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I came across this listing a few minutes ago. It shows a vacant city block available in Midtown for sale. It is between Gray and Webster between Crawford and La Branch. The owner is asking $58 per square foot. That comes out to be $3,625,000.

There has been a lot of complaing on this board about the slow rate of development in the Midtown / DT areas. With price per square foot this high it is pretty darn hard to justify developing much on this tract (and similar tracts is land is selling for so much).

The first thing that pops into my head is Office. Since you can build up the price for land is not as big a hurdle. Of course the DT office market does not need anymore new projects coming on board right now. There is already too much vacancy (Thanks Enron).

I ran a basic pro-forma on developing a stip center on this land. Assuming you could build a 21,000 center, the rents would have to be between $27-$30 NNN per square foot to make this feasible. This does not sound too far off, but I think it is difficult to sell to lenders.

What is sad is that a Walgreens or CVS would be a pretty good fit on this land. Oc course both have already built or plan to build in Midtown so they are out.

I am not sure if anyone cares about this, but I think it goes a long way in explaining why development has not been faster in this area.

Midtown Tract for Sale

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That's funny....first thing that popped into my head was GREEDY.

If you owned the land and you thought you could get $58 a foot would you sell it for much less in order to speed up development. In other words would you take $35 and sell it right now or would you wait maybe a year or two and hope to get $58. I would probably wait (assuming I did not need the cash immediately).

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If you owned the land and you thought you could get $58 a foot would you sell it for much less in order to speed up development.    In other words would you take $35 and sell it right now or would you wait maybe a year or two and hope to get $58.  I would probably wait (assuming I did not need the cash immediately).

Depends on how much I had paid for it. If I had bought it back when Midtown whas the horrible awful ghetto for like $3-10/PSF, I'd let it go for $35. If I had bought for $30, I'd be much much less inclined to let it go for $35.

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Depends on how much I had paid for it.  If I had bought it back when Midtown whas the horrible awful ghetto for like $3-10/PSF, I'd let it go for $35.  If I had bought for $30, I'd be much much less inclined to let it go for $35.

Fair Enough. I was very suprised that prices have gotten that high. It really does kill most development ideas. A professional building (maybe similar to the Midtown Towers being discussed on another thread) with an association to St josephs might be a good use at that price.

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I came across this listing a few minutes ago.  It shows a vacant city block available in Midtown for sale.    It is between Gray and Webster between Crawford and La Branch.    The owner is asking $58 per square foot.  That comes out to be $3,625,000.   

There has been a lot of complaing on this board about the slow rate of development in the Midtown / DT areas.    With price per square foot this high it is pretty darn hard to justify developing much on this tract (and similar tracts is land is selling for so much).   

The first thing that pops into my head is Office.  Since you can build up the price for land is not as big a hurdle.  Of course the DT office market does not need anymore new projects coming on board right now.  There is already too much vacancy (Thanks Enron).

I ran a basic pro-forma on developing a stip center on this land.  Assuming you could build a 21,000 center, the rents would have to be between $27-$30 NNN per square foot to make this feasible.  This does not sound too far off, but I think it is difficult to sell to lenders.

What is sad is that a Walgreens or CVS would be a pretty good fit on this land.  Oc course both have already built or plan to build in Midtown so they are out. 

I am not sure if anyone cares about this, but I think it goes a long way in explaining why development has not been faster in this area.   

Midtown Tract for Sale

You probably have to build more space b/c $27 per square foot is overpriced for office space.

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I'm a little confused...

According to TrophyProperty's numbers, there are apparently 62,500 square feet in the subject block ($3,625,000 / $58 per square foot). So why would a developer only rent out 21,000 square feet? Would one really have to devote two-thirds of the property to non-rentable uses?

And here's an idea that might make the numbers work in any event... multiple stories, allowing the development of say, 105,000 rentable square feet in only five stories (and that's only using the seemingly low 21,000 square feet per story)

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The way I read it, TrophyProperty was talking about a hypothetical strip center, which means that there would, I'm guessing, probably need to be parking. 2/3 of the lot for parking seems about right for a strip center, based on strip centers I've seen around town.

Wouldn't it be possible to build something profitably that wasn't an office building? Why not condos or rentable apartments? Without height limitations, it could be taller than usual, making up for the cost of buying original land. Isn't that what they're doing with the 'superblock' ?

Basically I'm just wondering why $58 a square foot is so prohibitive to development, and why people are saying that an office building would be the best thing to put on a block so expensive.

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Same size lot at Scott and I-45 is going for 1.5 mil.

And a rinky dink lot across from Elizabeth Baldwin Park is going for the same amount.

So, this Midtown property sounds about right IMHO.

I do not think this lot is spectacular by any means. It is right next to a bath house, bus station, and other undesirable businesses. At least the area around Elizabeth Baldwin Park has is already being re-claimed.

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