Khan: Downtown's Laura Street Trio redevelopment deal 'alive but on life support

[vicupstate]

Maybe someone can help me understand something. Lake and Simms3 seem to be of the opinion that renovating/completing these buildings will be very expensive.  In terms of the Trio, I can see it a little more, but taking the Barnett building for example, how is it any more expensive than building new from the ground up?

The Barnett is completed gutted to the steel columns  is it not?  If you apportion $1mm to the cost of the Laura Trio and $2m to the Barnett, you have only $2mm invested in the land (significant in size and prime) and the completed Exterior including the brand new windows (a considerable expense in itself).  There is no interior demo to do either.  Of course the interior has to be built out, but there would be that identical expense with new construction too.  I can see there might be some inefficiencies built in, because of having to bring in materials and equipment into a completed building, as opposed to craning stuff in as it goes up.  But, would that be that much?  Can  you guys or someone else enlighten me?

Also, Cameron Khun thought he could make a profit with condos in the building.  Would high-finish apartments be that impossible to do, when the same thing (only new construction) is already going up nearby (albeit with tax breaks)?

[downtownjag]

Maybe someone can help me understand something. Lake and Simms3 seem to be of the opinion that renovating/completing these buildings will be very expensive.  In terms of the Trio, I can see it a little more, but taking the Barnett building for example, how is it any more expensive than building new from the ground up?

The Barnett is completed gutted to the steel columns  is it not?  If you apportion $1mm to the cost of the Laura Trio and $2m to the Barnett, you have only $2mm invested in the land (significant in size and prime) and the completed Exterior including the brand new windows (a considerable expense in itself).  There is no interior demo to do either.  Of course the interior has to be built out, but there would be that identical expense with new construction too.  I can see there might be some inefficiencies built in, because of having to bring in materials and equipment into a completed building, as opposed to craning stuff in as it goes up.  But, would that be that much?  Can  you guys or someone else enlighten me?

Also, Cameron Khun thought he could make a profit with condos in the building.  Would high-finish apartments be that impossible to do, when the same thing (only new construction) is already going up nearby (albeit with tax breaks)?

They are both correct. Im really not trying to take sides here, Simms and i havent always agreed, but hes knowledgable in this area. Rehabbing is more expensive than new construction. There are always hidden challenges, not to insert a random, unaccountable ghost cost, but it's true. demolition is most always the cheapest part of the project, and downtown land has next to no value (right now).

The inefficiency of older Floorplates is one of the largest reasons these old buildings are difficult. Older buildings, those that were constructed before central hvac, have lots of corners so everyone had access to windows and cross breezes. An old buildings floor plate may have a "u" shape whereas newer ones are rectangular. So you can't fit as many apartments, offices, or whatever in it and have more dead space. There are larger, unleasable "core" areas of the buildings like hallways. Its called a buildings core factor or loss factor. theyre huge percentages in older buildings. To your point, you're using the same amount of materials (if not more, because space planners have to be much more creative to maximize units) which is at least the same cost, to build out less units.

Khun was doing condos because he could "cash out" of the project faster, it's going to take a long time for those buildings to cash flow as apartments. Look at Carling and 11E; most apartment projects in town with that occupancy rate have traded, but not these. They have higher rents than average too! 

The project can probably make money, but not at a rate comparable to other projects where an investor can put the same money.

[vicupstate]

Thanks for your input downtownjag. 

If we were talking about the Ambassador Hotel, I think all your points would be on target, especially about 'hidden' problems.  But what is 'hidden' in a building gutted to the steel superstructure?

Your comment about windows seems  more applicable to an office use, but apartments and condos would require windows in every unit and in most of the rooms in every unit.  The same with a hotel use.

Can anyone locate Khan's floorplans for condos? That would show the eficiency or lack thereof of the floorplate.   

As far as Carling and 11E. , isn't the Vestcor's modis operadi to hold their properties? There original plans were to convert to condos after a few years.  Of course the great crash has delayed that obviously.  And speaking of 11 E. and Carling, their SF is in the 700 and BELOW range, which Simms3 considers too small for this market.

My guess would be that the Barnett is a viable project on it's own, but the group of four has to be done as a unit to get the full effect/benefit both for the city and the developer. 

