Retail-less parking garage to receive final approval

[simms3]

If it's only 20 ft above the Landing it may actually not be that visible considering how far back from the physically riverfront it is.

[Dapperdan]

Why does it not fulfill the parking promise? This adds 200 daily spots. The current Landing lot is never full during the day unless a special event is happening. It also adds 375 spots for night. This sounds like a good  amount of parking. How much more do they need?

[copperfiend]

This may be the worse publicly funded decision made downtown in years, and that's saying something.

Main St Pocket Park?

[tufsu1]

Why does it not fulfill the parking promise? This adds 200 daily spots. The current Landing lot is never full during the day unless a special event is happening. It also adds 375 spots for night. This sounds like a good  amount of parking. How much more do they need?

the agreement is for 300 spaces...but the main reason Sleiman doesn't like it is that it isn't his garage...so he doesn't make the profits!

[dougskiles]

Why does it not fulfill the parking promise? This adds 200 daily spots. The current Landing lot is never full during the day unless a special event is happening. It also adds 375 spots for night. This sounds like a good  amount of parking. How much more do they need?

the agreement is for 300 spaces...but the main reason Sleiman doesn't like it is that it isn't his garage...so he doesn't make the profits!

In just the same way that Parador needs dedicated spaces to lease the Suntrust building, Sleiman needs dedicated spaces for the national tenants he is trying to attract to The Landing.  Like it or not, that is always an issue in retail development.

[thelakelander]

^Good point. 

This may be the worse publicly funded decision made downtown in years, and that's saying something.

Main St Pocket Park?

This would be worse.  The park came from a $800 FDOT grant.  Other than leveling out some retaining walls, you could easily put a building on it.  This garage requires $3.5 million from the city to make the numbers work.

[dougskiles]

^Good point. 

This may be the worse publicly funded decision made downtown in years, and that's saying something.

Main St Pocket Park?

This would be worse.  The park came from a $800 FDOT grant.  Other than leveling out some retaining walls, you could easily put a building on it.  This garage requires $3.5 million from the city to make the numbers work.

I keep hearing that even with the $3.5 million, it doesn't work financially.  This all may be for show.  Wouldn't be the first time.

[acme54321]

Did they give final approval?

[thelakelander]

yes.

[simms3]

Why does it not fulfill the parking promise? This adds 200 daily spots. The current Landing lot is never full during the day unless a special event is happening. It also adds 375 spots for night. This sounds like a good  amount of parking. How much more do they need?

the agreement is for 300 spaces...but the main reason Sleiman doesn't like it is that it isn't his garage...so he doesn't make the profits!

In just the same way that Parador needs dedicated spaces to lease the Suntrust building, Sleiman needs dedicated spaces for the national tenants he is trying to attract to The Landing.  Like it or not, that is always an issue in retail development.

In addition to demographics, landlord incentive packages, cotenancy, market draw, access, landlord relationship, broker relationship and input, appeal and attractiveness of site, foot traffic, etc etc.

Parking is not going to make or break the Landing.  The success of downtown overall and Sleiman's own relationships and experience, as well as creativity, will make the Landing a success.  Worked on worse retail locations myself where the team was able to put in a few nationals and many of the best local/regional tenants.  Nationals is doubtfully the route to go, it won't draw shoppers (why would they go to Landing when same stores are scattered about town...and forget about top tier retailers forgoing SJTC to test out the Jax market at the Landing!)

Anyway, not saying I could do a better job making the Landing somewhat of a success than Toney, but the guy is just looking for avenues to lay blame elsewhere so that he can't be seen as a failure here.  If I were Toney I would have done something to get Black Sheep and other restauranteurs in town to locate in the Landing.  Would have more "creative" local events that aren't beerguzzling fests for college football fans who care not where they drink as long as there are TV screens and tall boys, make some impactful yet cost effective aesthetic improvements, improve exterior to draw people in rather than shut world out, etc etc.  I don't think he's the right guy for that asset.

Jax ain't a big city like Boston, but I work on a portfolio that consists of approximately 15% of GLA on Newbury St and a few buildings a block off, and believe me...having parking at all would kill that retail destination.  Worked on a project in Chattanooga at one point for 6 months...about 300,000 SF of retail and office (larger than Landing).  Parking on site with some surface and 1.5 level garage, but not much.  The dedicated parking became an issue for tenants such as a yoga instructor who held classes and needed a small block at certain times, or our token restaurant there, which needed parking at night (not for lunch).  Even there, a lot of business was walk-up and lots of office workers lived nearby (plus TVA across the street was a boon once word got out about the mercantile food court level).  We hosted fashion week there, all the private schools and Junior League etc held events there...so we made publicity that way, food trucks every Tuesday, pop-up shops, etc (and working as an outsider in Chattanooga is A LOT more challenging than being the star developer in your own hometown...the city actually worked against us and viewed us as the big bad firm from Atlanta trying to do as we please in their city).  Candidly the office component is a huge success while the retail component struggles (but is still leagues better than the Landing could be even at full potential).

