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

[MusicMan]

Pros:  Something will finally happen at this site.
          At $3,000,000 that is one of the all time best buys in Florida Real Estate History.

Cons:  If you are not puting a residential rental community like 11E or The Carling, which have booked
            at 95% occupancy rates since they were finished, you are missing the entire point of what is killing
            downtown. NOT ENOUGH PEOPLE LIVE THERE. A cursory look at the current statistics will reveal a
            strong demand for downtown housing that is going unmet. Putting a restaurant into the Marble bank (I
             presume a high end one) will be a total waste. Will the college kids be eating there? Has Steve Atkins
             ever lived in downtown Jacksonville? A boutique hotel sounds neat until you realize it will do almost 
             nothing for the rest of downtown. Will this project meet the basic needs of a quality grocery store
             downtown , a dry cleaners, a pharmacy? Quality housing for young professionals who move here and
             don't want to live in the 'Burbs?  Basic entertainment besides consuming alcohol?

             I'm happy something is going to happen but I do not like this plan mentioned in the previous thread.

             My opinion, humbly submitted.

[thelakelander]

While I don't know what the final uses of this particular project may be, I disagree on the idea that the previously mentioned uses don't provide better economic benefit than strictly turning all the structures into residential.  For example, you'd struggle to get a decent amount of residential into the Laura Trio, to the point where you'd still have a feasible project. 

The square footage simply isn't there for the amount of money it takes to bring the buildings back.  You'd be better off building +300 units from the ground up in Brooklyn or LaVilla than spending millions to restore these buildings, only to see them fit less than 100 residential units in them.

Nevertheless, if you could pull off a hotel, those are rooms being booked by people who are spending money to eat out at least three times a day, every day. That's going to be more beneficial to a business like La Cena or a place like the Landing than a few extra people residing within that block. Also, a dormitory does equate with people living downtown.  While students may not have the same type of disposable income as yuppies, you can pack more of them in there and they'd at least funnel cash into may of the service style businesses and bars.

Also, the Marble Bank isn't the type of building you'd put a dry cleaner or pharmacy into. We have several other lots and spaces more suitable, such as the proposed retail complex on Riverside Avenue across the street from the Times-Union.  Anyway, probably most important to that area's street scene is the compact combination of a hotel, restaurant (if it includes outdoor dining) and a school with dorms (and possibly street level retail) is they'll pack that block with people and activity 24/7.  With that said, I have no idea what this group has in store for these buildings.  However, I'm happy to see them take the risk and wish them financial success.

[fieldafm]

I disagree on the idea that the previously mentioned uses don't provide better economic benefit than strictly turning all the structures into residential.  For example, you'd struggle to get a decent amount of residential into the Laura Trio, to the point where you'd still have a feasible project. 

The square footage simply isn't there for the amount of money it takes to bring the buildings back.  You'd be better off building +300 units from the ground up in Brooklyn or LaVilla than spending millions to restore these buildings, only to see them fit less than 100 residential units in them.

Once again, 100 percent agree

[jaxjags]

Thelakelander, I totally agree. The small square footage of the two high rises would provide only a few residential units. But at 300-400 ft2 per hotel room, at 1-2 people per room 7 days a week, that adds to DT. Also a student complex can be the catalyst for so much more. Just check out Savannah with the arts school. True DT Savannah is mainly hotel rooms. Does anyone see the large spark that happened just today for DT. The Riverside project, the Barnett Bank, the Trio and the start of good infill on the Southbank. Maybe getting closer to "critical mass".

[tufsu1]

Hotel use for the Barnett Building is optimal for more activity in that area of downtown

[I-10east]

I like alot what MusicMan said. Whatever those projects are gonna be, I would rather for them to be maybe a lil' modest and sustainable vs too expensive and ultimately soon to be downsized. You can get away with everything being top notch (hotels etc) in a big major market, not so sure about a city like Jax at this present time. We have seen to much downsizing over the past years, look no further than the Landing; Fill in the blank national brand clothing store turnt the Museum of Plywood that has nice laminated paper signage. Sadly usually once you downsize, there's no coming back. 

