Think Mixed Use

Thinking, talking and learning about mixed use development

Mixed Use Development (or not) in Midtown Houston

Posted on February 19, 2012 by Greg Martin

We believe in mixed use, but in order for a mixed use project to be successful, all components must succeed themselves. Over the past 12 years, the principals of Milhaus have developed projects with and without mixing uses. Some have worked well and others have not so well (during 2007-2009). Last Thursday we received approval for multiple setback variances in Houston for two city blocks in the Midtown neighborhood. Over the course of the last week, several blogs in Houston have been discussing our project, the neighborhood, and the rapid development currently underway in their great city. You can find their continuing discussions here:

Indeed, Houston is not a mid-tier city by any measure. As the 4th largest city in the country with 23 of the Fortune 500 companies in the metro area, we think its is on the path to becoming a 24 hour city, to be mentioned in the same breath as Chicago, New York, Los Angeles and Miami. When we looked at Houston, we chose to focus on the Midtown area for a variety of reasons. It has easy access to jobs downtown as well as the medical center. By its transit service, block patterns, and ongoing streetscape improvements it has the potential to be the most walkable of all neighborhoods in the city. To the west of Main Street: the funky shops, number of new residents, and the type of nightlife and dining options attracted us as well. As we explored the area east of Main Street, it reminded us of other urban areas attractive to redevelopment. While it is lacking in retail uses, it does have a large component of home ownership. From discussions with retail brokers and tenants in Houston, there just isn’t enough housing density east of Main Street to justify new commercial space. However, we believe that if enough residents move into the neighborhood that will change. Our project includes 280 units. It’s hardly enough to warrant new commercial space on it’s own, but we think it will help set the stage for more development there.

In order to complement what the Midtown Redevelopment Authority is planning in the area, we designed the first floor of the building along Gray Avenue, between Austin and La Branch to be built to hold commercial tenants if the demand is ever warranted. Until then, we will locate all of the building’s leasing and club rooms/amenity areas along the street front. It’s not retail, but it will help create a pedestrian experience along Gray Avenue. Since the apartment market is currently very hot, the common perception might be that it would be easy to obtain equity and debt financing for a mixed use project, let alone an apartment project. However, this is not an accurate perception in today’s financing world. In the past many financial firms and banks have been burned by investing in Houston, due to the boom and bust cycle that tends to predominate the real estate market here. We are facing challenges just like everyone else, which is somewhat complicated by focusing east of Main Street. Nevertheless, we are committed to Midtown and we will continue to focus on making this project a reality.

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This entry was posted in Our Philosophy, USA West

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Can Adaptive Reuse and Mixed Use Save a City?

Posted on January 22, 2012 by Jake Dietrich

Adaptive reuse and mixed-use are two of the most popular catch phrases in urban development and planning circles today. A growing share of the industry is being shaped by these two sectors in larger cities where the real estate markets have stabilized. Imagine what could happen by combining these two together in less fortunate cities. Take Detroit for example. This once booming industrial city has become the poster child for low density, blight and vacancy in America. However, through the Detroit Works Project the city is looking for ways to go about revitalizing this dying city. With over a third of the city’s land lying vacant, something must be done to restructure the city to increase density and decrease blight. Detroit is filled with Art-Deco and Neo-Gothic buildings that exude the heritage and history of the city. However, many of these beautiful buildings lie abandoned and without use. Finding new innovative uses for them is a much better investment in the long-term view of the city. Detroiters love the heritage of their city, and further destroying it by removing its historical structures could potentially cripple it even more. By rehabilitating these buildings and implementing new mixed-uses could serve to promote the density that this city so desperately needs. Let us not forget that the ‘greenest’ building is one that has already been built.

~~ Jacob Dietrich is a student at Ball State University completing his major in Urban Planning and Development this Spring.

This entry was posted in Guest Post

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Milhaus starts its third year

Posted on January 01, 2012 by Milhaus Development

It's hard to believe that Milhaus has entered its third year today. The last couple of years have zipped by and we have been pushing hard into a lot of areas and with a lot of new projects. We settled into our office at the Maxwell in March and now feel at home on the east edge of downtown Indianapolis. Penn Circle Apartments in Carmel, IN started construction in November and should have units available this upcoming Summer. We purchased University Square in Muncie, IN and continue to enhance its significance to Ball State University. We've also recently been selected to work with the City of Michigan City, IN on the redevelopment of two downtown blocks. Look for more information on that project in the coming months. In Indianapolis we received city approvals for the Mozzo to begin construction this Spring. We're working on further growing our portfolio there with the redevelopment of the former Renaissance Bay community near Keystone at the Crossing in 2012. Finally, we have entered the Houston market and are working on a project to be announced there in the next few months.

Before going forward on this year's business, here a few of the highlights from Milhaus in 2011:

Deals closed: 4
Meetings at ICSC RECon: 115
Employees: 5
Interns: 3
States with projects: 3 (Indiana, Texas, Tennessee)
ULI speaking engagements: 5
Miles flown: a lot
Units started construction: 193
Total units: 304
Total commercial SF: 41,000
New babies: 2
Jimmy John's deliveries to the office: 41
Cookies with Milhaus logos: 10

Thanks for following along. Hope you have a great start to the new year.

