Misc. Uptown Projects/News

[RANYC]

On 1/30/2024 at 10:20 PM, KJHburg said:

One more from Monday.  N Tryon and 12th St may not be like South Florida but this apartment complex is being built like an apartment building going up in Miami.  It is cinderblock and I have concluded this this is the apartment complex most likely to survive a direct Cat 3 hurricane hit if that happens here.    Monday from the Brookshire. 

Speaking of South Florida, I’ve been here all week and have had the occasion to get around among South Beach, Brickell, and Coconut Grove.  Really impressed with the forms of development I’m seeing and the effort to integrate walkability and pedestrian inter-connectedness among uses.  The streets here seem much more modernized than Charlotte’s, with lots of multi-use paths even among the busiest boulevards.  The paths are tree-lined and shaded as well.  It struck me that so many Charlotte roads are so backwards in design because the suspense around our transit plan has put lots of transformational redesigns on hold. 

[kermit]

40 minutes ago, RANYC said:

 It struck me that so many Charlotte roads are so backwards in design because the suspense around our transit plan has put lots of transformational redesigns on hold. 

This!!!!!

[KJHburg]

this investment firm  (Animal)  based in Atlanta funded with German money behind it buying up properties and they have one already uptown the previously disclosed Mint St Parking deck.

ANiMAL (animalgroup.co)    (check out that rendering for possible development at the garage site wow!)

from a Biz Journal article today   

""Animal's strategy, Cookes said, is to buy infill properties that can be redeveloped such as office buildings, parking decks, hotels and malls. The firm has already started doing this in Charlotte with the acquisition of two former uptown Duke Energy Corp. (NYSE: DUK) properties.

Animal, alongside investment partner Millennium Venture Capital, made its first Charlotte purchase in late 2022 with the $24 million acquisition of a former Duke Energy office building at 401 S. College St. Animal and Berlin-based MVC also purchased the Mint Street parking deck from Duke in May 2023 for $42 million.

Cookes declined to provide details about its plans for those sites, but said Animal will have an announcement in the next few months.""

Real estate investment firm Animal plans 'buying spree' in Charlotte - Charlotte Business Journal (bizjournals.com)

Edited February 1 by KJHburg

[videtur quam contuor]

Holy cannoli!

Renderings suggest a vision which financing, taste, tenants, local market may often fail to support. A dream is a wish your heart makes.

 

[RANYC]

Sad how much skylines are intertwined with city pride and identity in America, and yet a growing share of skylines are becoming obsolete with no clear path forward.  Louisville-based Humana just announced it was exiting the eponymous Humana Tower in downtown Louisville.

It’s quite possible skyscrapers may need to be demolished.  And sadly, many American cities have stood by and let corporate skylines be their signature marvel.  Never a thought to investment in eye-grabbing, community-defining civic squares and civic monuments, i.e., public place-making.  We’ll just let DC monopolize our grandiose civic assets and spaces celebrating who we are as a republic, but not really spending much time and effort on doing that for ourselves locally, at a reasonable scale given budgetary constraints.

For downtowns with stand-out natural landmarks like a riverfront or bayfront or beachfront, there’s perhaps more of an intuitive place for gathering / connecting, a feature shaping the city’s sense of itself beyond a corporate asset’s useful life. 

For those other cities, like Charlotte, I’d argue that public place-making is even more critical, with the scale of such place-making needing to be bigger than peer cities.  I know we don’t want to be this place, but to illustrate the principle, if Manhattan is on an island and still has a Central Park, surely we need to think more strategically and more urgently about our own humanistic place-making program. 

A vast web of greenways is actually a good start in this direction given how human-scaled it is as a means of far-ranging mobility.  It needs acceleration in the current environment.

Edited February 5 by RANYC

[kermit]

1 hour ago, RANYC said:

Sad how much skylines are intertwined with city pride and identity in America, and yet a growing share of skylines are becoming obsolete with no clear path forward.  Louisville-based Humana just announced it was exiting the eponymous Humana Tower in downtown Louisville.

It’s quite possible skyscrapers may need to be demolished. 

FWIW Humana does roughly the same thing as Centene, process easily interpretable information encoded on forms. This sort of activity requires very little f2f interaction between workers to accomplish, and this is why Centene decided to walk away from its shiny new office in UC.

I would say that most firms (Humana being the exepction) that are just information processors (like Humana and Centene) had office in suburban office parks (drawing the bulk of their labor from the 'Pink Collar Ghetto' of the beltway burbs). Most of those firms have gone remote, and few other companies are eager to move to the suburban office campus.

