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TheNiche

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Posts posted by TheNiche

  1. Hmmmm. I was trying to make a joke, did you catch the whole Kevin Bacon/degrees of seperation thing? Maybe you think my attempt at humor sucks?

     

    Over my head, to be honest.  I'm only vaguely aware that Kevin Bacon is a celebrity, and I'm pretty sure that he's an actor, but all I ever can think of when I see his name is bacon.  His name is very distracting from anything of relevance that might involve him.

  2. Let's take a look at the numbers.  i think apartments in  these new developments are averaging about 800 square foot per apartment.  This building plans 300 square units; that gives us 240,000 rentable square feet.  6,000 square feet is 2 1/2% of your total.  You've just put that portion of your planned return into a very different risk pool and different rental market. (And that doesn't even address the difference in building and operating costs.)  I don't know, but It seems like that could indeed break the financial model.

     

    Having done financial modeling for a living at one point in my life, I'll chime in briefly.

     

    A developer's model backs into the highest dollar amount that they're willing to pay for the land.  If a developer decides to take a haircut on a development in order to provide a public good, then they won't be able to pay as much for the land.  They'd get outbid by a profit-maximizing developer.

     

    Also, people that specialize in multifamily typically are hesitant to venture into retail.  Its a totally different business model with its own market dynamics and cost structure.  If the retail rents that can be achieved are sufficiently high, then the extra effort and uncertainty may be worth it.  The problem is that there are only a very few cases in Houston where the risk-adjusted retail rents exceed apartment rents.

     

    Which brings me to my next point: It isn't enough to point out that restaurants at the Post development are busy or that Phoenicia is busy.  Many other stores are not busy; that consumers return over and over again to busy stores and witness other consumers doing exactly the same thing probably has a lot more to do with those stores' business models and good management than with their physical plant, but that's easy to forget if you don't go to the places that are suffering for business, which you aren't because otherwise they wouldn't be suffering for business...and besides which, don't tend to last very long anyway.  So consumers see other people at the places where consumers are at and figure that everywhere should and could be like that.  But the fact is that there are only so many retail prospects out there, and so many fewer still that have viable business models or good management.  When rents are being negotiated, landlords are price-takers.  They can't necessarily tell whether a store will be successful (although a place like Phoenicia is probably an exception, and in cases like that the TENANT typically holds the cards and the rent is much lower), but whether destined for success or not, the prospective tenant can go down the street and find a landlord that will undercut the other one.  Its a competitive market.  If the rents aren't obviously high enough or the demand isn't obviously there, then nine times out of ten a multifamily operator isn't going to make the effort to take the risk.  The multifamily operator has no doubt that there will be demand for their units, with or without a retail component, and they know that even if the market declines prior to delivery, they can give concessions and fill the units quickly to generate cash flow, cover the note, and make the investment marketable to a third-party buyer.  If that retail component sits empty for three or four years before finding an awesome tenant, that's a goddamn long time and there's no cash coming in.

    One last thing.  Having retail at the ground floor can be disruptive to parking designs.  It depends a lot on the layout of the site and what the architect can do with it, but any option that requires more concrete to yield less net rentable area skews the model against that option.  Mixing uses still requires on-site segregation of those uses for resident convenience and security.

     

    So yeah, if its a good model then the model won't break.  It'll just indicate a lower land price that can be paid as a maximum bid, and the mixed-use guy gets outbid.  There are exceptions, but not many in Houston.

     

    Niche, out.

    • Like 3
  3. If Lovett Homes Inc. is the only name he owns property under, I don't see an east side address for him per hcad - only a few on the west side, inner loop.

    No, the entity name is Fenway Development Inc., which is linked to Frank Liu. He's already platted out all that land for townhome development just within the past year. You can look at the HCAD plat maps to see how it's configured.

    EDIT: Here's a story about the cleanup process:

    http://stateimpact.npr.org/texas/2012/06/18/urban-renewal-toxic-brownfields-tough-to-redevelop/

    • Like 1
  4. Hopefully, if he does still own it, it will give a slight confidence boost for the KBR owners, knowing there is a very good possibility they'll have some "good" (wealthy) neighbors. I wonder if this would alter Liu's plans at all, or maybe he already knew of KBR's potential and that's why he bought his land in the first place.

