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Hope on the Horizon for the Motor City?

Posted on July 20, 2011 by Jake Dietrich

During a recent trip to Detroit, I was able to coax a family member into giving me a driving tour of the city. I had visited the suburbs several times, but never had the opportunity to get into the city. My father, who grew up in a small town just outside of Detroit, also went along for the ride. Our reaction to the tour was similar: awe, disbelief, and despair. I knew the state of Detroit was poor at best, but even my father noted the situation has worsened in the past twenty years. We have all seen pictures and heard the news reports on Detroit’s economic state, but one must see it for themselves to truly believe it. The sheer amount of dilapidated and vacant buildings is tremendous, but the fact that it can be found throughout the city is even more disheartening.

The amount of disinvestment in the city makes me cringe when I think about what the city must have been like 60 years ago at the height of the city’s industrial economy. Today, however, more than 50% of residents have moved out of the city due to deindustrialization, leaving over a third of Detroit’s 139 square miles vacant. So many beautiful buildings lie vacant because no one is willing to invest in one of America’s “Dead Cities.” Buildings like Michigan Central, the 500,000 square foot 20 story train depot and office building that has been inactive for over twenty years. Without a doubt a gorgeous building in its prime, the structure is in need of renovations that have been estimated at between $80-300 million to upgrade its current state. Similar cases of neglect and vacancy are all too commonplace throughout the city. Buildings that would make an awesome adaptive reuse or rehab project in another city have little hope for redevelopment because of how long they have stood vacant. While many pieces of property in the city’s downtown has recently been acquired, there is no word on when development will actually begin. So, how does a city with such minimal prospect for growth in the near future make redevelopment and rehabilitation projects happen? Right now the Detroit Works Project, a city-wide redevelopment planning effort, is looking to find some answers to that question. But even they realize that there is no complete magic roadmap to getting the city back to where it was. However, through extensive community involvement and realistic action steps, the DWP aims to create a plan to get the city moving back in the right direction.

Photos

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This entry was posted in Redevelopment, USA Midwest

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XianTianDi, China - Shui On Development

Posted on April 07, 2011 by Tadd Miller

Of all the projects I have toured throughout China, XianTianDi in the Pudong area of Shanghai is one of the most well thought through, creative, iconic and best implemented projects I have seen. Although it doesn’t quite scream insurmountable super-power of steel and glass like the World Financial Tower, it’s a must see visit on a Shanghai tour. Next door to the iconic Pudong skyscrapers, it is a true urban project that pays homage to the area’s bright historic background, yet integrates and delivers high-rise, mixed use components in its core. It is an incredible reuse of historic structures, including careful placement of new a hotel and office building with selective demolition of historic structures. The result is a viable street pattern and new community.

It took a special company, great attention to detail, proper funding, political connections and designers to think through and implement this complex project. This is the type of mixed use development that we all dream of participating in, and it was amazing just to get the behind the scenes tour from our hosts at Shui On land.

The highlight of the visit: the developers rehabilitated a very traditional home that was located in the neighborhood as an actual museum for people to see the contrast between history and modern day development.

Special thanks for the tours to:
K.B. Albert Chan; M.Arch, MS(UD), MBA, AIA; Director of Planning and Development
Daisy M.Y. Lai; MHKIP, RPP, LEED AP, PRC Registered Urban Planner Qualification
Assistant General Manger – Planning & Development

Photos

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This entry was posted in Project Highlight, Redevelopment, Asia

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Hundreds of school buses, one parking lot, and a major economic development

Posted on April 04, 2011 by Tadd Miller

IPS Bus Garage MilhausLooking at the former Coca Cola building at Mass Avenue & College Avenue in Indianapolis, a sea of yellow school buses sit idle. There I sit as the 10th car back at the stoplight in the middle of rush hour. The children have already been delivered home and their 100+ buses are parked while traffic inches by. I make the assumption that there are people whose full time job is driving these busses, however their two routes a day leave most of the day unused. Additionally, there are three months of the year when there is no bus service at all. I hear the mass transit debate in Indianapolis, and it appears to me a combined system of IPS and IndyGo buses provide at least an option for increased efficiency and service. Is that really such a big leap?

Aaron Renn talks about successful public transit connecting “transit addressable trips” to create a system that works. It seems to me that there are thousands of students in the downtown area who depend on these busses that are necessary "transit addressable trips" that are already being addressed in a completely separate set of costs. (Makes me wonder...have I seen school buses in Manhattan?) Anyway, with IndyGo’s need to increase routes and cut back expenses, an exploration of this combination seems at least a scenario to consider and do some serious studies to figure out. In addition, it would open up a large tract of developable ground to bring more development downtown Indianapolis.