[thelakelander]

^I'm not sure residential in the Trio without the addition of a larger connected building is the definition of modest and sustainable.

[simms3]

This is a difficult site.  Definitely a dream project.  It would be possible, though not likely feasible, to do rentals.  Once you reconfigure the existing buildings and add new construction next door (as you'll need to, also - structured parking...will need to be integrated into overall building as site is tight), your basis is already likely too high to be able to charge rents the local DT market can support (you'll never be able to charge higher than $1.50-$1.60psf so long as 11 East and the Carling rents are as low as they are, and new construction involving adaptive reuse of buildings in these configurations and these conditions is pricey to the point where you'll hope for rents pushing $2psf, which is right around the area's high watermark at the Strand).  Restaurant parking requirements are much more stringent than rental parking requirements, which are much more stringent than hotel parking requirements (and so on to below):



Restaurant + hotel + bar go very well together.

If I had as much money as Khan, this would be a dream pet project.  Khan has so many options here with hotel.  He has the ability to 3rd party out operations and pay fees.  He can directly partner with a guy like Atkins and pay fees and a promote; that way Atkins is vested.  He has so many pieces to play around with...he can develop a really cool hotel concept, or two (2 buildings), and a restaurant.  RFP out to local chefs (you get wined and dined like a biatch in the process...I only know from experience ).

If done right, he would have soooo many options later on.  Jax is such a risky hotel market, I'm *sure* that only a guy like Atkins would come in to create a new hotel downtown, but something cool and unique to the market that doesn't rely on downtown office users, convention business, tourists, or budget travelers.  You build something right and you have the opportunity to sign a lease with a credit operator and flag it (say a Kimpton), or sell it outright (who knows what will net you more in Jax...it's all a fun test...sell all the improvements outright or negotiate a lease and sell the business separately and sell the land/improvements subject to the lease later on when need be at the drop of a dime to a fixed income investor who will pay a premium for guaranteed monthly income backed by good credit and awesome collateral, etc)

The most creative side of real estate is independent hospitality side.  You can have street retail, suburban mixed-use, etc etc, but with an independent hotel + restaurant, you REALLY have to have vision, balls, and patience (as well as spectacular PR agent).  You get it going and it's a real high risk, high reward real estate proposition.  My firm has done both owner/operator of independent hotels (we recently sold one to Loews after repositioning it to 4 star with 4 star dining), and we have acquired mixed-use deals where a hotel has a 99 year lease for a portion of the space...obviously a certain calibre/flag of a hotel for that type of deal (the risk is on the operator more than the lessor unless you price the hotel-backed income stream too high...which is unlikely).

Plus, the restaurant is the pitching point.  An independent restaurant + bar does nothing for a multifamily development, only means something to a condo development when it's a 400 unit high rise with units starting at $1M, and works in older office buildings that offer the space...but Trio doesn't scream office space to me at all, definitely not in Jax.  You do hotel + restaurant together with the goal of each feeding the other, and eventually you can get a credit operator/flag who will own and operate the hotel AND the restaurant, likely not one without the other as your F&B business is a huge side of the business and something you want to control.

I don't see student housing working without an actual campus nearby.  I *don't* believe that student housing is a positive use of that site.  It won't be large enough to really make that much of a difference, and at best you'll see an increased demand for Chipotle, a late night wing place, convenience store, etc.  A boutique hotel will better feed downtown attractions, dine-in restaurants, and also put bodies on the street (attrac

Very exciting news!  Will somebody lend me $3MM so I can have this opportunity??

[jcjohnpaint]

Good point Simms

"The most creative side of real estate is independent hospitality side.  You can have street retail, suburban mixed-use, etc etc, but with an independent hotel + restaurant, you REALLY have to have vision, balls, and patience (as well as spectacular PR agent).  You get it going and it's a real high risk, high reward real estate proposition."