[downtownjag]

Thanks for your input downtownjag. 

If we were talking about the Ambassador Hotel, I think all your points would be on target, especially about 'hidden' problems.  But what is 'hidden' in a building gutted to the steel superstructure?

Your comment about windows seems  more applicable to an office use, but apartments and condos would require windows in every unit and in most of the rooms in every unit.  The same with a hotel use.

Can anyone locate Khan's floorplans for condos? That would show the eficiency or lack thereof of the floorplate.   

As far as Carling and 11E. , isn't the Vestcor's modis operadi to hold their properties? There original plans were to convert to condos after a few years.  Of course the great crash has delayed that obviously.  And speaking of 11 E. and Carling, their SF is in the 700 and BELOW range, which Simms3 considers too small for this market.

My guess would be that the Barnett is a viable project on it's own, but the group of four has to be done as a unit to get the full effect/benefit both for the city and the developer. 

I don't think you did it intentionally, but you breezed right over my point about efficiency of Floorplates. An efficiently built structure would be a rectangle with a small core factor. An inefficient plate is one with lots of turns and corners that are hard to plan and then lease.

It is an inefficient Floorplate, most old buildings are. Your leasable area is much less in comparison to the building as a whole. If you want to see the plate, go to COJ.net. Kuhn didn't have an answer no one else does. Again, he was going to sell them as condos, not lease them.

Yes, I believe Vestcor holds most of their properties but these two were developed as Condos, not Vestcors typical project. I think Simms was referring to the SQ FT of the average suburban apt, but yes dt rental buildings are typically more dense.

I would agree with you that the Barnett by itself would be easier, except for there's no way the amount of units you can fit into that building justify structured parking, which is an absolute must have.

[vicupstate]

Thanks for your input downtownjag. 

If we were talking about the Ambassador Hotel, I think all your points would be on target, especially about 'hidden' problems.  But what is 'hidden' in a building gutted to the steel superstructure?

Your comment about windows seems  more applicable to an office use, but apartments and condos would require windows in every unit and in most of the rooms in every unit.  The same with a hotel use.

Can anyone locate Khan's floorplans for condos? That would show the eficiency or lack thereof of the floorplate.   

As far as Carling and 11E. , isn't the Vestcor's modis operadi to hold their properties? There original plans were to convert to condos after a few years.  Of course the great crash has delayed that obviously.  And speaking of 11 E. and Carling, their SF is in the 700 and BELOW range, which Simms3 considers too small for this market.

My guess would be that the Barnett is a viable project on it's own, but the group of four has to be done as a unit to get the full effect/benefit both for the city and the developer. 

I don't think you did it intentionally, but you breezed right over my point about efficiency of Floorplates. An efficiently built structure would be a rectangle with a small core factor. An inefficient plate is one with lots of turns and corners that are hard to plan and then lease.

It is an inefficient Floorplate, most old buildings are. Your leasable area is much less in comparison to the building as a whole. If you want to see the plate, go to COJ.net. Kuhn didn't have an answer no one else does. Again, he was going to sell them as condos, not lease them.

Yes, I believe Vestcor holds most of their properties but these two were developed as Condos, not Vestcors typical project. I think Simms was referring to the SQ FT of the average suburban apt, but yes dt rental buildings are typically more dense.

I would agree with you that the Barnett by itself would be easier, except for there's no way the amount of units you can fit into that building justify structured parking, which is an absolute must have.

I just don't think the floorplate issue matters very much except with offices.   Office needs change often, at my job we move people around all the time, so you need lots of flexiblity.

Someone isn't going to need to 'annex' someone else's apartment unit.  They would just move to a bigger unit. I don't recall Khun's floorplans being ackward or in inordinate amount of space being devoted to hallways, etc.   I was hoping to refresh my memory, if someone saved them off.   Where/why would Khun's floorplans be on coj.net?  I assume you mean the existing floorplate of the building?

I agree with Stephen that the atypical nature of the project scares off the typical lenders and  contractors, but someone that has done this elsewhere, would see this as viable, I  would think.