This entry was posted in Our Philosophy, Redevelopment, Transportation

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Bill Alsup at Hines and a look at CityCentre DC

Posted on January 04, 2011 by Tadd Miller

City Center DCBill Alsup, SVP Development at Hines, was kind enough to present to me their CityCentre DC project in Washington. As I walked onto the site it became clear why this site was envied by many developers. Its size at 10 acres is unheard of in the city. The only reason this parcel exists is because the previous convention center was demolished here. (It seems that it was obsolete as soon as it was built.) Since demolition the property has remained dormant, other than the interesting twist of it being used for some pro-tennis matches. The current project is the fruit of an incredibly difficult entitlement process that included plans for tearing down old convention center, building a new one and opening up new streets that hadn't been open in years.

CityCenter DC will soon contain 2.5 million sf of mixed-use development, intended to be comprised of three phases. The project will include the re-introduction of two streets through the site, a new park, a central plaza, retail-oriented alleyways and streetscapes, and a 1,600-car parking facility. The project will kick off with approximately 1.5 million sf including two, 11-story 260,000 sf office buildings, 240,000 sf of retail, two 11-story apartment buildings containing 229 apartments each, and two condominium buildings. The condo towers will be 10 and 11 stories, each containing 216 condo units. Phase II will contain a 10-story, 275,000 sf, 400-room hotel and 100,000-120,000 sf of retail. Phase III (master planned by Hines but to be developed by another party) will contain 560,000 sq. ft. of office space and 40,000 sq. ft. of retail space.

To ensure this project gets done right, and since Hines doesn’t have any residential experience, this project was done as a 50/50 JV with Archstone. I was told that Hines recently lost a lead tenant, Skadden and Arps, who was going to occupy 350K sf. Unfortunately, they will renew at their existing location. The project hasn't started yet, but it is expected to commence during second quarter 2011.

Picture – from project website

This entry was posted in Project Highlight, Redevelopment and tagged infill, DC, Hines

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Why can't those parking lots be developed?

Posted on November 09, 2010 by David Leazenby

Recently in Oklahoma City there was yet another example of the need for public participation in downtown redevelopment in mid-tier markets. There seems to be a lot of that going around. Downtown Indianapolis has its own current financing decisions to make. It's been almost 10 years of parking lots under the old Market Square Arena site. Now, the largest employer in the state has asked the city to loan it $86M so that it can build a massive mixed-use project on its own parking lots. It seems in Oklahoma City the economics are not much different. In these mid-tier markets, the land prices and rents just do not allow new development to pay for itself in the short term. It is obvious to most observers that it is much cheaper in the short term to build far away from existing infrastructure. Until it becomes clear what the long term benefits of compact development will be, how they can be valued, and what the trade-offs are going to be in each affected community; there will continue to be underutilized parking lots in every downtown.

This entry was posted in Redevelopment

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Development Niche in China - Lifestyle Centers

Posted on November 07, 2010 by Tadd Miller

I was fortunate to have a very engaging meeting in Shanghai with the CEO of Lifestyle Centre's in China a few weeks ago. Regardless of the difficulties of development in the “wild west,” Brian has created a very unique environment not often found in China. American real estate professionals in American can relate to the old phrase “its always bigger in Texas,” and in China the majority of projects are of mind boggling size and scale, to the point of intimidation for even the largest American developers. Many projects are so large and so massive, they almost seem fake (even thought the population and the demographics make them very real).

However, Brian has created a unique neighborhood that feels comfortable, safe and enjoyable as soon as you walk in, a scale that solid developers in America can digest and understand. Maybe it is just that everything around it is so big, but as you walk in the office space or into the bar/restaurant, you immediately feel as if you are at home. This is a neighborhood where you know all your neighbors, know the bartender, etc., as well as live work and play. This is definitely a model and product type that I could see being a huge niche market for LifeStyle centers throughout China, and the entry point for many developers and the development business in China. It also may be a way for “expats” to enter the market who are often dissuaded by the overly large intimidating structures often found in the Chinese markets.

This entry was posted in Design, Redevelopment

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Greyfields: A Mixed Use Dream?

Posted on August 12, 2010 by Milhaus Development

Guest Post by Greg McHenry, Development Assistant and Intern with Milhaus Development

Starting in the mid 1990’s, many enclosed malls began losing tenants because of low sales, causing many to completely shut down. The main reason for this was that Americans were finding other ways to shop besides driving miles to the nearest mall. These empty shells and expansive parking lots became known as “Greyfields“. These vacant malls are becoming a burden on their adjacent economies and communities (e.g. Cloverleaf Mall in Richmond, VA; Hawthorn Mall in Hawthorn, CA; or Lafayette Square Mall in Indianapolis). The website www.deadmalls.com emotionally documents the horror stories behind many dead malls.

A successful redevelopment of a community-plaguing Greyfield can become a mixed-use developer’s dream. Not only do are these areas low-priced (a true Greyfield will sell at the price of land minus expected demolition costs) but they have the ability to restore a community’s identity if developed right.