This entry was posted in News

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New Lawrence Office Space Available

Posted on December 20, 2011 by Gregg Donaldson

Milhaus Realty LLC is pleased to represent the Lawrence Township Trustee in procuring a tenant for the newly remodeled office space within the Morris Settles Municipal Building located at 4455 Mc Coy St., Indianapolis, IN. 1,846 sf is available in two separate suites (1,434 and 412 sf respectively). The Trustee is asking $14/sf gross annual rent. The landlord has tenant improvement funds available depending on lease terms and tenant qualification. This office space is ideal for service professionals that cater to individuals whom might be visiting the adjacent services of the Small Claims Court or the Trustee's Office (energy assistance, child support services, etc...). Please contact Gregg Donaldson 317.236.7117 for additional information or to setup a showing.

This entry was posted in News and tagged Lawrence Office Space, Trustees Office, Office Space for Lease

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Time factor of mixed use development

Posted on December 19, 2011 by David Leazenby

It was a simple question overheard at an event recently: How much longer does a mixed use project take to develop? Well, maybe one day if we can write a book, there will undoubtedly be a chapter devoted to the time cost of including commercial space in our buildings. We have a rule of thumb at Milhaus for project timeframes that vary depending upon the size of the project, the role of neighborhood groups and government approvals, design complexity, construction method, and even the weather. From contract signing to starting construction, it varies from 8 months to 24 months depending on many factors.

To understand development of mixed use and urban-infill properties, one must first understand that signing a contract to buy a property for development has only earned you the right to spend lots of money and risk lots of time and even more money. You've basically bought the right to promote a vision for changing something. That "something" can be a building, a city block, a vacant parcel, etc. Whatever it is, there are many other ideas for how it should be developed that are contrary to yours. Moreover, there are many other people that have some "ownership" of that something like you do. There are neighbors, customers, concerned citizens, and advocates of preservation that all have a voice in our business. It takes time to build trust and relationships with each of these stakeholders. It takes time to design and redesign a building to respond to reasonable concerns. It takes time to navigate the myriad neighborhood meetings, city entitlement processes, and bring the project team members along the way.

Mixing the uses takes time to explain why you are doing it, how it will work, and why it will be successful. It increases the complexity of approvals, design, and financing that just takes more of everything to get it done. Depending on the other factors at play, just adding commercial space to a residential building can add 25%-50% more time to your schedule to reach construction. Of course, this extra time has a cost and it needs to be measured against other goals and objectives of the project and the company. Is it worth it? Well, sometimes the value of mixing uses in the project cannot be measured in dollars and cents. We'll leave that thought for another day.

This entry was posted in Our Philosophy

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Thoughts from Houston Green Building Expo

Posted on November 18, 2011 by Tadd Miller

I was fortunate to have a few minutes between meetings to stop by the University of Houston’s Green Building Components Expo. Two intriguing products were exhibited that I could see easily implemented into a Milhaus project in the near future: the Botanica air purifier and the Parametric Precast system. The Botanica is an indoor living wall system that can be installed along existing walls using the plants to reduce the number of pollutants purifying indoor air. The Parametric Precast system is a simple and affordable system made of recycled concrete that can allow a stacking application that includes application of solar panels and living walls within the structure. These are the type of products that we need to continue thinking and exploring at Milhaus to continue to understand how to make our projects more sustainable.

One other more complicated product at the event that is the Z-fab home. This product implements a lot of the things Milhaus has spent significant time trying to figure out in the modular multi-family housing space with Clayton Homes and Genesis Homes. This modular implementation would help mitigate numerous issues we deal with in the urban core and mixed-use issues of delivery, staging, timing, and delivery, not to mention the mitigation of waste and implementation of sustainable practices.

This entry was posted in Design, Sustainability

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Milhaus Closes on $20 Million Project in Carmel, IN

Posted on November 01, 2011 by Milhaus Development

Milhaus Development has completed its financing of Penn Circle apartments in Carmel, Ind. and plans to begin construction this month on 193 units on the approximately six-acre site. The project is one of the first in the area to take advantage of the emerging central Indiana regional transit system.

“One of our goals at Milhaus is to build sustainable buildings and neighborhoods,” said David Leazenby, Principal, Milhaus Development. “The Penn Circle location is perfectly positioned to provide housing for people employed within the North Meridian Corridor. The area has terrific access to growing companies as well as three hospitals. It is also near shopping, cultural and recreational amenities.”

The apartments are within walking distance of the northern stop for the Indy Express commuter bus, which is located in the Meijer parking lot across the street from the project. Sidewalks will be added so residents can easily get to the bus and downtown Indianapolis.

“Progressive companies like Milhaus are investing in a future with improved public transit in Central Indiana,” said Ehren Bingaman, executive director of CIRTA, the Central Indiana Regional Transportation Authority. “In addition to providing immediate access to Express Bus service to downtown, the Penn Circle project is well-placed for envisioned transit-oriented development.”

