Camden McGowen Station & Midtown Park At 2727 Travis St.

[Houston19514]

Nice try but I didnt ask you to predict the future, I'm asking, in YOUR opinion, do YOU think a little retail facing the park would cause camdens entire superblock project to become a financial failure? Yes or no?

 

As I told you, I do not know.  I do not have enough information to form an opinion worth writing.  And, as I said before, neither do you.

 

Campo has been quoted by a local newspaper to have said that apartments with retail on the ground floor are much more costly to build and carry more risk.  He no doubt knows more about it than the two of us put together.

 

To paraphrase Samagon's wise closing statement, above... This is probably why none of us own a ~40 story luxury condo or other apartment development.

Edited February 1, 2013 by Houston19514

[scarface]

What i don't understand is why ground level retail is not a problem in Dallas's downtown and surrounding areas? The population around downtown Dallas is actually less than or equal to Houston's surrounding downtown population.

[woolie]

So, long discussion here. I'll just add that I've been thinking about San Francisco alot lately, and also visiting. Most residential buildings in SF don't have ground floor retail. Yet, it has the highest rents and is considered one of the best urban environments in the country.

[RedScare]

What i don't understand is why ground level retail is not a problem in Dallas's downtown and surrounding areas? The population around downtown Dallas is actually less than or equal to Houston's surrounding downtown population.

 

It actually IS a problem in Dallas. There is a Dallas Morning News article that I linked somewhere on this forum that described all of the empty groundfloor storefronts that had been required by Dallas, and some of the problems in filling them. What many people do is look at one building or one location where groundfloor retail works, and believe it will or is working everywhere, when that is not at all true. Their walkable fantasy will not allow them to consider that financial realities preclude groundfloor retail in many developments.

[TonyM]

It's a pretty simple formula folks, retail follows residential, not the other way around.  I think people have a utopian vision of "ground floor retail" that it will somehow transform the inner loop into Manhattan v2.0.  Not going to happen, and frankly I don't want it to, if I wanted that I'd move to NYC/Chicago/etc.  Fact is, Houston's inner loop real estate boom is already pricing many smaller retailers out of the market and the only folks who can afford it are the big chains (which everyone decries).  You can't have it both ways.  As Midtown's residential density increases, the retail WILL fill in.  Why?  Simple economics, if you have a TON of residents within a short distance of your business the higher cost of entry becomes more palatable.  Right now, the cost of entry is still high, yet the residential density is not yet at the tipping point that demands retail in fill.

[samagon]

It actually IS a problem in Dallas. There is a Dallas Morning News article that I linked somewhere on this forum that described all of the empty groundfloor storefronts that had been required by Dallas, and some of the problems in filling them. What many people do is look at one building or one location where groundfloor retail works, and believe it will or is working everywhere, when that is not at all true. Their walkable fantasy will not allow them to consider that financial realities preclude groundfloor retail in many developments.

 

Agree 100%.

 

I recall there was a project that was supposed to go up on gray near la branch (seems to have stalled, but I saw a backhoe in there the other day where it looked like they were updating the board on the northeast corner of the lot), they were going to put their workout facility and some other amenities on the ground floor so that they could easily swap these out with ground floor retail when the time was right.

 

It's a good way to have the option later on.

 

I think though, the question is still a good one, even if it's just two 3000sqft spaces facing the park, 6000sqft total, the equivalent of 4 or 5 apartments, would it break the model of this complex? I doubt it, but if they think it will break the model, then they won't even consider it.

[Houston19514]

Agree 100%.

 

I recall there was a project that was supposed to go up on gray near la branch (seems to have stalled, but I saw a backhoe in there the other day where it looked like they were updating the board on the northeast corner of the lot), they were going to put their workout facility and some other amenities on the ground floor so that they could easily swap these out with ground floor retail when the time was right.

 

It's a good way to have the option later on.

 

I think though, the question is still a good one, even if it's just two 3000sqft spaces facing the park, 6000sqft total, the equivalent of 4 or 5 apartments, would it break the model of this complex? I doubt it, but if they think it will break the model, then they won't even consider it.

 

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.

[scarface]

It actually IS a problem in Dallas. There is a Dallas Morning News article that I linked somewhere on this forum that described all of the empty groundfloor storefronts that had been required by Dallas, and some of the problems in filling them. What many people do is look at one building or one location where groundfloor retail works, and believe it will or is working everywhere, when that is not at all true. Their walkable fantasy will not allow them to consider that financial realities preclude groundfloor retail in many developments.

 

Oh ok. That makes sense.