Kuhn had an answer, it just that answers doesn't work now because no one will finace a condo these days. I don't understand why the same floorplan with apartment level finishes wouldn't work the same here as it did/does for 11 E. and Carling.  Both of those buildings have a much smaller footprint.  They also cost more to buy, and had demo costs that Barnett would not have.  If memory serves, Kuhn was going to have 150 or so units, versus the 100  or so that 11E. and Carling have.

The parking garage issue probably kills viability more than anything, but 220 Riverside has that expense too. Would giving Barnett/Laura Trio the same tax breaks make this work?

[simms3]

700 SF is not an average suburban footprint and is considered a good average for urban rental properties in much larger markets than Jax.  11 East Forsyth is a roughly 187,000 SF building across 17 floors and contains 127 rental units.  Even at a load of 30% per floor and units starting on the 3rd floor, I am getting to 900 SF average apartment size, which is a suburban size though it makes sense because these apartments are considered "loft" to a degree and "loft" apartments are larger.

I think the Barnett is a much more inefficient floorplate than 11 East.  Compile that with the fact that Vestcor + debt = over $24MM for their 11 East project, which is $189K per door.  That's FAR more expensive than the all-in development cost of 220 Riverside.  In fact, here's the disconnect - yes Vestcor has an attractive loan structure (they still weren't cash flowing enough to service it and needed a "refi" with the city a few years back), an apartment building I used to live in in Atlanta which now has rates at about $1.80psf average (net effective, or $1300/mo across units at 97% occupancy at sale signaling average size of 700 SF) just sold for $185K/door with room for new owner to spend an additional $8K/door in upgrades.

There is just this disconnect because Vestcor built the project like it could charge rents approaching $2psf and I believe it's down at $1.20-$1.30psf, still, today.  So as you can see rentals in renovated buildings in DT Jax are a financial feasibility challenge.

[simms3]

The challenge with office users in the Barnett is also the floorplate size and compatibility.  There are hardly anymore users who don't now value open, efficient floorplans.  It will be more expensive to fit the same amount of employees on a floor at the Barnett as [insert average bland postwar DT Jax box here], which means a company must lease more space.  And given the U-shape that DTJag mentions, it's hard to multi-tenant a floor in that building unless you can find office users such as dentists or startup law firms who can work in bowling alleys.

That is not to mention the overall dismal office market in DT Jax where you'd be hard-pressed to find users at all.  Not knowing much about student housing + classroom space, seeing similar buildings being fully used by Georgia State in Atlanta or Rush University and others in Chicago or Pace University in New York, I know it seems to work for them.  Hopefully current ownership can find such a school to take the entire building.

[simms3]

I think you can easily do hotel in the Barnett, but then you just destroy what I think is your only option for the Trio...methinks reserve hotel for Trio and it can be cooler anyway than a hotel in the Barnett (what city doesn't have Courtyard in a building like the Barnett at this point?...boring and not as challenging from a development perspective)

[downtownjag]

Round and round we go on the floor plate issue. The last developer that had the project under contract specialized in rehab.

[fieldafm]

Thanks for your input downtownjag. 

If we were talking about the Ambassador Hotel, I think all your points would be on target, especially about 'hidden' problems.  But what is 'hidden' in a building gutted to the steel superstructure?

Your comment about windows seems  more applicable to an office use, but apartments and condos would require windows in every unit and in most of the rooms in every unit.  The same with a hotel use.

Can anyone locate Khan's floorplans for condos? That would show the eficiency or lack thereof of the floorplate.   

As far as Carling and 11E. , isn't the Vestcor's modis operadi to hold their properties? There original plans were to convert to condos after a few years.  Of course the great crash has delayed that obviously.  And speaking of 11 E. and Carling, their SF is in the 700 and BELOW range, which Simms3 considers too small for this market.

My guess would be that the Barnett is a viable project on it's own, but the group of four has to be done as a unit to get the full effect/benefit both for the city and the developer. 

I don't think you did it intentionally, but you breezed right over my point about efficiency of Floorplates. An efficiently built structure would be a rectangle with a small core factor. An inefficient plate is one with lots of turns and corners that are hard to plan and then lease.

It is an inefficient Floorplate, most old buildings are. Your leasable area is much less in comparison to the building as a whole. If you want to see the plate, go to COJ.net. Kuhn didn't have an answer no one else does. Again, he was going to sell them as condos, not lease them.

