GreenStreet: Mixed-Use Development At 1201 Fannin St.

[LTAWACS]

This lunacy of watering down projects has got to stop!

[UtterlyUrban]

Serious question, but why do you think that?

The original plan called for a mid-range hotel and an apartment tower. Those apartments, judging by the downtown market, would have been full, especially with the loss of the Humble Tower units just down the block. Additionally, the hotel would have beaten the Embassy Suites, Homewood Suites, and Hampton Inn out of the ground. From everything I've heard, the Embassy Suites has been happy with the market.

Additionally, I cannot imagine having 200 hotel rooms and 150-200 apartments would have done anything but HELP the rest of the development.

I tend to agree, unless it was a timing issue. When did the Pavillions "start" to fail?

Since around 2010, downtown hotel occupancy rates have been very high and got even higher each year. Hard to find a room many times. Since around 2010-ish, downtown resi rental has really taken hold and gotten better each year too.

But, Greenstreet was built earlier than that and we would have to look back and see what residential occupancy rates and hotel occupancy rates were at that time. I don't know but the environment was likely not as conducive to resi and hospitality success as now.

[fernz]

Serious question, but why do you think that?

The original plan called for a mid-range hotel and an apartment tower. Those apartments, judging by the downtown market, would have been full, especially with the loss of the Humble Tower units just down the block. Additionally, the hotel would have beaten the Embassy Suites, Homewood Suites, and Hampton Inn out of the ground. From everything I've heard, the Embassy Suites has been happy with the market.

Additionally, I cannot imagine having 200 hotel rooms and 150-200 apartments would have done anything but HELP the rest of the development.

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.

[Howard Huge]

I beg to differ.

If they had built the original plan, none of the retail would be empty.

With a hotel, office building, and apartment building directly above the pavilions, they would have had a built in comsumer base around the clock.

Im sure the reason the retail failed was lack of foot traffic, coupled with every business that tried to make it there failed, and also, they picked some really lame retail (Books-A-Million anyone?)

Well now, as one of our HAIF posters pointed out a while back, they are basically building the original plan, with Alessandra to the west and the Marlow flanking greenstreet to the east.

So lets see what happens after Marlow and Alessandra build out, Im sure at that point it will be far easier to lure reatilers in at that point....

[Triton]

I beg to differ.

If they had built the original plan, none of the retail would be empty.

With a hotel, office building, and apartment building directly above the pavilions, they would have had a built in comsumer base around the clock.

Im sure the reason the retail failed was lack of foot traffic, coupled with every business that tried to make it there failed, and also, they picked some really lame retail (Books-A-Million anyone?)

Well now, as one of our HAIF posters pointed out a while back, they are basically building the original plan, with Alessandra to the west and the Marlow flanking greenstreet to the east.

So lets see what happens after Marlow and Alessandra build out, Im sure at that point it will be far easier to lure reatilers in at that point....

 

My viewpoint as well. It wouldn't have been even more of a fail... it would have been even more of a success.

[quietstorm]

I beg to differ.

If they had built the original plan, none of the retail would be empty.

With a hotel, office building, and apartment building directly above the pavilions, they would have had a built in comsumer base around the clock.

Im sure the reason the retail failed was lack of foot traffic, coupled with every business that tried to make it there failed, and also, they picked some really lame retail (Books-A-Million anyone?)

Well now, as one of our HAIF posters pointed out a while back, they are basically building the original plan, with Alessandra to the west and the Marlow flanking greenstreet to the east.

So lets see what happens after Marlow and Alessandra build out, Im sure at that point it will be far easier to lure reatilers in at that point....

 

I tend to think that the retail choices or lack of interest by certain retailers (e.g., H&M) is the primary reason for the failure.  Forever 21 has done well despite lack of built in foot traffic.  I would venture that similar concepts such as Zara and H&M that one traditionally sees in proximity to Forever 21 in other cities would've helped. 

[Howard Huge]

I tend to think that the retail choices or lack of interest by certain retailers (e.g., H&M) is the primary reason for the failure. Forever 21 has done well despite lack of built in foot traffic. I would venture that similar concepts such as Zara and H&M that one traditionally sees in proximity to Forever 21 in other cities would've helped.

Agreed.