 

I think i'm guilty of looking at one area and thinking its working everywhere. I thought i saw those areas with storefronts everywhere in Uptown Dallas

 

Thanks Red.

[TheNiche]

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.

[RedScare]

Here is one article describing the problems filling retail spaces in Dallas.

 

http://www.ucrurban.com/press_detail.php?sec=4&id=141

[ToryGattis]

Joel Kotkin has described to me whole streets in LA with block after block of empty retail with absolutely packed apartments on top of them.

 

The Post restaurants seem to do quite well, but the non-restaurant retail seems to be struggling, and the retail space next to Christian's Tailgate has been perpetually empty.  I think these places would have more of a chance if there was diagonal street parking in front, which I sorta wish the Bagby St reconstruction had included instead of the somewhat overdone landscaping, IMHO.

[C2H]

Here is one article describing the problems filling retail spaces in Dallas.

 

http://www.ucrurban.com/press_detail.php?sec=4&id=141

 

That article is a little old. I wonder if they're still having that problem up there?

[Houston19514]

That article is a little old. I wonder if they're still having that problem up there?

 

Five years later, here's an update:

 

The project has 18,640 square feet of retail space, not the 42,000 square feet stated (or at least implied) by Steve Brown.

 

Brown said that in 2008 there was one small sandwich shop.  That shop has apparently closed.  They now have

 

1 Mexican restaurant

Highland Park 24-hour "emergency room" (that takes almost 1/2 of the total retail space)

Oscar Nails and Spa

Tread Fitness (a tiny storefront offering circuit training in a group setting)

Pride Staff

 

1,386 square feet remains available (perhaps the former sandwich shop)

[RedScare]

Go to Google street view and look up 1000 Ross Avenue in Dallas. It was mentioned in the article. Almost the entire block is empty. Only the corners have tenants.

[KinkaidAlum]

Joel Kotkin has described to me whole streets in LA with block after block of empty retail with absolutely packed apartments on top of them.

 

The Post restaurants seem to do quite well, but the non-restaurant retail seems to be struggling, and the retail space next to Christian's Tailgate has been perpetually empty.  I think these places would have more of a chance if there was diagonal street parking in front, which I sorta wish the Bagby St reconstruction had included instead of the somewhat overdone landscaping, IMHO.

Where in LA?

I go to LA multiple times a year and can't recall seeing a ton of vacant retail spaces much less entire blocks. I've been all over West Hollywood, Los Feliz, Wilshire, Brentwood, Adams District, Silver Lake, Eagle Rock, Downtown (the most empty space I've seen but downtown has only recently started to turn residential), Santa Monica, Hancock Park, Koreatown, and more.

[Slick Vik]

Joel Kotkin has described to me whole streets in LA with block after block of empty retail with absolutely packed apartments on top of them.

The Post restaurants seem to do quite well, but the non-restaurant retail seems to be struggling, and the retail space next to Christian's Tailgate has been perpetually empty. I think these places would have more of a chance if there was diagonal street parking in front, which I sorta wish the Bagby St reconstruction had included instead of the somewhat overdone landscaping, IMHO.

More parking and less landscaping? Typical houston mindset

[ToryGattis]

More parking and less landscaping? Typical houston mindset

 

Street sidewalk/retail vibrancy requires people which requires parking (apartments on top are never enough people to fully support the street retail).  Better to have vibrancy and parking than pretty but deserted landscaping.

[Slick Vik]

Street sidewalk/retail vibrancy requires people which requires parking (apartments on top are never enough people to fully support the street retail).  Better to have vibrancy and parking than pretty but deserted landscaping.

 

There is plenty of street parking on both sides of Bagby. The requirement of parking for most businesses is what makes this city an aesthetic disaster.

[Mister X]

Hey. How about a compromise? Retail front and center on signature streets and ample parking goes in the BACK where it BELONGS. So simple. Too simple. It's possible to put attractive store fronts up to the sidewalks AND have enough parking out back or up a few levels (out of the way) for the real world. I know. I've seen it with my own eyes. I forget where.  Spend the extra dollars and DO IT RIGHT the first time. Or in Houston's case, the second time will do. 

 

Even if the parking lots were not so 'glorified' as if our dependency on cars required constant reminders that Houston owes it's very soul to the automobile that parking lots must be the focal point of almost every landscape, Houston would be prettier. Prettier=better.

 

Midtown is such an asset to this city.  A perfectly laid out, half way developed grid in the middle of all major employment, residential and entertainment centers just begging for a modern re-do. Every night I say a silent prayer that it gets done right this time. The potential of Midtown is off the charts, crazy wonderful - in my mind. Some of these projects going up now are like a dream come true, others aren't so perfect but they are a huge step in the right direction.