    Whatever gets built on the KBR site will generate a lot of sales and rental traffic for the Clinton Dr. submarket that would not have existed otherwise. If Liu develops his land concurrent with his competitor, then he can leach off their marketing efforts and take a substantial cut of the market share. It'd be good strategy, that's for sure.

  5. Another interesting aspect of this site is the big piece of land just to the north (to the right in photo below) of this site. Anyone know what's up with that piece of land?

    Yeah, it was a Superfund site that Frank Liu bought and cleaned up for residential development, but his timing was right before the real estate bust, and so that never happened. Not sure if he still owns it, but I think so. We probably would've heard about it transacting, otherwise.

    • Like 2
  6. It will just cause land speculation. Land will be purchased and held on to for long periods of time. I doubt that we would see any development anytime soon. Land prices will just be driven up.

    Like was mentioned look at midtown its perfect example. Lots of developments could have taken off in the area if not for land speculation driving up the prices of property and property owners holding on to land to attempt to make a higher profit.

    Would you rather that townhomes were built at 18 units/ac. around the light rail stations on $30 PSF land, or that dense midrises at 80+ units/ac. and eventually highrises get built around the light rail stations at $80 PSF? Land speculation has a vital role in the long-term future of our city. Just gotta be patient, let market forces to their work.

  7. At least I attempt to back up my claims with actual numbers and statsitics. Don't let you personal disagreements with me distort things. I know significantly more about transit than Bill King, that much is obvious.

    I've written a number of articles, newsletters, white papers, and data-intensive full-length studies in my day, and ump-teen-thousand posts on HAIF. When I write with the intent of accomplishing something, I write with an audience in mind.

    In the business realm, they may be executives or analysts. In the political realm, they're typically city councilmembers, a department head, or someone in a similar capacity. If I'm boiling down my points into an executive summary, businesspeople like bullet points with a conclusion that validates their preconceived notions. Politicians like vapid, imprecise, and defensible drivel with a conclusion that validates their preconceived notions. The marketing folks and the media just want sensational bloviation that grabs attention. The Chronicle is in the entertainment business. They want people to read articles, get a rise, comment about them, link to them, and drive traffic to their site.

    Bill King's op-ed surely was not very informative. I won't dispute that. But then, neither are Crossley's articles when he gets published. Neither of them would be figures in the press if they came off like analytical know-it-all pricks. Having said that, I've met each of them on a variety of occasions. They aren't as oblivious as they come across as in print.

  8. Wow what an uninformed article, lol.

    Glad he's happy that Houston's transit will not improve. He must have had a bad experience with rail when he was younger. :blink:

    That's just blind hatred, with no regard for rational thinking at all.

    Dude, look in the mirror. Pot meet kettle. Bad and unenlightened articles do not merit similar but opposing responses.

  9. At the same time, whether it is developed next year or next decade, won't it bring more investment to the east side of town in anticipation?

    Anticipation of what, now?

    (Welcome to the wonderful world of business ownership. Since I've made my exit from the East End and the realm of business ownership altogether, I can give in to my cynicism again.)

  10. Ah yes, let's wait twenty years and have prices for rail skyrocket even more and then complain about the prices when the time comes. If they don't build the rail now, its not going to happen (changing from brt to rail).

    The "skyrocketing" costs you cite are primarily related to land acquisition, which certainly is important. One of the reasons that Dallas was able to afford so much fixed-guideway transit is that they purchased intact rights of way from railroad companies decades in advance of actually needing to use it. Houston's experience will be more costly because we are trying to develop light rail along the highest-profile and most expensive frontage in the entire city. And yeah, it's going to be expensive, and yeah that would be subject to inflation if they didn't do it now.

    But they're doing it now, so quit whining.

    As for materials costs, that's mostly having to do with construction of Asian infrastructure, financed by distorted patterns of international trade and a weak dollar. The most important thing we could do to address light rail and other infrastructure costs (aside from ROW acquisition) would be to get the State Department to hold China's feet to the fire on its WTO agreements, and to kick it out of the WTO if necessary. (Of course...if you think that Obama is totally ineffectual loser and you've got no confidence in his ability to do anything except to further devalue the dollar and cause economic malaise, well then yeah we need to build up our infrastructure as quickly as possible, while there's still some purchasing power left.)