And they are picking and choosing which retailers they rent to (which is ludicrous in my mind) because from what I heard when I spoke to the Greenstreet rep over the phone (I believe here title was "manager" of some sort) they have fielded several offers from potential tenants that they jave TURNED DOWN because, and I quote, "They didnt fit the image of Greenstreet"

Ummmmmmm, WHAT IMAGE?

[fernz]

I beg to differ.

If they had built the original plan, none of the retail would be empty.

With a hotel, office building, and apartment building directly above the pavilions, they would have had a built in comsumer base around the clock.

Im sure the reason the retail failed was lack of foot traffic, coupled with every business that tried to make it there failed, and also, they picked some really lame retail (Books-A-Million anyone?)

Well now, as one of our HAIF posters pointed out a while back, they are basically building the original plan, with Alessandra to the west and the Marlow flanking greenstreet to the east.

So lets see what happens after Marlow and Alessandra build out, Im sure at that point it will be far easier to lure reatilers in at that point....

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.

[Howard Huge]

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.

Its not a "fallacy"

There are quite a few retail on bottom apartments in Houston that almost certainly depend on the residents for its success.

Sure its an unspoken "rule of thumb" in real estate, we all know Ric Campo abides by it, but that doesnt mean there are not several projects in Houston that have successful retail because of the tenants above.

And we arent just talking about apartments at Greenstreet. Were talking about a high rise hotel, plus high rise apartments, plus the office building, which as of now Id bet the farm that the office building in the middle of Greenstreet that houses NRG is one of the main reasons the pavilions was able to squeak by with 90% of their tenants making all their money on the office worker lunch crowd.

[Moore713]

What Howard said vibes with what Scott gernter said happen after midway took over and he lost the lease to his downtown club..They told him it didn't fit into their vision of green st

[C2H]

 http://midwaycompanies.com/about/contact

 

My email to Midway.

 

To Whom It May Concern,

 

I want to start off by applauding the work of the Midway corporation and everything it has done towards improving the Houston area. Especially with City Centre and the current Greenstreet project downtown Houston. However, I am extremely disappointed in the new re-design for the Hotel Alessandra. Houston has been bombarded with poo0r, tacky architecture and underwhelming architecture in its buildings for years. It has been falling behind the curve of many of its peer cities like Dallas, NYC, Philadelphia, Atlanta, and even Austin TX.

 

With the presentation of the original design from March 2014, I had high hopes for this project and thought it was going to be the start of establishing a new precedent for architecture in Houston. Although I am grateful of the initiative and ambition of the hotel, I have to  say that the original design was much more striking and appealing.

 

I hope to hear some sort of reply regarding this. I am interested in hearing all plans for Midway

 

Sincerely,

 

C2H

[largeTEXAS]

 

My email to Midway.

 

To Whom It May Concern,

 

I want to start off by applauding the work of the Midway corporation and everything it has done towards improving the Houston area. Especially with City Centre and the current Greenstreet project downtown Houston. However, I am extremely disappointed in the new re-design for the Hotel Alessandra. Houston has been bombarded with poo0r, tacky architecture and underwhelming architecture in its buildings for years. It has been falling behind the curve of many of its peer cities like Dallas, NYC, Philadelphia, Atlanta, and even Austin TX.

 

With the presentation of the original design from March 2014, I had high hopes for this project and thought it was going to be the start of establishing a new precedent for architecture in Houston. Although I am grateful of the initiative and ambition of the hotel, I have to  say that the original design was much more striking and appealing.

 

I hope to hear some sort of reply regarding this. I am interested in hearing all plans for Midway

 

Sincerely,

 

C2H

 

 

C2H! Wow!! What a letter..can I copy it for another letter to Midway  

 

Apologies for my previous posts. I've always had a ton of respect for you, your viewpoints and passion...since the early days of HAIF (before the first website crash). In my previous posts I was just hoping to get across what you so eloquently did in your letter to Midway. Seems like a bunch of us were hoping Alessandra would be a masterpiece and usher in a new day for architecture and development in Houston. Even so, I think these are exciting times in Houston and developers are getting better. Let's keep the pressure on these guys! 

[fernz]

Its not a "fallacy"

There are quite a few retail on bottom apartments in Houston that almost certainly depend on the residents for its success.

Sure its an unspoken "rule of thumb" in real estate, we all know Ric Campo abides by it, but that doesnt mean there are not several projects in Houston that have successful retail because of the tenants above.