 

Edited February 5, 2013 by Mister X

[Howard Huge]

Hey. How about a compromise? Retail front and center on signature streets and ample parking goes in the BACK where it BELONGS. So simple. Too simple. It's possible to put attractive store fronts up to the sidewalks AND have enough parking out back or up a few levels (out of the way) for the real world. I know. I've seen it with my own eyes. I forget where. Spend the extra dollars and DO IT RIGHT the first time. Or in Houston's case, the second time will do.

Even if the parking lots were not so 'glorified' as if our dependency on cars required constant reminders that Houston owes it's very soul to the automobile that parking lots must be the focal point of almost every landscape, Houston would be prettier. Prettier=better.

Midtown is such an asset to this city. A perfectly laid out, half way developed grid in the middle of all major employment, residential and entertainment centers just begging for a modern re-do. Every night I say a silent prayer that it gets done right this time. The potential of Midtown is off the charts, crazy wonderful - in my mind. Some of these projects going up now are like a dream come true, others aren't so perfect but they are a huge step in the right direction.

AWESOME post!

[ToryGattis]

I agree with the parking in back, but think Houstonians need "teaser" parking in front, ideally diagonal street parking if the RoW is available.  Think about University Blvd in the Rice Village for something similar. Ed Wulfe talked about this once. If you have the teaser parking in front, people will drive to that store thinking they will get it, and once they're there but it's full, they'll drive around back.  When a place has no parking in front, or just one or two parallel spaces, people just pick a destination/competitor with easier parking.

Edited February 5, 2013 by ToryGattis

[Howard Huge]

Btw Mister X, I think the retail on washington that houses the Counter Burger has exactly the "up to the sidewalk storefront and mucho parking hidden in the back. Its a good model.

[Slick Vik]

I agree with the parking in back, but think Houstonians need "teaser" parking in front, ideally diagonal street parking if the RoW is available.  Think about University Blvd in the Rice Village for something similar. Ed Wulfe talked about this once. If you have the teaser parking in front, people will drive to that store thinking they will get it, and once they're there but it's full, they'll drive around back.  When a place has no parking in front, or just one or two parallel spaces, people just pick a destination/competitor with easier parking.

 

If you don't have parking and the store is good enough, people will still come. Diagonal parking only re-emphasizes the notion that car is God. Someone taking away that subliminal idea can do a lot.

[KinkaidAlum]

Still waiting on the answer to where you can find block after block of empty retail under apartments in LA...

 

 

[infinite_jim]

Street-side parking, whether parallel or diagonal, protects walkers especially if the adjacent road has a speed limit greater than 20mph. A good example of this phenomenon is on lower Westheimer where parallel parking is allowed.

[ToryGattis]

If you don't have parking and the store is good enough, people will still come. Diagonal parking only re-emphasizes the notion that car is God. Someone taking away that subliminal idea can do a lot.

You're right, but that's the problem: very few stores are unique enough that people will clearly pick them over a competitor with easier parking.  And even if a store does have a loyal customer base, it may still lose the marginal/less-loyal customer, which can make all the difference.

 

 

Still waiting on the answer to where you can find block after block of empty retail under apartments in LA...

He didn't say.

[Houston19514]

Street-side parking, whether parallel or diagonal, protects walkers especially if the adjacent road has a speed limit greater than 20mph. A good example of this phenomenon is on lower Westheimer where parallel parking is allowed.

 

It also tends to slow the through traffic. 

[infinite_jim]

It also tends to slow the through traffic. 

 

A further corollary (of course I'm forgetting the article to cite) was a retail street that was shut down to vehicular traffic in Philadelphia, only to become a dangerous place after dark. Retailers complained about declining business due to the street closure and autos were then brought back to put "eyes on the street." 

 

Point is that mix-use is a neighborhood concept in Midtown, not necessarily a singular development or building strategy.

[RedScare]

If you don't have parking and the store is good enough, people will still come. Diagonal parking only re-emphasizes the notion that car is God. Someone taking away that subliminal idea can do a lot.

 

Perhaps you should brush up on your "walkable neighborhoods" knowledge. Urban planners promote parallel and diagonal parking as a  means to make traffic slower and to protect pedestrians. Bagby Street is being rebuilt in exactly this manner.

[woolie]

Tory just showed up in my LinkedIn "People You May Know." I guess LinkedIn has been following me on HAIF.