Greyfield redevelopments also make New Urbanists and Sustainable Developers happy. For one, these projects help reduce urban sprawl by promoting a more compact lifestyle instead of the commuter culture supported by malls. Also, these projects are shining examples of infill projects; reusing land that has outlived its original purpose. A large community of mixed-use is also a great chance for progressive planners to create active walkable communities. And since these malls are typically located near transportation channels, these communities can be very easily compatible with low-emissions transit. These Greyfields represent an ending of one American paradigm and the beginning of another. It is up to developers to bring this new built-world to life!

This entry was posted in Redevelopment, Retail, Sustainability

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Allen Plaza

Posted on July 29, 2010 by Milhaus Development

mixed-use-allen-plazaAllen Plaza began as an idea of area commercial developer Greg Allen. Allen, who specializes in commercial retail space desired to move his corporate headquarters into the heart of downtown Indianapolis.

Allen Plaza was intended to be a typical mixed use project with retail on the street level 1st floor with condominiums above. But after purchasing the building, several office space tenants including Noble Romans expressed motivation to continue operating out of the same building. Quickly Allen Plaza became an Indianapolis leader in mixed use, as the building transformed to what it is today.

Currently Allen Plaza is anchored by a long-term 1st floor tenant, Scotty’s Brewhouse. Office space begins on the 3rd floor offering tenants about 13,000 square feet of prime downtown office space a level. Office space occupies floors 3-5, totally about 40,000 square feet. Allen Plaza currently has 3 office space tenants and is working to fill the 5th floor, which originally was intended to be condos.

Above the restaurant and three floors of office space, you’ll find the beginning of a 24 units of prime condos. With currently 5 of the 7 completed condos sold, John Cunningham explained how Allen Plaza has found success in selling condos during a difficult time. John attributes the success of their condo sales despite the struggling economy to their unique, build to suit option. “Potential buyers are given the option to choose one of the seven models to purchase or build their own downtown condo space based off the models. This provides buyers with greater options and more flexibility unlike the typically downtown condo market,” Cunningham explained. Cunningham went on to explain that Allen is currently working with five prospective buyers to modify the condo space to their particular liking. One particular prospect is working with Cunningham to approve plans to create a two-story townhouse. Topping off the nine-story Plaza is three high end Penthouses, equating a total of 9,000 square feet of living space. All this, within the confines of what used to be an outdated eye sore.

Cunningham attributes the flexibility of Allen Plaza to the CB2 multi use zoning. This enabled them the ability to adjust the space from originals plans to what the current economic market dictated. Additionally, the lack of institutional financing eases the approval process of the changes as well.

The flexibility of Allen Plaza has enabled it to become a downtown Indianapolis leader in a tough condo market. Apartment conversions are the norm in big cities throughout the country, but Allen Plaza has deterred this by finding a niche to selling condos to a market that some developers questioning existing anymore.

This entry was posted in Redevelopment, USA Midwest

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Mixed Use Success – Stick With What You Know!

Posted on July 27, 2010 by Tadd Miller

Mixed use requires residential, retail, and office components to be individually successful. Empty retail dramatically affects residential rents/absorption, just as residential failure destroys retail value within a project. To create success in this environment, mixed use developers must be realistic about their expertise and capacity. Retail developers are “business-to-business” operators, while residential developers service customers’ homes 24/7, two extremely different cultures; which if redirected, destroys customer confidence leading to project failure or value limitations. This need for focus and specialization is what is driving the multiple joint ventures that are taking place among real estate companies throughout the country.

Historically, real estate developers have made investments outside their focus area all too often, and the evidence shows a lack of return on capital. Most of the developers either cap their future capacity by continuing to struggle through, or more appropriately take a loss to exit the new venture in order to get back to their core focus. As a developer and entreprenuer, I understand the desire to control my own destiny, and fall into the “if someone else can do it, than so can I,” trap, but I have also learned the dangers of acting on those thoughts.

Unsuccessful projects are a big black eye for all mixed use projects. Find a partner or provider for the product in which you don’t excel, make sure they have been through the development of a mixed use project before, and lock them in to help them complete your next mixed use project, and that will be a big step towards making your project successful!

This entry was posted in Our Philosophy, Redevelopment and tagged mixed use, mixed use development, joint ventures, partnerships

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Cole Noble Neighborhood's Future…

Posted on July 20, 2010 by Tadd Miller

mixed-use-maxwell-300x288As a resident, business owner, and developer in the Cole Noble Neighborhood District of Downtown Indianapolis, it is clear that Cole Noble has not been a focus for the City of Indianapolis. A new group of leadership has gotten involved in the neighborhood, and I think you are going to see a whole new Cole Noble, as well as a whole new East Side of Indianapolis over the next few years. The membership has come together, there is a new group of engaged leadership, and the momentum of new projects in the neighborhood all seem very positive. With new additions to the neighborhood like The Buchanan Group, Harrison College, The Maxwell, and the Nature Conservancy joining forces with some of the existing great business like Easley Winery, Rowland Design, and Axis Architecture, I think you are going to see amazing things....Stay tuned to their website for new news as they progress...

This entry was posted in News, Project Highlight, Redevelopment, USA Midwest

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