Yes, I believe Vestcor holds most of their properties but these two were developed as Condos, not Vestcors typical project. I think Simms was referring to the SQ FT of the average suburban apt, but yes dt rental buildings are typically more dense.

I would agree with you that the Barnett by itself would be easier, except for there's no way the amount of units you can fit into that building justify structured parking, which is an absolute must have.

I just don't think the floorplate issue matters very much except with offices.   Office needs change often, at my job we move people around all the time, so you need lots of flexiblity.

Someone isn't going to need to 'annex' someone else's apartment unit.  They would just move to a bigger unit. I don't recall Khun's floorplans being ackward or in inordinate amount of space being devoted to hallways, etc.   I was hoping to refresh my memory, if someone saved them off.   Where/why would Khun's floorplans be on coj.net?  I assume you mean the existing floorplate of the building?

I agree with Stephen that the atypical nature of the project scares off the typical lenders and  contractors, but someone that has done this elsewhere, would see this as viable, I  would think.

Kuhn had an answer, it just that answers doesn't work now because no one will finace a condo these days. I don't understand why the same floorplan with apartment level finishes wouldn't work the same here as it did/does for 11 E. and Carling.  Both of those buildings have a much smaller footprint.  They also cost more to buy, and had demo costs that Barnett would not have.  If memory serves, Kuhn was going to have 150 or so units, versus the 100  or so that 11E. and Carling have.

The parking garage issue probably kills viability more than anything, but 220 Riverside has that expense too. Would giving Barnett/Laura Trio the same tax breaks make this work?

You're breezing over the rent you would have to charge for residential in order to even break even... Which would be FAR above market for the floor plan you could fit in the Trio.

The Barnett Building is very valuable in my opinion, but the catch 22 is that you'll need to build a garage to make it work... Which forces you to buy the Trio and deal with the can of worms they pose.  The bright side is you can build an attached building which gives you some flexibility for the Trio buildings. 

It's a project with tremendous costs and risks. 

[MusicMan]

I traveled for a couple years with Broadway Tours and almost always picked the Historic hotel choice, if given that option. I loved the history of the places, especially the lobbies and common areas. Most importamtly, for me, was that all the rooms/suites had a different floor plans. No two were alike, and after a few months of cookie cutter Hyatts and Hiltons, something diferent was always welcome. Sometimes you would get two rooms, or one large one, sometimes two bathrooms even, and almost in every instance you got a bigger space, which for serial travelers, is a big plus. A little more room to stretch out in was never a downer on the road. I think this approach would work great at the Barnett Building, offering all different sizes and shapes of rooms for the clientele.    I could also see a setup where some floors were for short stays and other floors were for extended stays, minimum one week. Choice is good, options are good. Still think the Bisbee and Florida life could be awesome apartments/condos, great views from both buildings.

[thelakelander]

They could be awesome apartments/condos. However, the developer paying for such a conversion would just be burning their money. If you're in development to turn a profit, there are simply much better and less riskier ways to make money.

[downtownjag]

Thanks for your input downtownjag. 

If we were talking about the Ambassador Hotel, I think all your points would be on target, especially about 'hidden' problems.  But what is 'hidden' in a building gutted to the steel superstructure?

Your comment about windows seems  more applicable to an office use, but apartments and condos would require windows in every unit and in most of the rooms in every unit.  The same with a hotel use.

Can anyone locate Khan's floorplans for condos? That would show the eficiency or lack thereof of the floorplate.   

As far as Carling and 11E. , isn't the Vestcor's modis operadi to hold their properties? There original plans were to convert to condos after a few years.  Of course the great crash has delayed that obviously.  And speaking of 11 E. and Carling, their SF is in the 700 and BELOW range, which Simms3 considers too small for this market.

My guess would be that the Barnett is a viable project on it's own, but the group of four has to be done as a unit to get the full effect/benefit both for the city and the developer. 

I don't think you did it intentionally, but you breezed right over my point about efficiency of Floorplates. An efficiently built structure would be a rectangle with a small core factor. An inefficient plate is one with lots of turns and corners that are hard to plan and then lease.

