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Discovery West: Skanska Downtown Mixed-Use Development


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On 6/30/2021 at 8:36 AM, Nate99 said:

I want to be a render person some day, I'd do something like this lady. "Aaah my eye!"

I personally like the lady in the bike lane. She has the look of "Oh flurf, did I go the wrong way?"

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On 6/28/2021 at 5:37 PM, Big E said:

You know, the city should really penalize property owners who own surface parking lots or undeveloped lots downtown and refuse to develop them or sell them.

 

The concept is called a land-value tax. The idea is that, rather than base property tax valuation on the land-plus-improvements, you only tax the value of the land. So the owner of a block used for surface parking would pay the same tax bill as the owner of a block across the street used for, say, an office tower. 

This incentivizes landowners to more quickly develop to highest-and-best use, thereby discouraging the kind of land speculation Golconda is engaging in, and eliminates the tax penalty associated with remodeling existing structures.

It also removes the tax incentive to quickly demolish an existing structure, then leave the lot empty for (sometimes) years before actually building on it (see e.g. Chevron's demo of the downtown YMCA).

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35 minutes ago, Angostura said:

 

The concept is called a land-value tax. The idea is that, rather than base property tax valuation on the land-plus-improvements, you only tax the value of the land. So the owner of a block used for surface parking would pay the same tax bill as the owner of a block across the street used for, say, an office tower. 

This incentivizes landowners to more quickly develop to highest-and-best use, thereby discouraging the kind of land speculation Golconda is engaging in, and eliminates the tax penalty associated with remodeling existing structures.

It also removes the tax incentive to quickly demolish an existing structure, then leave the lot empty for (sometimes) years before actually building on it (see e.g. Chevron's demo of the downtown YMCA).

Has this been tried anywhere in the U.S.? Besides scaring a lot of investors out of Houston because you've suddenly dramatically altered how properties are taxed, it seems like this would have a decentralizing effect on development, as people would choose to build office buildings in suburban locations where land is valued much less and tenants would flee the dramatically high tax reimbursement costs downtown.

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On 7/2/2021 at 10:53 AM, H-Town Man said:

Has this been tried anywhere in the U.S.? Besides scaring a lot of investors out of Houston because you've suddenly dramatically altered how properties are taxed, it seems like this would have a decentralizing effect on development, as people would choose to build office buildings in suburban locations where land is valued much less and tenants would flee the dramatically high tax reimbursement costs downtown.

From Wikipedia

"Notwithstanding the change in 2001, the Pittsburgh Downtown Partnership Business Improvement District employed a pure land value taxation as a surcharge on the regular property tax from 1997 to 2016.[22] In 2000, Florenz Plassmann and Nicolaus Tideman wrote[23] that when comparing Pennsylvania cities using a higher tax rate on land value and a lower rate on improvements with similar sized Pennsylvania cities using the same rate on land and improvements, the higher land value taxation leads to increased construction within the jurisdiction."

 

It would probably make most skyscraper taxes downtown much lower. Compare the property tax of a skyscraper downtown to the property tax of a same sized area of houses in the burbs. Now compare the land value of a block downtown compared to the land value of a same sized area in the burbs.

 

Also the value of empty lots downtown would go way down, because property owners would be forced to sell land rather than pay the taxes. Much of the value of lots downtown is due to speculation.

 

Edited by staresatmaps
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On 6/30/2021 at 7:36 AM, Nate99 said:

I want to be a render person some day, I'd do something like this lady. "Aaah my eye!"

 

Aaah my eye.png

For my renders I've been using this site:

https://www.mrcutout.com/

Apparently if you let them use your photos you might get a royalty from it. Don't quote me.

If you make it on a site let me know and I'll personally star you in a fancy render I do some day.

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18 hours ago, staresatmaps said:

It would probably make most skyscraper taxes downtown much lower. Compare the property tax of a skyscraper downtown to the property tax of a same sized area of houses in the burbs. Now compare the land value of a block downtown compared to the land value of a same sized area in the burbs.

The relevant comparison would be property taxes of office buildings downtown vs. property taxes of office buildings in the burbs. Right now, land value makes up about a third of the total assessed value of a typical  office building. So the property tax is only 1/3 affected by location. The rest of the tax is based on building value, and a building can be equally nice downtown or in the burbs. But if you base the whole tax on land value, and your downtown land is worth $300-400/SF whereas your suburban office area land value is $15-20/SF, your downtown taxes will now be twenty times the suburban taxes for the same building.

There are some factors that will diminish this. A suburban building probably takes up more land because land is cheaper; it has a sprawling garage and some gardens rather than all being stacked on a single block, 2-3 acres instead of 1 acre. And of course downtown land values would sink if such a law were enacted, so that will diminish the difference a bit more. But there would still be a much sharper difference in taxation for downtown vs. suburban offices, because you've based the whole tax on location.

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So let me think- Discovery West, Texas Tower, Brava, and the unnamed 42-story highrise going up- so that makes 4 towers going up at once downtown, is that correct?

When's the last time we've had that many buildings going up at once downtown?