    Other factors contributing to inflation are more evenly-distributed, meaning that prices increase, but so do sales, sales taxes, and revenue to transit agencies.

  11. I'm certain it reduces costs but college football stadiums are built to last 50 plus years and I worry if a super modern look will be outdated in 10 years, but I'll withhold judgement until a more detailed rendering is available.

    It probably will look dated in 10 years. But then, it might look super-cool in 30 or 40 years, right before it gets torn down, presuming that it hasn't already been extensively remodeled into something bland and inoffensive.

  12. Completely serious. I believe the land has already changed hands.

    I wouldn't doubt that there will be a new residential highrise announced soon in the downtown area, and I think I know who's behind it. I'm a little bit surprised that this is a likely site, though. It isn't exactly anchored by anything the least bit attractive.

    FWIW, I'm not finding any relevant courthouse filings by the prospective seller. Either it's a very recent transaction or it's still under contract while the prospective buyer does their due diligence.

    • Like 1
  13. Yeah, it's a surprisingly popular and active place for the miserable failure it has been pronounced to be. I hold out high hopes the new ownership will make it even better and more successful.

    To me personally, it's as unremarkable as nearly any new retail development; but that I'm unexcited by it just means that I'm not the target audience, not that it is necessarily a failure.

    My assessment of the circumstances are only from a business perspective. Vacancy is a real problem there, and some stores have struggled with sales and even with paying the rent. It does seem that restaurants, bars, and clubs are the most successful constituents of their tenant base, but how many of those can one development have?

    Was the $188 PSF sale price even above replacement cost? If it takes fresh capital to fix new construction, to me that signals a business failure.

  14. Jones Lang Lasalle is calling the HP office space Class B, wow.

    http://downtownhoust...12-Q3_-_JLL.pdf

    The directory shows only the large spaces filled, while the second floor is a ghost town.

    http://houstonpavili...o gift card.pdf

    Armchair economists, kick back your lazy boy:

    1) When/will HP be 100% leased?

    2) What will it take to get it 100% leased? Maybe a condo/office mixed used tower across the street on Caroline and maybe another apartment tower on Caroline and Polk?

    Ouch. That's harsh. Then again, this is a newly-built asset in a prime location that sold for only $188 PSF whereas other downtown buildings have set record high prices. Maybe that reveals what I've been saying all along, that the downtown retail market isn't that strong and that mixed-use projects tend to be functionally obsolescent at completion because office building operators don't know what to do with retail and retail operators don't know what to do with office.

    More downtown residents can't hurt, but it'd take a huge number to make a difference. Like it or not, I think that substantial quantities of downtown retail organized as single projects just make bad investments.

  15. I'm sorry, The Niche, when you're taking it on the chin in that other thread for coming to the defense of the possibly-fake Asian landlord guy with the not-yet-finely-tuned sense of how, when, and, crucially, whether to invoke race -- but I'm going to drop the "envelope of politeness" (your locution) and slip into something more comfortable:

    I detest your farfetched (Dallas voluntarily elects to shutter one of the busiest airports in the world?!) vision, and the attitude toward rural Texas implicit in it, and all in the service of making Austin grow and grow. Why would we want to do that?

    Reading it made me unhappy in a wish-I-was-never-born kind of way, which only happens a few times a month.

    But I wouldn't like to be accused of negativity for not proffering something else instead.

    (Trying hard to think of my own vision, when actually I'm really super-excited about leaving things the way they are.)

    Got it. Let's make the spaceport they're planning at Boca Chica, the one on the inholding in the refuge, a super-airport serving a reunified Texas and Mexico and ... the galaxy! Our ideas are about on par -- in fact, mine is a step or two closer to fruition.

    Regarding the landlord's inferred race and inferred racism, I think that I've handled myself well and I feel sorry for people that lack empathy for people that mean well but just don't know any better.

    Regarding the airport, the obvious candidate for a location would be within striking distance of the Bryan/College Station area. If you know Aggies like I know Aggies, then you know that they would welcome the idea. They'd promote the hell out of it.

