Manchester Development

[I miss RVA]

47 minutes ago, upzoningisgood said:

My guess: costs exploded at the same time investors got pickier and banks got spooked. People don’t want to/can’t cut big checks right now. 
 

Basically, because investors can’t cut as big checks, they want more bang for their buck. So they want returns/dollar invested to be higher than a few years ago. Because so many people are out, those still in can be, and must be, pickier. That means tall, costly projects like Hourigan’s is behind the 8-ball now in a way they weren’t a few years ago even before the other factors listed above. 

So with costs coming down, inflation cooling, what needs to change to get these projects out from behind the 8-ball? Does it boil down to the change in interest rates over the last three years? When a lot of projects were flying across our radar screens and into the RVA pipeline two and three years ago - weren't the interest rates essentially zero at the time?

I realize there's no "magic elixir" to fix this problem - but what needs to happen to get us back to where projects like Hourigan's will work again the way they would have two or three years ago? Or is this issue with lenders a longer-term problem that's here to stay?

[upzoningisgood]

8 hours ago, I miss RVA said:

So with costs coming down, inflation cooling, what needs to change to get these projects out from behind the 8-ball? Does it boil down to the change in interest rates over the last three years? When a lot of projects were flying across our radar screens and into the RVA pipeline two and three years ago - weren't the interest rates essentially zero at the time?

I realize there's no "magic elixir" to fix this problem - but what needs to happen to get us back to where projects like Hourigan's will work again the way they would have two or three years ago? Or is this issue with lenders a longer-term problem that's here to stay?

The interest rates are the biggest deal. They affect a lot of things, mostly on a second order basis. 
 

Higher interest rates -> higher financing costs for private equity, lower returns to development -> higher target returns for PE acquisitions, less money floating around -> fewer purchases -> fewer construction loans paid off ahead of schedule -> less money for banks to lend out -> harder to borrow for development. Development, especially for relatively cost-dense projects, gets squeezed on multiple sides. It’s harder to find people to play ball, those people are pickier, and then even if you find someone for equity it’s hard to get debt. 
 

Hard costs (at least in Nashville) spiked over the last two years as contractors 1) had to price unknown inflation risk and 2) had full enough pipelines that they could price in fatter profit margins. The pricing might cool down because, in markets across the nation, there’s a supply cliff entering in 2025 and a construction cliff entering 2024. But, hard costs (as well as rents!) are still way elevated from pre-pandemic. That makes it harder to achieve quality returns on cost because now the returns have to be much bigger because the cost is much bigger. If hard costs grow faster than rents, returns on cost decline as they did nationwide post-pandemic, but that is a doubly tough pill to swallow when investors are pickier and debt is harder to come by. 
 

Insurance is getting more expensive. The wildfires in CA and rising exposure to global warming are hurting the books of the insurers and they are raising premiums to compensate. RVA isn’t as screwed as California or Florida is, but issues there permeate throughout the country. That also hurts target return metrics and I’m sure provides complications for a project on the waterfront, even if it’s behind a flood wall. 
 

I always come back to tech change and building codes because I think they’re the best way out. I’ve talked about CLT,  I think building codes could be loosened some to enable smaller two and three-bedroom units that would help affordability and costs, and I think laws should should be streamlined (I’m not exactly sure how) to enable more modular construction. We still build everything on-site. That seems crazy to me in 2023. You can’t do anything about interest rates and insurance but you can provide more flexibility to accommodate these factors. 

Edited July 20, 2023 by upzoningisgood

[I miss RVA]

3 hours ago, upzoningisgood said:

The interest rates are the biggest deal. They affect a lot of things, mostly on a second order basis. 
 

Higher interest rates -> higher financing costs for private equity, lower returns to development -> higher target returns for PE acquisitions, less money floating around -> fewer purchases -> fewer construction loans paid off ahead of schedule -> less money for banks to lend out -> harder to borrow for development. Development, especially for relatively cost-dense projects, gets squeezed on multiple sides. It’s harder to find people to play ball, those people are pickier, and then even if you find someone for equity it’s hard to get debt. 
 

Hard costs (at least in Nashville) spiked over the last two years as contractors 1) had to price unknown inflation risk and 2) had full enough pipelines that they could price in fatter profit margins. The pricing might cool down because, in markets across the nation, there’s a supply cliff entering in 2025 and a construction cliff entering 2024. But, hard costs (as well as rents!) are still way elevated from pre-pandemic. That makes it harder to achieve quality returns on cost because now the returns have to be much bigger because the cost is much bigger. If hard costs grow faster than rents, returns on cost decline as they did nationwide post-pandemic, but that is a doubly tough pill to swallow when investors are pickier and debt is harder to come by. 
 

