money can generate a return. The rest of the reasoning underlying 2) seems rather hopeful to me, since the price increases needed to justify new construction without cash subsidies is so large, as earthling mentioned. But demonstrating that there are people in this city willing to pay higher prices to live downtown (if that's the case) would be a step in the righ direction, a step towards justifying further new construction.

I would guess this most likely has to do with Bank's underwriting criteria for the loans. The developer likely would not be able to get enough funding b/c of bank's skepticism towards the untested market for this type of construction. Bank's criteria push development trends more than most people realize. You can want to do a certain kind of construction all you want, but unless you can convince the bankers your market is there it won't happen.

Once they have one new construction high rise on the books they have a comp for the next and are able to change their underwriting criteria and offer loans that make sense for developers to keep replicating that product...

or at least that seems to me like the theory behind "subsidizing" (or providing gap financing) the first tower.

In reality they will all be subsidized with abatements and other incentives...but, this is really only about the 8 million they're getting for being the showcase development for future new construction.

[FangKC]

The other difference between market rate and affordable housing via public subsidies for the construction often depends on the funding mechanism. If state low-income housing credits are involved, or HUD money, then the developer had to provide some, or all, affordable units in the project--depending on the formula, and size of the public investment.

The City's public incentives in this tower has nothing to do with low-income housing credits or HUD money. Thus, it can be market rate.

If the developer sought low-income housing credits, or financing from HUD, they would have to set aside so many units as affordable housing. This often happens in residential towers in New York City for example.

Often, luxury towers are built with this type of financing, and a certain percentage (5 or 10 percent) of the apartments are set aside as affordable housing. Usually on the low floors without good views. The funding mechanism may be based on the developer offering these units for so many years (say 15-20 years); then the developer is free to rent or sell those units at market rate. I think the some of the new housing built on Quality Hill was done this way. Since more than 20 years has passed since they were built, those units have no fallen out of the HUD program, and can be leased or sold on the open market.

Some of the housing in the East Village will likely be funded this way. There will be affordable housing, but after so many years, the developer/owner will be free to take the units to market rate.

[earthling]

http://www.bizjournals.com/kansascity/p ... towns.html

Until recently, Downtown was projected to add only 1,000 new units during the next five years. But according to a recent Downtown Council housing report, 1,688 new units are under construction or planned. In addition, much of the 10-story Thomas Corrigan Building, 1828 Walnut St., and 30-story Commerce Tower, 911 Main St., now are expected to be converted from office to apartments.

“We feel Downtown will be able to absorb all those units very well,” said Christina Boveri of Boveri Realty Group, which specializes in downtown rentals and sales. “We’ve finally gotten to the point where investments in Downtown have people wanting to come here.”

Existing projects are enjoying 98 percent occupancy, she added, and rental rates are rising with demand.

[FangKC]

I wish some developer would buy and convert the Brookfield Building, on the SW corner of W. 11th and Baltimore, to apartments. That building has sat empty for several years now, and needs something done with it.

It's old enough to be placed the National Historic Register, and be eligible for some federal and state historic tax credits.

http://tinyurl.com/krp56e7

[flyingember]

that one's a sore spot for sure downtown. it's going to be a transit-driven development for sure. parking is somewhat limited for that area

this is one of those building examples where a transit line plus access to multi-building parking garage makes sense.

[earthling]

Very interesting...

Where is the demand coming from? Surprisingly, Boveri said, 70 percent of her agency’s downtown rental deals involve people moving from outside the area.

Can anyone find out what it is for Midtown/Westport/Plaza? I've always suspected well over 50%.

http://www.bizjournals.com/kansascity/p ... towns.html

[Eon Blue]

There's more fuel for the fire that non-natives can look at KC objectively and see that there's more going on here than some of the 'burb-bound natives want to give it credit for.

Full disclosure: I'm a non-native who thinks KC is pretty damn spiffy.

[Pork Chop]

There's more fuel for the fire that non-natives can look at KC objectively and see that there's more going on here than some of the 'burb-bound natives want to give it credit for.

Full disclosure: I'm a non-native who thinks KC is pretty damn spiffy.

I am a non-native and I agree.

[earthling]

^Mind if I ask where you two are from, this side of Midwest, larger/smaller city?

About 2/3 people I meet in midtown lounges are not from KC area. About 2/3 people in my building (Westport zip) are not from KC area. About 3/4 of my closer friends are not from KC area.

Many who grew up in KC burbs were either taught to fear the city or watched too much sensationalized news. Crime is real in the city but is the case with most cities yet suburbanites in many other cities embrace the city core more than metro KC does. The perceptions are changing a little but as long as TV news continues to terrorize everyone it the burbs, it's not going to be many.