Penn Circle will include studio, one- bedroom and two-bedroom apartments with open concept floor plans and high-end features including granite countertops. The community will also have a pool and an outdoor living room with an outdoor kitchen. Leasing will begin in the Spring of 2012.

Milhaus has partnered with Gershman Brown Crowley, Inc. and the Gene B. Glick Company on the project. Gershman Brown Crowley has listed a 0.76 acre parcel on the corner of Pennsylvania Street and Old Meridian Street for retail use. The Gene B. Glick Company is serving as the general contractor as well as the property manager. The approximately $20 million investment has been financed by PNC Bank.

This is the third transaction Milhaus has completed since it began less than two years ago. In December 2010, the company partnered with the Gene B. Glick Company to purchase The Maxwell Apartments. In May 2011, Milhaus purchased a commercial shopping center on 1.8 acres in Muncie, Ind. called University Square and is now renovating the building while working with current and potential tenants on leasing arrangements. The company has multiple projects under development, including the Mozzo Apartments in Indianapolis, as well as two apartment properties in Houston, TX.

Photos

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This entry was posted in News

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"Shark Tank" at ULI Los Angeles

Posted on October 31, 2011 by David Leazenby

I had the opportunity last week in Los Angeles to lead off the first ever "Shark Tank" session at a ULI Fall Meeting. While planning it over the last few weeks, we were not sure what to expect. Would we have enough content? Would anyone show up? Would the sharks really be interested in these deals? What will it be like to present real deals to different people with different criteria all while sharing all of our strengths and weaknesses? Well, if the immediate response is a good indicator, it was a wildly successful session in front of about 500 people. The concept (the brainchild of Lynn Carlton at Sasaki) was modeled after the popular TV show where entrepreneurs present their product or service to a group of investors. ULI is not typically a large format "deal-making" sort of meeting, but rather an educational and networking organization focused on developing leaders in the real estate industry. However, for 105 minutes in LA, four real estate investment pros poked and prodded their way through two different real estate opportunities while the presenters (and the audience) were educated on what these ladies and gentlemen are looking for in a deal today. Moderating the session was Steve Furnary, CEO of Clarion Partners. The sharks included Cia Buckley, Partner at Dune Real Estate Partners; Arthur Fefferman, President of AFC Realty Holdings; Trish Healy, Principal of Hyde Street Holdings; and Charles Burd, CIO of Bentall Kennedy. The result: I pitched a 380-unit redevelopment project in Indianapolis and asked the sharks for $15M in equity on a $42.6M project; two of them voted to do the deal. Well, actually three if you count Trish Healy's hedge. Thanks to them all and to Lynn and my co-presenter Craig Cherney of American Land Fund for helping to make a great idea come to life.

This entry was posted in Finance, News

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New Mozzo Rendering

Posted on October 21, 2011 by Milhaus Development

Here is a new rendering of the Mozzo Apartments, which we have proposed to be developed at 531 Virginia Avenue in the Holy Rosary Neighborhood in downtown Indianapolis. The 4-story mixed-use building comprised of 64 units and a corner cafe space are designed to provide flexibility with the new Cultural Trail. North of the corner space, the first floor spaces will be available for residential or commercial uses. The building will include a mix of studios, one bedroom and two bedroom units. We plan to start construction in the first quarter of 2012.

Photos

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This entry was posted in Project Highlight, USA Midwest

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Great places need enough residences

Posted on October 18, 2011 by Tadd Miller

Developed by Woodbine Development Corporation and now fully owned by Macerich, Kierland Commons is a very successful and award winning project. It’s retail spaces are well-leased and has heavy volumes of very diverse, multi-cultural and high-end traffic. For the residential units it has a great sales team led by Bill Hammond of Signature Properties and they are offering a terrific residential product. The amenities, quality, unique design, mountain views and finishes exceeded my expectations. However, I am not sure this is the place where I would want to purchase a home. Although I am a strong supporter, investor, and promoter of building residential into large-scale retail projects, I believe there is one critical element to this concept that was missed at Kierland Commons - and its perhaps not the developer's fault. In order to create a sustainable residential neighborhood and a place that feels like home, it is important to create enough residences to build value around each other. The 84 units at Kierland Commons seems to be floating in the middle of a mall, with no real hopes for neighborhood expansion. With such a small number of units, it makes me wonder if the residential will always be a second class “tenant” dominated by the retail space? It’s a fantastic place and I wish more units could be incorporated there. I am not sure if the 84 units was negotiated by strict zoning guidelines. However, this project demonstrates the effects of building too few units in a major retail center. A critical mass of residential units (at least 200) and at enough density (at least 25/acre) are critically important. I could see this being a great hotel location, a place to spend a night away near the shops and dining, but a long term residential commitment with so few neighbors seems less likely. Just like the retail space in a new development needs a critical mass of shops, the residential product needs to have enough people living there to build a true neighborhood. It creates stability and adds more long-term value.