Insurance is getting more expensive. The wildfires in CA and rising exposure to global warming are hurting the books of the insurers and they are raising premiums to compensate. RVA isn’t as screwed as California or Florida is, but issues there permeate throughout the country. That also hurts target return metrics and I’m sure provides complications for a project on the waterfront, even if it’s behind a flood wall. 
 

I always come back to tech change and building codes because I think they’re the best way out. I’ve talked about CLT,  I think building codes could be loosened some to enable smaller two and three-bedroom units that would help affordability and costs, and I think laws should should be streamlined (I’m not exactly sure how) to enable more modular construction. We still build everything on-site. That seems crazy to me in 2023. You can’t do anything about interest rates and insurance but you can provide more flexibility to accommodate these factors. 

A reader commented in an article last week in Richmond BizSense that the Commonwealth will, in fact, be revising/updating the state building codes in 2024 to allow for CLT construction up to 18 stories.

Here's the comment:

Stephen Weisensale

 7 days ago

 Reply to  Ted Herm

There is a change coming to the new edition of the Virginia building code in early 2024, which will permit mass wood framing up to as many as 18 stories or 270 feet for the R-2 use group (apartments). I believe the current model of a 5 story maximum for type-5 wood construction will in some cases be replaced by this new class of type-4 mass wood frame construction, which will still permit the framing to be wood, but with significantly taller structures. For those familiar with the IBC, look at the 504.3 and .4 tables in the 2021 version.

@upzoningisgood -- this is what you're talking about, no?

 

 

[wrldcoupe4]

Not sure this has been mentioned yet, but the Sampson coatings building at third and Hull is starting to be demolished.

[Shakman]

4 hours ago, wrldcoupe4 said:

Not sure this has been mentioned yet, but the Sampson coatings building at third and Hull is starting to be demolished.

Is this the white brick building?  Across from the former Planet Zero?

[plain]

I don't know if anyone seen this, but city council has given the demolition of the Southern States silos a thumbs up! On to the next step.

 

https://www.wric.com/news/local-news/richmond/city-council-votes-for-southern-state-silos-to-be-demolished-in-richmond/

[I miss RVA]

41 minutes ago, plain said:

I don't know if anyone seen this, but city council has given the demolition of the Southern States silos a thumbs up! On to the next step.

 

https://www.wric.com/news/local-news/richmond/city-council-votes-for-southern-state-silos-to-be-demolished-in-richmond/

Must've been on the consent agenda. Either way - glad we have the green light on this!

[I miss RVA]

Mansour Real Estate is planning a 49-unit, five-story apartment building for the far eastern end of E. 4th street, well south and east of the Maury Street interchange with I-95. According to @RVABizSenseMike's reporting in today's RBS, the site at 925 E. 4th Street is currently occupied by a warehouse previously owned by the Hanlon Plating Co., a chrome-plating business. No retail or commercial space is planned in the building.

It will be a nice addition to the burgeoning "Maury Street Corridor" - although 40 of the 49 units will be of the one-bedroom variety.

From today's Richmond BizSense:

https://richmondbizsense.com/2023/07/28/michael-sons-mansour-planning-five-story-apartment-building-in-manchester/

Edited July 28, 2023 by I miss RVA

[Brent114]

I was really happy to see this today. 
If Hispanics are going to build this city they should be visible.  And it’s cosmopolitan to boot! 
 

Edited August 13, 2023 by Brent114

[I miss RVA]

28 minutes ago, Brent114 said:

I was really happy to see this today. 
If Hispanics are going to build this city they should be visible.  And it’s cosmopolitan to boot! 
 

SWEET! I love it!!

Real major cities aren't just black and white. I love that RVA becoming increasingly diverse and more cosmopolitan.

[Icetera]

On 8/10/2023 at 6:40 PM, I miss RVA said:

Thanks, Ice! Wow... multiple projects all going up at the same time. Soda Flats are looking AYYY-MAYYY-ZINGG on W. Broad... N. Chasen looks like it'll be breaking ground soon - and the Signage - I mean - the "Ace" will be hopefully breaking ground before the end of September.

I wonder how long it'll be before we see significant movement on the BIG projects over in Manchester? 

The Sampson Coatings plant is under demo.  The 2nd floor portion overhanging the alley is now gone with interior preparations underway.



I also imagine Plant Zero's demo phase is nearing completion by now. 

Unfortunately, I doubt we will see much action for Avery, Silos, or South Falls II for some time.

[I miss RVA]

1 hour ago, Icetera said:

Unfortunately, I doubt we will see much action for Avery, Silos, or South Falls II for some time.

Right - I think those projects will need some time to ramp up, given that SUPs have only recently been approved. Plus - Hourigan has a LOT of work ahead in getting the silos demo'd.

I think Avery for certain isn't slated to get under way until next year. The exception could be South Falls II. Tom Papa sometimes can be very surprising, moving on projects when we don't think he will.