I guess this is all we can hope for to get this town above water again.  Lets face it- Jacksonville is bad for business, unless these moves are made together with other great moves.  I guess that is why all this shit is happening all at once as it did before the bust.  I think it just takes a few investors with such courage and patience to get things going. 

[PeeJayEss]

Whatever ends up going in the buildings, and even if it all flops right out the gate, if the buildings get restored to readily usable condition, its a huge plus for downtown.

[duvaldude08]

I think it just takes a few investors with such courage and patience to get things going.

I think thats deinfately it. Seems as if people are willing to take more of a risk with our market now, downtown in particular. I think its also a plus to have a local billoniare investor like Khan. He's passionate about Jax succeeding, so he'd probably take a few more calculated risk than other investors.

[MusicMan]

PeeJay, good point. If Khan ever has to foreclose on these properties he'll make money right there.

I'll restate my opinion, because I love the points of view expresesed by all parties on this thread.

1. Best deal for the Buyer in recent history.
2. Restaurant in Marble bank, bad idea.

If tomorrow the developer announced he was partnering with Trader Joes (or Whole Foods, or any well known premium grocery store/chain) to place a new concept store into the Marble Bank as the center piece of his redevelopment, this would be a true start to the renewal of downtown. The building is big enough ( and cheap enough) to do something incredibly original, to create buzz across the country, not just downtown, and then put residential around it. Those units would go quickly, and at a premium. Also, this would draw customers from within
the entire county, making use of the billions of dollars of infrastructure already in place and bringing people downtown to spend money, something that is not happening right now. All of the residents currently downtown would have a premium place to walk and pick up groceries, maybe drop off dry cleaning (in a small nook of the building, or the basement) and folks who work downtown could pick up some goodies leaving work on their way home.  My ideal is sort of a "Zabars meets Fresh Market" concept, tailored for DT Jax.

I like the old Barnett bank as a better place for the boutique hotel, because there is a need for one downtown. And room inside for a cozy restaurant/bar to serve it's patrons.

[Tacachale]

As much as I hate to play the debbie downer role (there are numerous other forum participants who fulfill it nicely) I'm skeptical about the possibility of "higher education" and dorms in the Barnett. Presumably this "as-yet-unnamed school" will be some new for-profit, in which case it's difficult to see such a thing attracting much residential interest or other positive impact.

For the other buildings, I can see a boutique hotel working a lot better than residential in those buildings, unless you were to add on an additional connected building or something. There's just too little space. I'd rather see new, larger mixed-use buildings going up on empty lots if that's where we're going. If they can swing it, boutique hotels also have the benefit of making a lot of their income from their restaurants/bars, which attract people who aren't necessarily staying there; as such they have an impact beyond just the hotel portion.

[Captain Zissou]

What is the ceiling height inside of the marble bank building?? Why not make it multi-story and do both? You could easily fit a Grassroots Market and a restaurant in there with two floors. You could do a blacksheep-style rooftop bar on top of the restaurant and really make something of the property!

[fieldafm]

What is the ceiling height inside of the marble bank building?? Why not make it multi-story and do both? You could easily fit a Grassroots Market and a restaurant in there with two floors. You could do a blacksheep-style rooftop bar on top of the restaurant and really make something of the property!

Ceiling height isn't a problem.

For a grocer like Trader Joes (which is very much a pipe dream, they would better fit in North San Marco if they were to move near the urban core), it would be interesting to see how they would fit a loading dock in there.

Something like a CVS wouldn't have that kind of issue, they typically don't require scissor lifts in their urban layouts.

Kind of off topic, but if you are ever in Chicago the Walgreens in a converted bank building in Wicker Park is really nice.  I have a ton of pics (the lady friend got quite mad that I spent over an hour in a drug store on a recent trip) I'll post up tonight if the Suns game gets rained out.

Here's a teaser: