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Discovery West: Mixed-Use Development Downtown By Skanska


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23 minutes ago, H-Town Man said:

In places where visitors like you or me would not be likely to see them. A google search shows some stations scattered alongside a railyard in Queens, one on the water near some industrial stuff, one in an industrial part of the Bronx, nothing in Manhattan. Maybe they are underground in Manhattan?

Or encased in buildings?  I wonder if it Is possible for them to be encased within larger buildings, or would they be required to be in their own free-standing building?

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1 minute ago, Houston19514 said:

Or encased in buildings?

If so then probably a multi-story building with other uses and I doubt they would use the first floor unless it's in a very out-of-the-way location. Think about it... if they could pay to put all the railroads underground in Manhattan, they probably put all the electrical stuff down there as well.

 

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Just as a point of reference, 3 or so years ago, Oklahoma City wanted a substation on the edge of their downtown to be moved to make way for parking for a new convention center.  It cost them $30 Million to pay for the move, plus buying the land on which to move the substation (about 1/2 mile away).  (They didn't move it into a building, just to a more remote place... in Houston, anything that nearby would carry with it the distinct possibility of having to be moved again in 20 years or less.)

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1 hour ago, Houston19514 said:

Just as a point of reference, 3 or so years ago, Oklahoma City wanted a substation on the edge of their downtown to be moved to make way for parking for a new convention center.  It cost them $30 Million to pay for the move, plus buying the land on which to move the substation (about 1/2 mile away).  (They didn't move it into a building, just to a more remote place... in Houston, anything that nearby would carry with it the distinct possibility of having to be moved again in 20 years or less.)

Now that's interesting. So assuming it costs the same to move a substation here as it does there, the differential in land value would have to be at least $30 million for it to be feasible. So what is the land worth now? We have a pretty good recent comp in Skanska's purchase of 3.5 acres nearby for $55 million, or $360/SF. That value has probably gone down since the pandemic but value for a smaller parcel (with a premium for a full contiguous block) would raise it, so we'll call it a wash. At 62,500 SF, that puts the value of this block at $22.5 million. Now then, what is the cheapest land within a half mile? Just picking one off the map, HCAD values the block at Pease/Dowling/Bastrop/Leeland at just over $3 million. So your difference is $19.5 million.

That's a long way from $30 million, but when might we get to a difference of $30 million? Hmmm... maybe if Skanska completely develops all of the 3.5 acres that they purchased and it becomes a busy little area of downtown, the value of this block doubles and a developer is willing to take this project on. It could happen in ten years. It could be 30 years. Or it might never happen. If downtown makes another giant leap forward like it did this past decade, it will happen.

 

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@H-Town Man I would wager that a group the scale of Skanska has already thought about this possibility.  Whether Centerpoint is clever enough to take advantage is another question.  There could also be something about needing that substation located where it is (or within a short distance of present location) due to the large users nearby: Toyota Center, MMP, GRB etc.?  Perhaps someone with electrical infrastructure expertise could chime in?

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15 minutes ago, arche_757 said:

@H-Town Man I would wager that a group the scale of Skanska has already thought about this possibility.  Whether Centerpoint is clever enough to take advantage is another question.  There could also be something about needing that substation located where it is (or within a short distance of present location) due to the large users nearby: Toyota Center, MMP, GRB etc.?  Perhaps someone with electrical infrastructure expertise could chime in?

I don't think it will be Centerpoint being clever enough, it will be a developer pushing the whole thing and Centerpoint going along if the costs work out for them. I'm sure the location matters, but that is part of the relocation cost. Anything can be made to work, it's just a question of cost.

 

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To be fair, electrical utilities are (understandably) very risk averse organizations. Even if it is profitable to move to another block, they might be concerned enough about reliability etc to not make it worth it. You'd probably have to do some work on rerouting the underground wiring that comes into/out of the substation, which could complicate things. 

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1 hour ago, sapo2367 said:

To be fair, electrical utilities are (understandably) very risk averse organizations. Even if it is profitable to move to another block, they might be concerned enough about reliability etc to not make it worth it. You'd probably have to do some work on rerouting the underground wiring that comes into/out of the substation, which could complicate things. 

Of course they are.  But I still loathe dealing with them.

 

I wonder… how much of this would be an issue if say, Houston had a zoning law?  I know…I know… but maybe there would be better planning to have located this next to the highly undesirable interstate/back-side of GRB, and not …hmm…squints… throws dart arbitrarily at a map of downtown blocks.  There!  Right within view of the big new Hilton Americas and Toyota Center.

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On 7/11/2021 at 10:29 AM, jmitch94 said:

Just think of the atmosphere at the street level if all the surface lots were buildings that actually contributed to the neighborhood. 

The atmosphere would be one of people rushing past empty buildings. There's a reason there are vacant lots - there's no demand for a building on them.  And, with something like 24% vacancy, it will be a while before demand increases enough to make building anything economic.

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47 minutes ago, Ross said:

The atmosphere would be one of people rushing past empty buildings. There's a reason there are vacant lots - there's no demand for a building on them.  And, with something like 24% vacancy, it will be a while before demand increases enough to make building anything economic.

Tough crowd at times.  I think the aspiration was “imagine if there wasn’t 24% vacancy caused by yet another tumble in oil prices because of a global pandemic that has fallen directly on our heels just as we were emerging from our previous recession.  Oh, and imagine if Houston had developed like - all other cities - and the downtown was the hub of most of our urban activity, and we didn’t have 4-6 other major urban developed areas spread across 600 SqMiles of land.

I think that’s sort of what they were going for, as, reality is pretty obvious.