[whw53]

The next one up I think will be what I've been calling 'Beach Co Dos' on 7th street next to Eddy On The James project. We were informed of an intended summer ground breaking there too. Havnt been by the site in a minute, anyone got an update from 7th St?

[whw53]

https://thebeachcompany.com/tbc-announces-completion-of-the-foundry-and-eddy-on-the-james/

[I miss RVA]

4 hours ago, whw53 said:

https://thebeachcompany.com/tbc-announces-completion-of-the-foundry-and-eddy-on-the-james/

From Beach Company's marketing page: really great picture of the Eddy on the James, the ruvvah, and the downtown skyline.

 

[Shakman]

Decent facade.  Perhaps an investment on decorative screens along the roof to hide all those compressor units.

[I miss RVA]

Axios Richmond is reporting this morning that Belle Isle Moonshine is launching a $2 million crowdfunding campaign with an eye toward building a new/improved taproom at their headquarters and distillery at 615 Maury Street in Manchester - as well as to expand distribution outside of Virginia. I've a feeling we'll be seeing something on this in RBS before too long.

Pretty cool renderings are available! (See below - note: I highlighted the entire block - not sure if Belle Isle owns the entire amount of surface parking, including the bigger lot along E. 6th - or just the small lot to the north of the distillery. ALSO - note allllllllll the potentially developable land immediately around the distillery!)

From today's Axios Richmond:

https://www.axios.com/local/richmond/2023/08/23/belle-isles-new-taproom-moonshine

[Brent114]

Great news.  I thought they had closed the business. 

[I miss RVA]

The next domino to fall in the burgeoning Maury Street corridor has been announced. @RVABizSenseMikeis reporting in today's RBS that Charlottesville-based Castle Development Partners is planning a 70-unit condominium development the city block at 301 Maury Street. The project will feature 35 two-over-two stacked townhomes (similar to those built east of the Diamond District in the Hermitage Road area and in Carver). HOWEVER - the units will not be for sale; rather, they are planned as rental units. Interesting concept that, as a layman, really doesn't make sense to me.

Each building will be four stories tall. The upper units would be roughly 2,600 sq ft while the lower units would be approximately 1,500 sq feet. From Mike's reporting, here's how the development will be designed:

Plans show the project would be split up between five rows of contiguous structures. Two rows of 10 townhomes would rise facing Maury and Everett streets, and between those would be three rows of five townhomes. 

It's an interesting development, and even though we always lean into wanting more height and density, given the location, I actually like the "row house" look and feel - very reminiscent of what you'd see in Baltimore or Philadelphia. And if you stop and think about it - this development COULD provide for some "sneaky" density - because while 70 units doesn't seem like a lot, at three bedrooms, there is the potential for roughly 210 people to live there - which is what you'd get with a five-story 200-unit apartment building. 

Either way - from today's Richmond BizSense:

https://richmondbizsense.com/2023/09/06/70-unit-two-over-two-townhome-project-planned-next-to-maury-st-roundabout-in-manchester/

[plain]

More row/townhomes in the city is always good (even though these are rentals). Especially in and around Manchester. And especially 3+ stories. This is a very good look for that intersection.

[wrldcoupe4]

A little weird to have that as a gateway to the neighborhood, but seems fine.

[I miss RVA]

It's been quite a while since we've heard anything about this project. Looks like the five-story, 118-unit income-based apartment building planned for the southeast corner of Hull Street & Commerce Road is officially a GO. Norfolk-based developer The Lawson Cos has completed purchase of all of the necessary land parcels and is slated to break ground next spring with an eye toward being ready for occupancy by 2026.

The architecture is... well... we've talked about this previously. Not exactly conducive as a pedestrian-friendly or a visually appealing gateway into lower Manchester for folks approaching from the south.

From today's Richmond BizSense:

https://richmondbizsense.com/2023/09/19/land-deal-clears-way-for-income-based-apartments-in-manchester-crossroads/

Edited September 19, 2023 by I miss RVA

[rjp212]

I was hoping this project died.    That corner deserves better.

[Brent114]

I’m thrilled that this project didn't die.  This corner has been vacant for 40+!years.  That’s plenty of time to wait for the perfect suitor.   

I’m going to dance with this ugly building because  it’s the one that actually showed up.   We need affordable  housing.  People living in affordable housing deserve to live in nice areas too.  I can’t wait to get this one done.  The two sides of Manchester desperately need to be reconnected.   This will go a long way in doing that. 
 

[I miss RVA]

12 minutes ago, Brent114 said:

I’m thrilled that this project didn't die.  This corner has been vacant for 40+!years.  That’s plenty of time to wait for the perfect suitor.   

I’m going to dance with this ugly building because  it’s the one that actually showed up.   We need affordable  housing.  People living in affordable housing deserve to live in nice areas too.  I can’t wait to get this one done.  The two sides of Manchester desperately need to be reconnected.   This will go a long way in doing that. 
 

 on all of this!