It is an inefficient Floorplate, most old buildings are. Your leasable area is much less in comparison to the building as a whole. If you want to see the plate, go to COJ.net. Kuhn didn't have an answer no one else does. Again, he was going to sell them as condos, not lease them.

Yes, I believe Vestcor holds most of their properties but these two were developed as Condos, not Vestcors typical project. I think Simms was referring to the SQ FT of the average suburban apt, but yes dt rental buildings are typically more dense.

I would agree with you that the Barnett by itself would be easier, except for there's no way the amount of units you can fit into that building justify structured parking, which is an absolute must have.

I just don't think the floorplate issue matters very much except with offices.   Office needs change often, at my job we move people around all the time, so you need lots of flexiblity.

Someone isn't going to need to 'annex' someone else's apartment unit.  They would just move to a bigger unit. I don't recall Khun's floorplans being ackward or in inordinate amount of space being devoted to hallways, etc.   I was hoping to refresh my memory, if someone saved them off.   Where/why would Khun's floorplans be on coj.net?  I assume you mean the existing floorplate of the building?

I agree with Stephen that the atypical nature of the project scares off the typical lenders and  contractors, but someone that has done this elsewhere, would see this as viable, I  would think.

Kuhn had an answer, it just that answers doesn't work now because no one will finace a condo these days. I don't understand why the same floorplan with apartment level finishes wouldn't work the same here as it did/does for 11 E. and Carling.  Both of those buildings have a much smaller footprint.  They also cost more to buy, and had demo costs that Barnett would not have.  If memory serves, Kuhn was going to have 150 or so units, versus the 100  or so that 11E. and Carling have.

The parking garage issue probably kills viability more than anything, but 220 Riverside has that expense too. Would giving Barnett/Laura Trio the same tax breaks make this work?

You're breezing over the rent you would have to charge for residential in order to even break even... Which would be FAR above market for the floor plan you could fit in the Trio.

The Barnett Building is very valuable in my opinion, but the catch 22 is that you'll need to build a garage to make it work... Which forces you to buy the Trio and deal with the can of worms they pose.  The bright side is you can build an attached building which gives you some flexibility for the Trio buildings. 

It's a project with tremendous costs and risks. 

I think that was Dav-Lins original plan and I like it best. The new resi building would help regain some efficiencies of the project.

[acme54321]

Looks like Jim Bailey is excited...

From the publisher: James F. Bailey Jr.

When the Great Fire of 1901 wiped out what was then our Downtown, heralded architects Henry Klutho and Edward H. Glidden led a rebirth of the charred city center â€" much like a phoenix rising from the ashes.

Three buildings, now called the Laura Street Trio, designed by these two must have inspired a community in the early 1900s that was devastated by the Great Fire.

Last week, we finally received the long-awaited news that the Laura Street Trio and old Barnett Bank Building in the city's heart might actually come back to life after sitting empty and deteriorating for more than a decade.

Is lightning about to strike twice in Downtown Jacksonville?

The importance of this development for the entire community cannot be overstated.

Since it was reported that a group led by Jacksonville developer Steve Atkins has purchased the historic buildings with plans to restore them to their century-old glory, there has been a buzz about Downtown that I have not seen in a long time.

It's as if Atkins and his team have managed to send a giant spark into the core of the city, which makes it only fitting he intends to reveal his detailed plans for the buildings during Downtown's One Spark festival next week.

Let's talk about the importance of the four buildings.

The oldest is the former Florida National Bank, which many refer to as the Marble Bank, on the corner of Forsyth and Laura streets.

In 1902, shortly after the Great Fire flatted the city core, Glidden designed the building in the Classical Revival style.

In 1916 it was renovated to include a large room with a skylight, but during a 1950 refurbishing the ceilings were dropped, covering the skylight and the plaster detailing.

In 1976, then as the Jacksonville National Bank, the lowered ceilings were removed and the building was restored to its grand appearance.

The second building constructed, the Bisbee Building, was designed by Klutho in the Prairie Style and built next to the Marble Bank building on Forsyth Street.

It opened in 1908-09 as a 10-story high rise, the first in Jacksonville.