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52 minutes ago, BEES?! said:

So let me think- Discovery West, Texas Tower, Brava, and the unnamed 42-story highrise going up- so that makes 4 towers going up at once downtown, is that correct?

When's the last time we've had that many buildings going up at once downtown?

 

52 minutes ago, BEES?! said:

So let me think- Discovery West, Texas Tower, Brava, and the unnamed 42-story highrise going up- so that makes 4 towers going up at once downtown, is that correct?

When's the last time we've had that many buildings going up at once downtown?

There is also a 10 story going up at Main and Jefferson and some other apartment north of the baseball stadium. Still, I think a few years back ( 6 or 7 years ago) there was more construction.

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1 hour ago, BEES?! said:

So let me think- Discovery West, Texas Tower, Brava, and the unnamed 42-story highrise going up- so that makes 4 towers going up at once downtown, is that correct?

When's the last time we've had that many buildings going up at once downtown?

During the time frame of 2015-2017 we had a building boom downtown due to the tax initiative for apartment developers. At its peak I recall 19 tower cranes in downtown and was hoping they would hit 20 but projects started finishing.

Hillcorp office on Travis had 3 tower cranes.

609 Main office tower had 3 tower cranes.

Block 334 apartments 1 tower crane.

Old Texaco Reno apartments had 1 tower crane.

SkyHouse apartments 1 tower crane.

Marriott Marquis had 2 tower cranes.

Hampton Inn had 1 tower crane.

Houston First had 1 tower crane.

Catalyst apartments had 1 tower crane.

Hines Aries apartments had 1 tower crane.

Market Square Tower apartments had 1 tower crane.

16 story parking garage on Milam had 1 tower crane.

UHD parking garage had 1 tower crane.

HSPVA had 2 tower cranes.

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On 7/10/2021 at 4:12 PM, j_cuevas713 said:

I think this is the beginning of a massive change in downtown construction, as we continue to get denser and push downtown further south. Still a few lots to fill up, but imagine downtown with no empty lots 😮. Our skyline would be huge. 

Agree, its a big difference in market Square in the last 5 years.

I think by 2030 downtown Houston will be completely different. Im hoping it happens by the World Cup in 2026

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  • 3 weeks later...
9 minutes ago, enriquewx91 said:

Im so glad that this project will cover up that horrid building from view from Discovery Green

Agreed, although it will block the view of the Astrodome from my office, which I am sad about.

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1 hour ago, thatguysly said:

Too bad there is a substation there next to the Hilton and Toyota Center. That would be another great spot for development.

Can it be moved? any of the blocks along 59/69 would be way better than where it currently is. 

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1 hour ago, urbanize713 said:

Can it be moved? any of the blocks along 59/69 would be way better than where it currently is. 

Sure but CenterPoint isn't going to want to pay to do that. Plus all the connections would have to be routed to the new location as well. Anything is possible but I say it getting moved will probably never happen.

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I can’t see Centerpoint paying the money it would take to construct a shell around their substation(s).  The substation in question is a full city block, and I would think that if they decided to do something like this the best we could hope for is a high wall around the electrical equipment.

Petition your local city council representative.  Agreed these are typically horrid.

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for centerpoint to spend millions of dollars on a relocation or beautification project like this, the cost would ultimately be approved by the texas public utilities commission and end up on all of our electricity bills.  i will generalize and say we tend to get the ugly/cheap option in texas compared to more progressive locales.   

Edited by TrainTrak
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^seems about right.  Heaven forbid public infrastructure not look like hell.

I guess that is one of the positives the Great Depression gave all of us: Public works and infrastructure that is something to be proud of, not only in its design but also the longevity of so many of those old projects.

Edited by arche_757
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4 hours ago, arche_757 said:

^seems about right.  Heaven forbid public infrastructure not look like hell.

I guess that is one of the positives the Great Depression gave all of us: Public works and infrastructure that is something to be proud of, not only in its design but also the longevity of so many of those old projects.

Yeah, the WPA built some great stuff. But there were great public works before. Look at all the nice courthouses across Texas.

 

23 hours ago, urbanize713 said:

Can it be moved? any of the blocks along 59/69 would be way better than where it currently is. 

Anything can happen. It's a question of cost. When the value of the land is high enough, it will happen. Not sure how high that needs to be. There's a reason you don't see electric substations walking around Manhattan or downtown Chicago. The land value is too high. Austin has relocated a lot of its Seaholm plant to create some high value land, but some of it is still there.

 

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30 minutes ago, H-Town Man said:

Anything can happen. It's a question of cost. When the value of the land is high enough, it will happen. Not sure how high that needs to be. There's a reason you don't see electric substations walking around Manhattan or downtown Chicago. The land value is too high. Austin has relocated a lot of its Seaholm plant to create some high value land, but some of it is still there.

 

Serious question:  Where do they put their substations in downtown Chicago and Manhattan?  They have to have them somewhere.

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22 minutes ago, Houston19514 said:

Serious question:  Where do they put their substations in downtown Chicago and Manhattan?  They have to have them somewhere.

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?

 

 

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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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I’ve been dealing a lot with electrical utilities lately and thoroughly believe they’re not the smartest folks in the room.  So yeah.  I can 100% see them being inflexible even if they could profit.

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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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