OTOH, much of the work happening in skyscrapers is work that requires dealing with uncertanty. This work requires lots of informal conversations (sometimes over coffee or lunch) and lots of opportunities to communicate uncertainties and poorly understood things (this stuff is often difficult to bring up in a 10 person zoom meeting). F2F office space is still required for industries like finance (according to Jamie Diamon anyway), most corporate HQ work (strategizing on new products and marketing etc.), and any sort of tech (Apple is back to the office 3 days a week). 

While I am not here to say that there will be no pressure on office functions in downtowns, I think they will be much more likely to survive than most office complexes in less central parts of town. Uptown Charlotte will have much more appeal as soon as there are enough lunch buyers to sustain a variety of spots in a hybrid work world. More residential space and WFH can fill this gap.

/rant/

Office space users are not all the same. I think an appropriate analysis of the future of office districts requires keeping these differences in mind

Edited February 5 by kermit

[RANYC]

25 minutes ago, kermit said:

FWIW Humana does roughly the same thing as Centene, process easily interpretable information encoded on forms. This sort of activity requires very little f2f interaction between workers to accomplish, and this is why Centene decided to walk away from its shiny new office in UC.

I would say that most firms (Humana being the exepction) that are just information processors (like Humana and Centene) had office in suburban office parks (drawing the bulk of their labor from the 'Pink Collar Ghetto' of the beltway burbs). Most of those firms have gone remote, and few other companies are eager to move to the suburban office campus.

OTOH, much of the work happening in skyscrapers is work that requires dealing with uncertanty. This work requires lots of informal conversations (sometimes over coffee or lunch) and lots of opportunities to communicate uncertainties and poorly understood things (this stuff is often difficult to bring up in a 10 person zoom meeting). F2F office space is still required for industries like finance (according to Jamie Diamon anyway), most corporate HQ work (strategizing on new products and marketing etc.), and any sort of tech (Apple is back to the office 3 days a week). 

While I am not here to say that there will be no pressure on office functions in downtowns, I think they will be much more likely to survive than most office complexes in less central parts of town. Uptown Charlotte will have much more appeal as soon as there are enough lunch buyers to sustain a variety of spots in a hybrid work world. More residential space and WFH can fill this gap.

/rant/

Are you sure?  Humana Tower wasn’t just a back office, but the corporate HQ, with all the management functions of a publicly-traded enterprise, etc.  And an insurance HQ isn’t just processing paper, lol.  It’s pricing risk, actuarial science, extraordinary uncertainty assigning probabilities to future outcomes, and often significant and sophisticated investing and cash management programs, although I don’t really know Humana super well, but now this about places like Zurich, AIG, and others.  

Centene wasn’t even insurance really.  Wasn’t it like Medicaid and Medicare and some private policy back office processing lol.

And by the way, Humana will still be in an office, it’s just needing significantly less space and will exit a signature skyscraper often identified with Louisville.

Edited February 5 by RANYC

[kermit]

2 minutes ago, RANYC said:

Are you sure?  Humana Tower wasn’t just a back office, but the corporate HQ, with all the management functions of a publicly-traded enterprise, etc.  And an insurance HQ isn’t just processing paper, lol.  It’s pricing risk, actuarial science, extraordinary uncertainty assigning probabilities to future outcomes, and often significant and sophisticated investing and cash management programs, although I don’t really know Humana super well, but now this about places like Zurich, AIG, and others.  

No, I am not sure — but I had thought they did the same basic Medicare admin work that Centene did (but just guessing). I had thought Centene also planned to do much of its HQ stuff from the Charlotte office. 

I guess one of the other questions is where will the stub Humana office end up, and what activities do they do there.

[RANYC]

2 minutes ago, kermit said:

No, I am not sure — but I had thought they did the same basic Medicare admin work that Centene did (but just guessing). I had thought Centene also planned to do much of its HQ stuff from the Charlotte office. 

I guess one of the other questions is where will the stub Humana office end up, and what activities do they do there.

Well, Centene’s announcement was an east coast HQ in Charlotte (not global HQ, which was to remain in St Louis), but the rumor mill suggested that the CEO at the time really wanted to be here and had purchased a condo in the area.  That CEO died and his successor and apparently the Board no longer under the influence of Centene’s forefather had vastly different plans for the future of work.  

At any rate, I digress.  