There are three interesting historical facts about the Bisbee Building: it was designed to be only 26 feet wide, but the high demand for office space spurred the owner to have Klutho double the width; it was the first reinforced concrete high rise in the Southeast; and it was in a race against two other 10-story buildings to become Jacksonville's first skyscraper.

The second Klutho-designed building is the Florida Life Building, which opened in 1911-12. It faces Laura Street and is next to the back wall of the Marble Bank.

Another Klutho masterpiece, the St. James Building, was restored during former Mayor Ed Austin's administration. Today it is City Hall on Hemming Plaza. When it opened, the Florida Life Building was the tallest in town.

The former Barnett Bank Building, which has been closed for more than a decade, sits at the corner of Laura and Adams streets. With 14 stories, it opened in 1926 as the tallest building in Jacksonville.

The structure was built by the same contractor, James Stewart Co., that constructed Madison Square Garden in New York City.

This is not the first attempt to bring these iconic structures back to life.

Mayor John Delaney recognized their significance in 2002 when he had the City purchase the Laura Street Trio with a plan to sell them to a private developer.

Atkins is a Jacksonville native with a passion and a vision for his hometown. He has been working on this deal since 2010, when he first proposed a $70 million plan to restore the four buildings.

By pulling off the purchase of the four buildings from the city for $3 million â€" with a financial loan and political boost from Jacksonville Jaguars owner Shad Khan â€" he is now off and running.

I've spent some time with Atkins. We talked about all of Downtown and what it takes. I've heard his plans and I've experienced that passion.

I do believe this is the real deal.

I can't wait to hear and see the details Atkins and his team unveil next week. Just this first piece of news has been like a shot of adrenalin to those of us who believe if we unlock the potential of our Downtown, it will make Jacksonville a top-tier city.

But, let's not be naïve. While bringing these four historic buildings to their original grandeur and then filling them with office workers, restaurants and residents is a great step, it is only a step.

There is much to do, which means the rest of us can't just sit around as spectators.

When these buildings reopen, we can't let their value be stifled by the environment around them. When people walk out on the street, they have to see Downtown as an exciting place to be.

There are many organizations with good intentions and some great work is being done to fill lingering voids, but we all need to row in the same direction and change perceptions.

We need bold leadership to address issues, from enforcement to homelessness and encourage pioneers, entrepreneurs and small business.

We need real leadership to revitalize the 25-year-old Jacksonville Landing, which Atkins calls the "crown jewel" of Downtown; clean up Hemming Plaza; save and restore the Bostwick Building; and implode the old courthouse and former City Hall on the riverfront so they can become economic and entertainment engines that contribute to Jacksonville's quality of life.

As for lightning striking twice Downtown â€" I have heard the clap of thunder. And I welcome it.


jbailey@baileypub.com

(904) 356-2466

http://www.jaxdailyrecord.com/showstory.php?Story_id=539172

[Cheshire Cat]

I am sure he is excited as he supports downtown efforts and sits on the DIA.  I was intrigued by the comments he made about the Landing.  Wonder where discussion is headed on the DIA?  I agree with the comments highlighted below.

I do believe this is the real deal.

I can't wait to hear and see the details Atkins and his team unveil next week. Just this first piece of news has been like a shot of adrenalin to those of us who believe if we unlock the potential of our Downtown, it will make Jacksonville a top-tier city.

But, let's not be naïve. While bringing these four historic buildings to their original grandeur and then filling them with office workers, restaurants and residents is a great step, it is only a step.

There is much to do, which means the rest of us can't just sit around as spectators.

When these buildings reopen, we can't let their value be stifled by the environment around them. When people walk out on the street, they have to see Downtown as an exciting place to be.

There are many organizations with good intentions and some great work is being done to fill lingering voids, but we all need to row in the same direction and change perceptions.

We need bold leadership to address issues, from enforcement to homelessness and encourage pioneers, entrepreneurs and small business.

We need real leadership to revitalize the 25-year-old Jacksonville Landing, which Atkins calls the "crown jewel" of Downtown; clean up Hemming Plaza; save and restore the Bostwick Building; and implode the old courthouse and former City Hall on the riverfront so they can become economic and entertainment engines that contribute to Jacksonville's quality of life