    Regarding Austin, that which I knew and once loved is ruined as far as I am concerned, a playground for north Texans and a vast diaspora of douchebaggery. There's nothing left that is special that can be lost, however there is something to be gained for places like Houston and San Antonio. Our douchebags would go and live there, not here. It would be a sort of Zion for them, and good riddance.

  16. Pretty incredible vision, Niche. It would certainly more than rival Atlanta for flights and nonstop destinations. The tricky part is the cost of the tubes and riding them. If it's self-funding, I'm guessing it adds at least $100 per person round trip (and possibly much higher), which would more than wipe out the competition benefits. If it's subsidized, then the question is who's paying for it - the airport? (which will build it into ticket prices, see previous problem), the taxpayers? The cool part would be enabling intra-triangle high-speed travel at the same time as connecting the airport. Maybe the inter-city riders on that could cover the cost of making it cheap or free for fliers?

    The same competition effect might be possible with just very high-speed rail/tubes between IAH and DFW, allowing local fliers to pick flights at either and forcing AA and UA to compete on "nonstop" service (assuming the tube ride is so fast as to be irrelevant and not really the same hassle as a connecting flight). It would exclude Austin and SAT, but still hit ~75% of the triangle population.

    Financing would comprise a mix of sources. Yes, airport fees are a part of the equation. They already exist, they exist at other airports, and they would exist at the proposed facility. They could be higher than most in order to capture some of the enhanced operating cost efficiencies for airlines; we should charge whatever the market will bear.

    Some of the capital expenses should be recouped by selling off existing airport land to developers of commercial and industrial properties in order to facilitate air cargo operations. If the price is right, then perhaps one or two of the airports in Dallas or Houston could be redeveloped entirely, just like Miller Airport was in Austin.

    What's left should be funded by a mix of federal, state, and local sources because goals that are compatible with each of the jurisdictions are being fulfilled. To that end, I think that the inclusion of Austin and San Antonio are politically necessary. The amount of government subsidy and the corresponding amount that has to be made up with user fees is something that would be difficult to speculate on without very precise studies that would confirm demand schedules and a profile of operating costs under different vehicle load characteristics.

  17. I still advocate for a massive international airport that should be developed in the middle of the Texas Triangle to accommodate any and all commercial passenger flights that would otherwise go to DFW, DAL, IAH, HOU, AUS, and SAT. The facility should be served by vacuum-sealed maglev tubes that run directly between the airport and each of the major cities' central business districts. Only 30 minutes from the cores of our cities, this would comprise the world's busiest airport, would serve a region of 18 million people at a continental crossroads between Asia and Latin America, would necessarily serve as a hub to two or more airlines, and would be served by the newest, largest, and most efficient passenger aircraft.

    At the confluence of operating efficiency, strategic geographic reach, and a competitive business environment, Texas would achieve low ticket prices that would offset the expense of the infrastructure. We would also shorten the effective distance between our major cities, bringing them closer together in terms of time and travel expense, and allowing for a new class of inter-city commuters and for the State of Texas to effectively market itself internationally as a tourist destination and a place to do business.

    The existing airports would convert to air cargo and general aviation purposes, and on account of their proximity to the world's largest airport, they may be a suitable location for major repair and maintenance facilities or other aerospace-related business enterprises. And removing all this air traffic from our major cities would enhance our quality of life by removing air and noise pollution, by fostering an airport traffic pattern that takes people into downtown areas, and by allowing airport users better access to central-city transit options.

    I'll leave you with a parting thought. What if Austin had Atlanta's airport, Dallas' jobs, San Antonio's history, Houston's food, and Galveston's beaches? What would its population be within a decade?

  18. The voters already approved the framework for 5 additional rail lines, including the University and Uptown Lines in what................ 2003?

    The Uptown Management District needs to focus on their previous commitments BEFORE they propose adding additionakl costs for a plan that doesn't accomplish what the voters approved.

    If it is addition too...fine but it looks like they are preparing the pro-transit detarctors or a soft landing.

    The concept of voter approval doesn't have any relation to the concept of a commitment from METRO or a mandate of METRO. You should go read the text of the 2003 referendum.

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