[kermit]

I digressed too. The thing I was really trying to say was I think signature buildings might become even more prevalent as firms that need to maintain office space concentrate their most valuable workers there. The basic school of thought is “if you are going to ask your employees to come back to an office, it had better be a really nice office.”

[atlrvr]

Humana is consolidating to two adjacent buildings they also occupy about 4 blocks away from their "tower"....still downtown.

So, it would be unfair to characterize them as abandoning downtown, but it would be fair to say they need less overall space.

[RANYC]

2 hours ago, atlrvr said:

Humana is consolidating to two adjacent buildings they also occupy about 4 blocks away from their "tower"....still downtown.

So, it would be unfair to characterize them as abandoning downtown, but it would be fair to say they need less overall space.

The main grievance in Louisville has been that its only Fortune 500 company HQ is "abandoning" the city's "iconic" skyscraper, after years of falling occupancy with Humana shedding 800,000 square feet of downtown office needs since 2017, this just feels like insult to injury.  Doesn't help that only 25% of Humana's 10,000 employees are coming to work each day, and there's no return to office policy in view.  We all get it here, I think, which is that downtowns have to diversify away from just being corporate showcases to something else, from Central Business Districts to something else Central and Iconic and Authentic.

On a positive note, a City Council committee today seemed very favorable on a proposal by the city's economic development team to give incentives for the old duke energy building conversion to residential with a large building fronting the property.  The county also favorable on the idea according to the article.  Idea for the Duke Energy conversion still has to come before the broader council.  I'm thrilled about this, and would actually propose incentives to get a select group of vacant lots filled in uptown as well.

https://www.bizjournals.com/charlotte/news/2024/02/05/mrp-realty-asana-partners-duke-energy-real-estate.html?utm_source=st&utm_medium=en&utm_campaign=BN&utm_content=ch&ana=e_ch_BN&j=34244655&senddate=2024-02-05

 

Edited February 6 by RANYC

[atlrvr]

I can't stress how much I despise this idea:

1)  There is no lack of premium housing in Uptown.  This isn't solving a supply problem that would require incentives.

2)  This isn't empty office space anymore.  It is not longer trying to attract tenants, and therefore no longer competing against other office buildings.  It's like it doesn't exist from an office market perspective.

3) MRP just bought this building 14 months ago for $35mm.  It's not government's job to bailout an investor that paid too much.  Unlike some of the Financial Crises bailout (banks, AIG, automakers), this has no broader risk of economic damage beyond MRP/Asana's investors.  

4) This sets horrible precedence.  Overpay for a property to "win" it, then ask for subsidies.  This is reverse.  If a developer has compelling plan in the public's best interest, and the only way to compete against a plan that is financially more beneficial to the seller, but quantifiably less in the public's interest, that is when the incentive conversation should happen.  That said, I see nothing about this plan that provides something that market forces have failed to bring on their own (I don't see saving a concrete bunker as high civic value) and again, the order of operations here is inverse, and should be rejected for that reason alone (precedence).

 5)  The idea that this development will generate higher tax revenue, is a logical fallacy, as another options would be for MRP to sell this site (or if they have a loan, to go into foreclosure and the bank sell it), at a value that allows for the proposed development to occur without subsidy, or a similar development to occur.  The deferral of 2 more years to achieve similar tax revenue (while owners are still paying taxes on current property) almost certainly is minimal impact versus the long term reduction in collections from incentives (PIP or otherwise).

I could go on, but  I think that highlights my key objections.

[RANYC]

4 hours ago, atlrvr said:

I can't stress how much I despise this idea:

1)  There is no lack of premium housing in Uptown.  This isn't solving a supply problem that would require incentives.

2)  This isn't empty office space anymore.  It is not longer trying to attract tenants, and therefore no longer competing against other office buildings.  It's like it doesn't exist from an office market perspective.

3) MRP just bought this building 14 months ago for $35mm.  It's not government's job to bailout an investor that paid too much.  Unlike some of the Financial Crises bailout (banks, AIG, automakers), this has no broader risk of economic damage beyond MRP/Asana's investors.  

4) This sets horrible precedence.  Overpay for a property to "win" it, then ask for subsidies.  This is reverse.  If a developer has compelling plan in the public's best interest, and the only way to compete against a plan that is financially more beneficial to the seller, but quantifiably less in the public's interest, that is when the incentive conversation should happen.  That said, I see nothing about this plan that provides something that market forces have failed to bring on their own (I don't see saving a concrete bunker as high civic value) and again, the order of operations here is inverse, and should be rejected for that reason alone (precedence).