[Ocklawaha]

As much as I hate the damn thing and the mindless little cluster of Homo habilis and their bipedal friends that approved it, I do think we could make some lemonade out of this lemon. That pass through courtyard could easily be turned into a festive themed market, filled with baskets, coffee's and interesting kitsch. Perhaps something along the lines of Stephen dare's 'Huguenot Arch,' and a French market. I'd even give it a street name al la St. Augustine's Palm Row, Artillery Lane, Bravo or Aviles Street.

LOS ANGELES has their Olvera Street which demonstrates the concept:

[thelakelander]

Simms, I think the national retail Doug is referring to is dining/entertainment oriented.

[simms3]

Gotcha.  Like a Ten Pen or Lucky Strike?  Every development I know of in struggling downtowns (like Houston's Pavilions development) has these national dining/entertainment tenants and none of these developments are panning out at all.  wasn't working super-well with the particular mix that was at Atlantic Station either, and new owners have trended local or new-to-market (very expensive).  They obviously have a lot more going for them fundamentally than Sleiman and institutional backing.

Wow development 101 issue here that we have run into ourselves on some of our opportunistic investments in riskier small markets like Jax.

Choices:
1) IRR driven - cram tenants in there at any cost and no attention to detail, buy for nothing then sell quickly for a good amount...obviously this is not Sleiman's plan, though it probably could have been in '07 back when retailers were over-expanding and people were idiots and would have bought 200,000 SF of retail on a ground lease in downtown Jax.

2) Multiple driven.  Lots of money upfront and babying the deal, lots of creativity necessary, decent hold and big pop for all the hard work at the end.  Doesn't seem to be his plan, plus not really possible with any retail deal in DT Jax.  This is like Pavilions in Houston or a lot of development deals, but most in riskier submarkets (i.e. Sunbelt) aren't panning out.

3) Dividend-paying.  This is a 100% leased Publix-anchored center with major term and no competition, obviously not Sleiman's deal here.

4) Make your money back.  Same strategy as multiple...work REALLY hard.  LoL  Is Sleiman working this center hard?  I can't really tell, but it does not seem like it.


Honestly, in similar deals I have worked on we are gambling over our hold by buying tenants, paying a lot for marketing and events, paying a lot to make the asset a really cool space that appeals to local and sophisticated crowd and praying that we can make our desired return on exit.  Problem with this is that very few buyers are going to pay more (i.e. lower cap rate) for your hard work in a risky market/submarket like DT Jax.  So you put all this money into it (which Sleiman is not doing) and you hope that your tenancy and term fits the same profile that can usually drop your exit cap from 10% to 8% anywhere else to make all of it worth it.  Say you put $200psf TI for a new restaurant (basically standard for nationals going into a place like Landing) and you get $20 net rent out of it.  10 year payback, non-discounted (and for Landing the discount rate should be like 20%, making it impossible to catch up ever).

Just saying I can't tell what Sleiman is doing with the center...he isn't following any standard protocols here and maybe he realizes there is no return for him so he's just avoiding the inevitable and trying to protect his reputation in the meantime.  I think a rare truly great team on all fronts (marketing, creative, landlord rep, developer, property mgt, etc) can do something with the Landing and come out at least making their money back.  It is possible.

[dougskiles]

The tenant demanded high parking ratios drive me crazy.  Lakelander is right, it would be mostly dining/entertainment at the Landing, however, I see it in other developments, too.

Having adequate parking won't ensure a successful commercial development.  Not having adequate parking can make a commercial development fail.

In my perfect world, we wouldn't build a new garage for the Landing.  We would provide the designated parking in an existing facility.  Same with Parador.  Then, instead of spending $3.5 million on another parking garage, we would put that money toward a fixed transit system that provides a viable alternative to driving.

[thelakelander]

I don't know what Sleiman is doing with the center now but he only purchased it for $5 million.  It cost Rouse $37.5 million to construct.  That being said, it's not like the center is empty right now.  Nearly all the riverfront/interior courtyard spaces are leased.  The food court is empty but I'd argue they need to completely empty it out and consider converting that space into another large scale riverfront dining operation.  With that said, I don't know if he needs to radically change the tenant mix there now. 

What really needs to be done is better utilization of the existing space so that synergy between it and surrounding uses can take place.  Better utilization of space would also save/generate Sleiman money.  If you want a food court, it should be relocated to the west side of the mall, overlooking an outdoor plaza facing Hogan & Independent, Suntrust Tower, this garage, Omni, and the performing arts center.  Right now, that's a lot of non-leasable space (with a riverfront view) on that second floor that someone is paying the air conditioning and maintenance bill for.

Also, they don't necessarily need to tear the middle of the structure down but it wouldn't hurt convert the center into an outdoor space (perhaps covered to keep retrofit costs down) , opening the courtyard up to the Laura Street corridor.  Looking at the interior mall spaces, it probably wouldn't hurt to completely lose the interior enclosed mall.  There's no money made air-conditioning all that interior common space square footage.  Plus, the idea of filling an interior mall with specialty shops (with limited visibility) and no anchors, makes little long term sense, imo. 

You could probably reshape a chunk of the east mall interior into a larger tenant or two and reconfigure/create a few specialty retail spaces along the open connection between the courtyard and Laura Street.