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fernz

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Everything posted by fernz

  1. Hilton Americas renovation in lieu of Super Bowl? That would be a raw deal.
  2. City Center is in a similar island, yet they made walkable design work.
  3. My mistake, I thought there was 1M square feet. I did read the part about expenses on your post, but that ddoes not cover debt service (huge cost), RE taxes or maintenance.
  4. You are missing something. First of all, capping $30M at 6% gives $500M, not $600M. But more importantly, you should be capping net operating income, not gross income. To those $30M you need to deduct debt service, real estate taxes, maintenance, and expenses ( which will vary greatly depending on the type of lease)
  5. If they bought for 50M, then that's when they got lucky!
  6. That will benefit the refining side of the business (and I guess all downstream overall), but that is not much help. That side of the business is booming right now with low oil and gas prices, but for whatever reason you don't see it impacting the city's economy...
  7. Skanska is another developer in town doing the same. There are benefits to this strategy, obviously, but most developers would still prefer to borrow money, even they had the cash, so they can leverage the borrower's money and make higher returns.
  8. Of course they do, and it's even more difficult because they require "pre-sales"
  9. "Meanwhile, Hanover is setting its sights on other major markets nationally, like Boston and California. The company has four new apartments breaking ground in Atlanta this year. "We've got plenty of other projects we're working on," Bowden said." http://www.bizjournals.com/houston/news/2015/01/27/amid-plunging-oil-prices-luxury-apartment.html?page=all
  10. Rottet Studios is designing the interiors?! Did you all miss that?? So, this WILL be a very high-end hotel indeed. Midway is putting its money where it matters (at least to the hotel customers, if not to haif posters). You can bet top dollar that this will be one of Houston's best hotels, no sexy exterior needed.
  11. Disclaimer, I'm assuming you are talking about a place like greenstreet, and not a subsidized deli shop: Depending on the type of retailer, its market is anywhere between 1 to 10 miles radius (or even larger for destination locations). Assuming best case scenario, the market the retailer needs to capture is about the size of Downtown Houston. So in your example above, a retailer makes $8 by drawing in people from all the office towers and apartments in Downtown. Adding two more buildings to the mix is not going to almost double the income, not by a long shot. Put another way, if, say a restaurant, needs $10 to turn a profit (my disclaimer still standing) there is no way the people from 300 apartments will consistently spend $10 over a sustained period of time. You would get less than $1, on average. Now, if your tower has 5,000 apartments, it might be a different story.
  12. You're absolutely right, that is an important distinction. Obviously a small, low cost shop has a different market from a national retailer. I probably should've pointed that out, but I was in the mindset of Greenstreet, and the type off establishments it has. My clarification in the subsequent post was to illustrate the difference, and make a case that they are not comparable. For clarification, many buildings have small delis that rely on the building occupants exclusively, but in many cases they are subsidized in the form of reduced rents, they are considered an amenity of the building.
  13. I know his record as a developer, but not yours. I would guess he is the expert of the two.
  14. If you want to compare the grill at Houston House with national brand retailers, be my guest. Like I said, I choose to listen to the RE experts instead.
  15. I'm sorry to disagree with you - and again your logic is off: I'm sure there are several successful retailers in Houston with tenants above, but that does't mean they are successful BECAUSE of the tenants above; there have also been several unsuccessful retailers in mixed use projects with tenants above: (rice lofts, west ave, bbva compass tower...) This is not an "unspoken rule of thumb". I first heard of this as a follow-thru comment from a market share lecture. Basically, you only get a small fraction of a market's residents - the market "share" - because (to put it very simply) a.) you will only get a few people to change their purchasing habit, b.) only some of them need/want your product, and c.) only a few people of that subset chooses your brand. This is why the market is usually based on 1, 5 or 10 mile radius, depending on the product (you need a big market in order to get a decent share). For a store like Forever 21, or Books-a-million, you would look at a 10-mile radius market. That means that those stores, in Downtown Houston, need to capture enough market share from ALL of the inside the loop population to be viable. Do you really think one more apartment building and office building nearby will make a difference? For a small grocery store, which would look at 1-mile radius market, you are talking about all of Downtown's population. This is why you need density for retail to start making sense. And this is why you don't rely on your project's built-in population, you need to look at the larger market. I keep hearing this idea that a tower in a mixed-use building will support the retail, but it just doesn't make sense when you look at the numbers. People who are in the businesses understand this, and maybe that's why you think it's a unspoken rule of thumb - but it's just math. I heard this explanation during a market research lecture from Patrick Phillips, who was teaching at Johns Hopkins Carey Business School, back when he was president of ERA (Economic Research Associates), a very well respected market research firm (it has since been acquired by AECOM, and Patrick Phillips moved onto become the Global CEO of the Urban Land Institute) - so I assume he knows what he's talking about. Finally, we all have our opinions of Ric Campo, but he has built what is arguably one of the most successful RE development firms in Houston (and maybe the US). So I would tend to believe the rules he abides by...but that's jut my opinion, you don't have to listen to him, or to Mr. Phillips. We can all continue spouting our beliefs in an anonymous forum while they run their very successful Real Estate businesses.
  16. That's a fallacy. The retail component of any mixed-use project must be viable without its built-in demand to be successful. That's pretty much a rule of mIxed-use projects.
  17. The project opened in very difficult times. But even if the hotel and apartments had been very successful, they would've generated enough cash flow to cover their share of the loans, but not enough to make up for all the empty spaces in the mall and office buildings. But since the entire thing was owned by one entity, the whole thing would've gone bankrupt. And it would have been harder to find a new buyer for the larger, more complex building.
  18. No...if they had built the original plan, they would've failed more miserably.
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