 5)  The idea that this development will generate higher tax revenue, is a logical fallacy, as another options would be for MRP to sell this site (or if they have a loan, to go into foreclosure and the bank sell it), at a value that allows for the proposed development to occur without subsidy, or a similar development to occur.  The deferral of 2 more years to achieve similar tax revenue (while owners are still paying taxes on current property) almost certainly is minimal impact versus the long term reduction in collections from incentives (PIP or otherwise).

I could go on, but  I think that highlights my key objections.

How many high-rise office-to-residential conversions have there been in Charlotte?  

If none, this is a new market and new product and this wouldn’t be the first time a municipality has catalyzed a new market with incentives in the hopes that it leads to market agents & infrastructure that make the market & supporting products more routine/normalized.  

With incentives, there’s also a leverage point to encourage inclusion of below-market housing alongside market-rate & premium units, which was discussed in committee yesterday. 

The Duke building is core to what is likely being regarded as a stadium district soon to see significant public-private investment.  A glaring ghost building designed like Fort Knox, atrocious in terms of walkability is perceived as a cloud over what the city wants to achieve in the heart of its local sports economy. 

Charlotte has a long history of proactive government engagement in shaping the look and feel of its inner city.  There are likely compelling arguments on both sides of the big government versus laissez-faire approaches to downtown vibrancy debate; however, up until the pandemic, I was blown away at how vibrant and bustling and green Charlotte’s downtown was versus other large sunbelt cities.  Perhaps that same pro-activity can bring us out of the coming CRE crisis faster than other downtowns who want to be hands off. 

Edited February 6 by RANYC

[Windsurfer]

38 minutes ago, RANYC said:

How many high-rise office-to-residential conversions have there been in Charlotte?  

If none, this is a new market and new product and this wouldn’t be the first time a municipality has catalyzed a new market with incentives in the hopes that it leads to market agents & infrastructure that make the market & supporting products more routine/normalized.  

With incentives, there’s also a leverage point to encourage inclusion of below-market housing alongside market-rate & premium units, which was discussed in committee yesterday. 

The Duke building is core to what is likely being regarded as a stadium district soon to see significant public-private investment.  A glaring ghost building designed like Fort Knox, atrocious in terms of walkability is perceived as a cloud over what the city wants to achieve in the heart of its local sports economy. 

Charlotte has a long history of proactive government engagement in shaping the look and feel of its inner city.  There are likely compelling arguments on both sides of the big government versus laissez-faire approaches to downtown vibrancy debate; however, up until the pandemic, I was blown away at how vibrant and bustling and green Charlotte’s downtown was versus other large sunbelt cities.  Perhaps that same pro-activity can bring us out of the coming CRE crisis than other downtowns who want to be hands off. 

There have been a couple. 230 South Tryon for one.

[Rufus]

7 minutes ago, Windsurfer said:

There have been a couple. 230 South Tryon for one.

But I will add the the ones that have occurred have been at a much smaller scale, and with a higher price point to offset the conversion.  230 S. Tryon and the Trust aren't cheap places to live, and mainly are condos instead of apartments, IIRC. 

[CLT Development]

7 minutes ago, Windsurfer said:

There have been a couple. 230 South Tryon for one.

Also The Trust. 

[atlrvr]

Mass Mutual bought 230 S Tryon for $20,631,000 back in 1991 (including the then vacant Ruth's Chris parcel as well as the parking deck behind them).  They operated  (through their Cornerstone Real Estate subsidiary) it as a Class B office building until 2004, and in partnership with Spectrum began conversion in 2005.  The  site is just under 1.75 acres (and building I believe was about 190k sq ft)  The condos started in the mid-200's, and the majority were 1 bedrooms selling in the high-200's.

I find it incredible that MRP can't figure out what to do with a 3.8 acre site that they bought 31 years later for $35,000,000 (less $ on a "per unit basis"  for land or existing structure sq ft, either metric) when Bell Uptown (formerly Spectrum Uptown) right across the street recently sold for $462k per unit.

At the very least, I hope we (the city) ask MRP the question, can you show us/tell us what you plan to do with the site in the absence of any incentives?   The city has a fiscal responsibility to not get caught up in pretty renderings, and actually consider what they are entrusted to do.