And we arent just talking about apartments at Greenstreet. Were talking about a high rise hotel, plus high rise apartments, plus the office building, which as of now Id bet the farm that the office building in the middle of Greenstreet that houses NRG is one of the main reasons the pavilions was able to squeak by with 90% of their tenants making all their money on the office worker lunch crowd.

 

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. 

Edited January 27, 2015 by fernz

[C2H]

C2H! Wow!! What a letter..can I copy it for another letter to Midway

Apologies for my previous posts. I've always had a ton of respect for you, your viewpoints and passion...since the early days of HAIF (before the first website crash). In my previous posts I was just hoping to get across what you so eloquently did in your letter to Midway. Seems like a bunch of us were hoping Alessandra would be a masterpiece and usher in a new day for architecture and development in Houston. Even so, I think these are exciting times in Houston and developers are getting better. Let's keep the pressure on these guys!

Absolutely. Please do.

And no worries. No need to apologize. Hopefully if we get enough letters in and they see enough people passionate about the situation, maybe they will listen.

[Howard Huge]

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, c.) 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.

Ok then, agree to disagree.

I can point to the Post Midtown strip of ground floor retail along west gray, which is arguably the most successful and well designed, walkable urban stretch in downtown/midtown, and I all but GUARANTEE you that all of that foot traffic is coming from the residents above in the surrounding blocks, NOT people that have walked to midtown from the north side or southeast Houston.

Dont try to convince me that if you just plopped down a Cocos Crepes or Cyclone Anayas in that barren section of Midtown without any of the existing apartments there, the retail would still succeed somehow.

I lived in Houston House apartments for years, and I CAN guarantee you that the shop/grill on the first floor was 99.9 percent supported by the 30 stories of residents above, I know that for a FACT from speaking with the owner every day.

You gonna try to tell me Phoenicia had plans to build a grocery store on a surface lot in downtown next? Or that if they heard One Park Place was gonna cancel the apartment tower, they still would have built anyway??

Gimme a break.

Like I said, I know that "if the retail cant survive on its own, it wont survive in a mixed use complex" is a rule that developers go by, I heard Ric Campo use that line as to why he was not building ground floor retail space in the Camden Superblock project, which is insane.

[fernz]

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.

[Sparrow]

Are there any plans to connect Greenstreet to the tunnel system? Not connecting a large retail development to the tunnels in our Downtown just seems like a huge miss. 

[fernz]

Like I said, I know that "if the retail cant survive on its own, it wont survive in a mixed use complex" is a rule that developers go by, I heard Ric Campo use that line as to why he was not building ground floor retail space in the Camden Superblock project, which is insane.

I know his record as a developer, but not yours. I would guess he is the expert of the two.

Edited January 27, 2015 by fernz

[H-Town Man]

It's not out of the question to suggest that the activity generated by a hotel and residences would lure more people to a shopping mall. Shoppers tend to go where they see other people; an empty mall scares people away even with great stores. Just a modest injection of bodies could have a multiplier effect.

 

 

[H-Town Man]

fernz, you said that "the retail component of any mixed-use project must be viable without its built-in demand to be successful," and then Howard gave you an example of a retail component of a mixed-use project that lived on its built-in demand. Now you're throwing out the qualifier that it must be national retail. But I thought you said "any mixed-use project"???

 

Edited January 27, 2015 by H-Town Man

[fernz]

fernz, you said that "the retail component of any mixed-use project must be viable without its built-in demand to be successful," and then Howard gave you an example of a retail component of a mixed-use project that lived on its built-in demand. Now you're throwing out the qualifier that it must be national retail. But I thought you said "any mixed-use project"???

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.

[Howard Huge]

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.

backpedal~backpedal~backpedal

Also, I noticed you said nothing about Phoenicia or the retail under Post Midtown Square.

In you're original post, as htowman already pointed out, you said retail period. Now you're changing it to "national chains", which is still besides the point, because that would be saying that Greenstreet couldnt be occupied by any local stores like Cocos crepes or Russos Pizzeria or Cyclone Anayas, which is clearly not true as they already have a Mia Bella, an Andalucia and Guadalajara.

Its irrelevant that the retail is local or National, as my point still stands.

Edited January 28, 2015 by Howard Huge

[fernz]

backpedal~backpedal~backpedal

Also, I noticed you said nothing about Phoenicia or the retail under Post Midtown Square.