[Eon Blue]

^Mind if I ask where you two are from, this side of Midwest, larger/smaller city?

A small town in SE Missouri. St. Louis was my big city growing up. My parents made an effort to expose us to the city on a regular basis, and while they were realistic about some of the problems facing the city the only time they ventured into "There be dragons!" territory was regarding East St. Louis.

About 2/3 people I meet in midtown lounges are not from KC area. About 2/3 people in my building (Westport zip) are not from KC area. About 3/4 of my closer friends are not from KC area.

Many who grew up in KC burbs were either taught to fear the city or watched too much sensationalized news. Crime is real in the city but is the case with most cities yet suburbanites in many other cities embrace the city core more than metro KC does. The perceptions are changing a little but as long as TV news continues to terrorize everyone it the burbs, it's not going to be many.

That's a sad truth. I'd wager the TV stations get their highest ratings in the 'burbs, so that's what they'll keep feeding them if it's working. I know that I can't stand watching any local TV news.

[Pork Chop]

^Mind if I ask where you two are from, this side of Midwest, larger/smaller city?

About 2/3 people I meet in midtown lounges are not from KC area. About 2/3 people in my building (Westport zip) are not from KC area. About 3/4 of my closer friends are not from KC area.

Many who grew up in KC burbs were either taught to fear the city or watched too much sensationalized news. Crime is real in the city but is the case with most cities yet suburbanites in many other cities embrace the city core more than metro KC does. The perceptions are changing a little but as long as TV news continues to terrorize everyone it the burbs, it's not going to be many.

I am from a town in Northeast N.J. about 45 minutes outside of NYC.

[FangKC]

Downtown between Broadway and Oak is now eligible for new market tax credits. These credits can provide gap financing for redevelopment projects.

A federal financing tool that helps developers and businesses create jobs and remove blight is available for the first time for projects within a swath of the downtown loop bounded by Broadway on the west and Oak Street on the east.

Prior to this year, only downtown loop projects east of Oak were eligible for New Markets Tax Credits, said Ruben Alonso, executive director of the Kansas City, Mo., Community Development Entity.

After being shut out for two years, KCMO CDE recently received U.S. Treasury Department authority to allocate New Markets Tax Credits for $45 million worth of development and/or business expansion projects. Central Bank of Kansas City also received a $45 million allocation this year.

http://www.bizjournals.com/kansascity/n ... l?page=all

Loftguy, can you suggest some properties that might benefit from this?

[FangKC]

Please add the MBG Lofts, at 1612 Grand, to the redevelopment listing. It's the former Maxwell Briscoe Garage.

http://tinyurl.com/k7s2hxa

[Highlander]

If the P&L building gets revamped for condos/apartments, there's going to be quite a building boom going in DT KC with respect to apartments.

1. Cordish 25 story building
2. P&L Building
3. Crossroads West
4. Quality Hill Project

These and a Crossroads hotel (or two) to boot.

Hope the market can absorb all the apartments.

[kboish]

If the P&L building gets revamped for condos/apartments, there's going to be quite a building boom going in DT KC with respect to apartments.

1. Cordish 25 story building
2. P&L Building
3. Crossroads West
4. Quality Hill Project

These and a Crossroads hotel (or two) to boot.

Hope the market can absorb all the apartments.

Actually there are a couple more that I think have a decent chance to get off the ground. Lets do a quick
Xroads to RM count (not gonna include union hill).

315 Onelight- Cordish 25 story building
270 P&L Building+annex and garage
275 Crossroads West
386 Quality Hill Project
180 East Village (Van Trust has cash-they'll get it done)
56 5th and Grand
298 2nd and Delaware
137 4th street by Populous (under construction)
16 Columbus Park phase I
44 1914 Main

So thats 1,977 new construction units that could be coming online in 2015/16 (i'm counting PnL building since its just an awesome project and some is new anyways). That doesn't include any of the potential rehabs (Pickwick, the Midland rehab, the argyle rehab, Folgers plant rehab, etc) or future announcements like 5th and main...hey, its only April...

I'd say DT is humming along at a good clip!


EDIT: btw. Thanks KcDowntown for maintaining that development map...made pulling numbers so easy! cool resource to track things as well. I keep it book marked!

[KCDowntown]

I've been tracking all the new development since mid 2013 at a custom google map here: Downtown Development Map.

If you click on an icon you'll find links to the latest article in either the Star or Business Journal, links to permits(in progress), links to websites, streetview, status, etc...

I've got the total of all the proposed units at 3875, which would add approximately 6000 people downtown.

KCDowntown

[KCMax]

Bump. Updated some recent projects. Let me know what's missing.