[CLT Development]

8 minutes ago, atlrvr said:

Mass Mutual bought 230 S Tryon for $20,631,000 back in 1991 (including the then vacant Ruth's Chris parcel as well as the parking deck behind them).  They operated  (through their Cornerstone Real Estate subsidiary) it as a Class B office building until 2004, and in partnership with Spectrum began conversion in 2005.  The  site is just under 1.75 acres (and building I believe was about 190k sq ft)  The condos started in the mid-200's, and the majority were 1 bedrooms selling in the high-200's.

I find it incredible that MRP can't figure out what to do with a 3.8 acre site that they bought 31 years later for $35,000,000 (less $ on a "per unit basis"  for land or existing structure sq ft, either metric) when Bell Uptown (formerly Spectrum Uptown) right across the street recently sold for $462k per unit.

At the very least, I hope we (the city) ask MRP the question, can you show us/tell us what you plan to do with the site in the absence of any incentives?   The city has a fiscal responsibility to not get caught up in pretty renderings, and actually consider what they are entrusted to do.

Well when you put it that way...

[DMann]

The Ivey's is another building that had a different origin.

 

[KJHburg]

Since office leasing is now being discussed a lot here is 70,000 sq ft of new and expansions in One Independence Center home of the new food hall. 

""Crescent Communities has signed nearly 70,000 square feet in new lease agreements at one of its uptown Charlotte office towers in recent weeks.

Sagar Rathie, Crescent's managing director of office, said over the last 45 days Crescent has signed six leases across 68,600 square feet at One Independence Center, 101 N. Tryon St.

Among the new tenants are professional technology services firm Genesis10, which is moving from The Johnston Building at 212 S. Tryon St. in uptown, and e-commerce experiences firm Bloomreach, which is moving from its office at 1920 Abbott St. in South End.  

Rathie declined to disclose the names of the other four companies as well as the size of each office space, though they range from 2,600 square feet to 25,000 square feet. Crescent's recent activity has stemmed from companies both in and out of the local market, with most being a footprint expansion, he said.

"These new tenants kind of run the gamut for their use, and for the most part, they all have some tech ties, which is great," Rathie said.

He said additional potential tenants are expressing interest in larger office spaces than in the last few years, some looking at footprints of up to 40,000 square feet.

"That size is just something we have not seen significant momentum on up until recently," Rathie said. "The big thing for us is that whereas a year ago our average lease size was around 4,000 square feet, now they are closer to 10,000 square feet on average. It shows that decisions are getting made for larger companies thinking about their space needs."  One Independence Center is about 70% leased, Rathie said. Stays by Walker, Bank of London and Chernoff Newman have also signed multiyear lease deals at the tower in recent years.""

Uptown Charlotte office tower One Independence Center sees leasing push - Charlotte Business Journal (bizjournals.com)

[KJHburg]

this is the 400 South Tryon which is mostly empty due to Duke Energy moving out.  I wish they would consider lower levels maybe for a hotel or something and maybe reskinned the building and keep the top floors office but cut out balconies on every floor as an amenity for tenants.  

[Prodev]

The lender is currently  marketing the non-performing loan for this property. $86 mil loan that'll probably sell at 50-60% of par, so probably still too pricy to raze.  I have no clue what it would cost to demo a high-rise building like this, but I have to imagine it's in the $5-10 mil range, so add that to the price tag. It also has ~120' of depth, so not ideal for hotel or MF conversion without having a large dead space (or storage as KJ noted).  The biggest problem with these conversions is that on top of it costing roughly the same as new construction, you end up with a 50 year old retrofitted (funky) building at the same cost as a purpose built amenity rich new construction. While this may be an A+ location, Charlotte doesn't lack land and uptown apartment vacancy is high, so I'd be shocked if there was any real interest from converters on this one. On the other hand, it will likely be attractive to office owners to be able to own a South Tryon office tower at ~$90 per foot. 

[J-Rob]

9 minutes ago, Prodev said:

While this may be an A+ location, Charlotte doesn't lack land and uptown apartment vacancy is high, so I'd be shocked if there was any real interest from converters on this one. On the other hand, it will likely be attractive to office owners to be able to own a South Tryon office tower at ~$90 per foot. 

So is the most likely scenario reskinning and amenity upgrades to attract office tenants? Or just cosmetic updates on interior?

[atlrvr]

Just mild cosmetic upgrades, and lower price point.

I had dinner with the COO of an office REIT a few months ago, and asked him about this building, and he was confident that was the only realistic outcome...though to be clear, no REIT is going to pursue this building as public market investors demand they focus on best in market properties.