In you're original post, as htowman already pointed out, you said retail period. Now you're changing it to "national chains", which is still besides the point, because that would be saying that Greenstreet couldnt be occupied by any local stores like Cocos crepes or Russos Pizzeria or Cyclone Anayas, which is clearly not true as they already have a Mia Bella, an Andalucia and Guadalajara.

Its irrelevant that the retail is local or National, as my point still stands.

Yes, I'm sure you're right.

[ArchFan]

I seem to recall Ric Campo as being loosely quoted as saying that he successfully does GFR in multi-family residential projects elsewhere, but not in Houston because it doesn't work here.  I'm not sure how accurate that quote is, but -- if true -- it would be interesting to know why Houston would be so different.  

 

I remember visiting Dallas in the mid 70s and seeing GFR in an apartment building there for the first time ... and saw many more gradiose examples pop up in later years.   Not long ago, I mentioned this to someone who does multifamily here and he said he had also noticed that GFR seemed to be more established there.  

 

My assumption has been that for a long time, the few attempts at it here were so poorly done -- and therefore unsuccessful -- that local developers have tended to shun it, implicitly assuming that there's little demand to support it.  Now, it occurs to me that perhaps its a sort of a self-fulfilling prophesy:  too many on both sides (developers and consumers)  expect it to fail.

 

Hopefully ROD will be a big success and demonstrate that, if well done, it can be successful here.

Edited January 28, 2015 by ArchFan

[UtterlyUrban]

I seem to recall Ric Campo as being loosely quoted as saying that he successfully does GFR in multi-family residential projects elsewhere, but not in Houston because it doesn't work here. I'm not sure how accurate that quote is, but -- if true -- it would be interesting to know why Houston would be so different.

I remember visiting Dallas in the mid 70s and seeing GFR in an apartment building there for the first time ... and saw many more gradiose examples pop up in later years. Not long ago, I mentioned this to someone who does multifamily here and he said he had also noticed that GFR seemed to be more established there.

My assumption has been that for a long time, the few attempts at it here were so poorly done -- and therefore unsuccessful -- that local developers have tended to shun it, implicitly assuming that there's little demand to support it. Now, it occurs to me that perhaps its a sort of a self-fulfilling prophesy: too many on both sides (developers and consumers) expect it to fail.

Hopefully ROD will be a big success and demonstrate that, if well done, it can be successful here.

There is a GFR space in one park place at the corner of La Branch and Lamar that has never been leased since the building opened 5-ish years ago...... Trillions of visitors to the park every year and 300 units above..... No takers (at the price being asked).......

[htownproud]

I'm not sure you all are disagreeing that much. If a retailer needs $10 to make a profit, and is only getting $8 based on normal traffic then he fails. Now if he has a hotel and residential tower over him he makes $7 extra dollars. So now he is very profitable ($15). Of course if all he had was the hotel and residential ($7) then he would still fail, but with both the normal traffic and the hotel/residential he becomes profitable.

[fernz]

I'm not sure you all are disagreeing that much. If a retailer needs $10 to make a profit, and is only getting $8 based on normal traffic then he fails. Now if he has a hotel and residential tower over him he makes $7 extra dollars. So now he is very profitable ($15). Of course if all he had was the hotel and residential ($7) then he would still fail, but with both the normal traffic and the hotel/residential he becomes profitable.

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.

[Timoric]

-

Edited July 8, 2019 by Timoric

[H-Town Man]

I seem to recall Ric Campo as being loosely quoted as saying that he successfully does GFR in multi-family residential projects elsewhere, but not in Houston because it doesn't work here. I'm not sure how accurate that quote is, but -- if true -- it would be interesting to know why Houston would be so different.

I remember visiting Dallas in the mid 70s and seeing GFR in an apartment building there for the first time ... and saw many more gradiose examples pop up in later years. Not long ago, I mentioned this to someone who does multifamily here and he said he had also noticed that GFR seemed to be more established there. .

It's also more established in Austin and, believe it or not, College Station. Kind of depressing.

[swtsig]

It's also more established in Austin and, believe it or not, College Station. Kind of depressing.

 

only bc city code in austin requires GFR, not bc the market demands it. more often than not GFR is a money loser for developers - it is often viewed as an amenity to the facility that often needs some sort of subsidy more than it is a form of market demand. don't believe ric campo? ask the guys at hines or hanover or brookfield or lionstone or yada yada yada.