Of course you are correct about the current state of affairs…

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1 hour ago, Ross said:

The atmosphere would be one of people rushing past empty buildings. There's a reason there are vacant lots - there's no demand for a building on them.  And, with something like 24% vacancy, it will be a while before demand increases enough to make building anything economic.

Yeah I got that. I'm just saying imagine if our downtown was what we would love for it to be instead of acres and acres of surface parking between all of the developed areas. 

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3 hours ago, Ross said:

The atmosphere would be one of people rushing past empty buildings. There's a reason there are vacant lots - there's no demand for a building on them.  And, with something like 24% vacancy, it will be a while before demand increases enough to make building anything economic.

Downtown doesn't have to be full of offices.

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Houston is moving in a right direction with the parking lots downtown.

it doesn't seem like that long ago it was 2001 and the east of downtown was nothing but a sea of parking lots. 

the only good thing was that I could park within 3 blocks of the baseball stadium and pay $5 for parking (and get a GA ticket for $5, but that's a different discussion).

today is far cry from what it was. 20 years from now will be a whole nother thing (was 2001 really 20 years ago? ugh).

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13 hours ago, arche_757 said:

Tough crowd at times.  I think the aspiration was “imagine if there wasn’t 24% vacancy caused by yet another tumble in oil prices because of a global pandemic that has fallen directly on our heels just as we were emerging from our previous recession.  Oh, and imagine if Houston had developed like - all other cities - and the downtown was the hub of most of our urban activity, and we didn’t have 4-6 other major urban developed areas spread across 600 SqMiles of land.

I think that’s sort of what they were going for, as, reality is pretty obvious.

Of course you are correct about the current state of affairs…

Good post but a slight quibble... I read something awhile back that compared American cities by how concentrated their office space was downtown, and Houston was actually the third or fourth most concentrated. Interestingly, the cities with the largest downtowns were also the ones that were most concentrated in downtown (New York the most, then Chicago...), even though they still would have been the largest if all of them had the same level of concentration. Also, NY and Chicago were the only cities where downtown was more than a small fraction of the total office market.

 

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1 minute ago, arche_757 said:

@H-Town Man from all of the articles I’ve read NYC downtown is exclusively the area in Lower Manhattan centered around Wall Street and the World Trace Center complex.  Is Chicago’s “downtown” considered within the Loop, or does that boundary broaden a a tad?

I was using the term loosely. "Urban core" or "expanded CBD" would be better. This would include Downtown and Midtown for NYC, and for Chicago, the Loop, River North, Greektown, etc.

 

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16 hours ago, arche_757 said:

I wonder… how much of this would be an issue if say, Houston had a zoning law?  I know…I know… but maybe there would be better planning to have located this next to the highly undesirable interstate/back-side of GRB, and not …hmm…squints… throws dart arbitrarily at a map of downtown blocks.  There!  Right within view of the big new Hilton Americas and Toyota Center.

Except of course the substation long predates any of those things.  Probably even predates the freeway.

Edited by Houston19514
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^ back in the old HL&P days.  I suspect the Houston Center development was taken into consideration if the substation was built closer to the later part of the dates @Houston19514  mentioned.  Full build out of that complex would have been something.

 

A shame the city didn’t have the resources, or clairvoyance to do something better when Toyota Center was built.

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6 minutes ago, arche_757 said:

A shame the city didn’t have the resources, or clairvoyance to do something better when Toyota Center was built.

They may have just made the judgment that there are many better ways to spend $30 Million, especially as long as we still have many blocks of surface lots that can be developed.

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28 minutes ago, Houston19514 said:

They may have just made the judgment that there are many better ways to spend $30 Million, especially as long as we still have many blocks of surface lots that can be developed.

This goes back to economics. You're not going to pay $30 million to create a block of land when a block of land is only worth $20 million. (Much less than that when Toyota Center was built.)

 

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22 hours ago, Houston19514 said:

Except of course the substation long predates any of those things.  Probably even predates the freeway.

 

22 hours ago, arche_757 said:

Does it?  When was it built?

 

22 hours ago, Houston19514 said:

It looks like it was built some time between 1953 and 1978.

The 1964 Historic Aerials image shows the block is a parking lot(as is much of downtown at the time). In the 1966 aerial, the block is cleared and the 1973 aerial shows the Western portion has stuff built on it. So, between 1966 and 1973. The block is shown in HCAD as 4 separate parcels with a total value of $6.25 million for land, and 0 for improvements. Of course, replacing it would be far more pricey. 

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3 hours ago, Ross said:

 

 

The 1964 Historic Aerials image shows the block is a parking lot(as is much of downtown at the time). In the 1966 aerial, the block is cleared and the 1973 aerial shows the Western portion has stuff built on it. So, between 1966 and 1973. The block is shown in HCAD as 4 separate parcels with a total value of $6.25 million for land, and 0 for improvements. Of course, replacing it would be far more pricey. 

A fine example of HCAD notoriously undervaluing commercial property.

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FWIW I was there walking around yesterday and didn’t even immediately notice the substation. They’ve got it pretty covered up with greenery it looked like, but in the future it’d be nice if they moved it. But as it stands it’s hardly the worst thing in Downtown. 
 

The Skanska site had equipment on it, but I didn’t get a pic because I couldn’t really see anything lol

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2 hours ago, H-Town Man said:

A fine example of HCAD notoriously undervaluing commercial property.

I would suspect that Centerpoint has sued HCAD over this property, and received a court order setting the value where it is. The Tax Code makes it pretty easy for a business to get the property values reduced by significant amounts.  The property seems to have a land value that's 20% of nearby blocks.

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