August 7th, 2011

Boston Development

What's happening in the center of the city is peripheral (ha!) to my thesis, however I want to point to a couple things.

http://www.boston.com/realestate/gallery/current_construction_projects/

Many of these "current" projects have not broken ground (as near as I can tell, anyway) and I'm not even sure financing has been nailed down for many -- but the Globe doesn't seem to consistently mention financial and other partners when present so an absence of mention is not evidence of absence.

_Exactly_ as in Seattle, many of these projects were all ready to go a few years ago when the markets froze solid and we all collectively freaked out; it's taken this long for credit to be available to proceed on development. So you would sort of expect these projects to be fantastically non-controversial by this point: people presumably would like the jobs and equally would have already engaged in oppositional activities years ago.

Not so.

http://www.skyscrapercity.com/showthread.php?t=597798

From this snapshot of a 2008 Globe article, we see that the proposed residential tower to go on top of Copley Place Mall (owned by Simon) was intended in the original development in the 1980s (<-- yes, thirty years ago, when even I was quite young, and when "Massachusetts Miracle" was a new and exciting term -- altho worth noting that in the same time frame, people knew _exactly_ what the Combat Zone was because it was still there).

"While many aspects of the project must be vetted with the community and approved by the city, a building at Stuart and Dartmouth streets was contemplated as part of the master plan for Copley Place when it was first built."

You can tell you're in Boston when you read this:

http://www.boston.com/realestate/gallery/current_construction_projects?pg=5

"Two lawmakers are accusing Boston Mayor Thomas M. Menino and Governor Deval Patrick of steamrolling the project through the public review process."

about something that's been contemplated in some form for thirty years. Hey, maybe it _was_ steam rolled.

R. asked whether Simon had any similar developments elsewhere.

Yes: Coconut Point in Estero, FL (shopping + condos, etc.) and The Domain in Austin, TX (shopping + apartments, etc.

So what is it with malls and condos/apartments? That will be the subject of the next post. Probably.

Building Space in the Suburbs: Malls

The Simon Property Group proposed residential tower with condos for Copley Place raised a bunch of questions: has Simon done this before? Yes. Were they the developer for the Natick Place condos that went to auction? No. (That was General Growth and they went through BK, Simon tried to buy them, it did not happen and General Growth exited BK as a going concern. For those of you paying attention, book value turns out to matter after all.)

Some of Simon's mall + housing is for lease, some for sale. But with two really big, successful REITs engaging in this, I had to ask, "Why?"

Someone has answered this question:

http://www.housingwire.com/2008/12/29/malls-the-future-of-housing

(In fact, someone answered this question 10 years ago, see below for the update on the properties mentioned in it:

http://www.deadmalls.com/news/20011216-sacramento-bee/)

Basically, if you want to build in the inner ring, you need a big parcel. Parking lots are nice, since demo for them is simple. Malls have _big_ parking lots. You don't even need to get rid of the mall (look at Northgate in Seattle, or, for an unrelated business with similar issues, a second gate for Disney - DCA - in Anaheim, and a DVC development for DisneyWorld - BLT - in Orlando.); just take some of the parking or maybe replace it with a garage.

The Housing Wire URL refers to Belmar in Lakewood, CO.

http://www.belmarcolorado.com/living.php

KB Homes built "row homes" for-sale housing. There's a wide range of for-sale and for-lease options (including live-work, down to studio, definitely up to 3+ bedrooms). It spreads over several blocks, and the complex does in fact include a grocery store (Whole Foods).

The developers of Belmar appear to be Continuum Partners (but for all I know, there were a huge number of participants; I can't tell). Check out their website, in particular, I've _never_ seen a big developer with a recommended reading list.

http://www.continuumpartners.com/resources/index.html

The Sacramento Bee article from ten years ago mentions the apartments at the Paseo Colorado in Pasadena. They're a going concern ten years on, charging high rates (much higher than 10 years ago, when it opened).

http://www.windsorcommunities.com/apartments/los-angeles/terraces

The Santana Row development worked out well, also. The search would suggest that up to 4 bedrooms exist in the complex, altho nothing bigger than 2/2.5 is currently available for rent.

CityPlace in Long Beach is owned/operated at least in part by Archstone (one of the really huge REITs; relatively recently bought a building in Belltown). It doesn't look like Mizner Park has fared as well as some of the others, but that's probably a regional effect.

Amusingly, according to the Housing Wire bit, the Natick development by General Growth was built on a Wonder Bread factory site, just like Legacy at Pratt, which was built after we left Seattle.

The list so far of where to get space to build in the suburbs: malls, defunct industrial (Wonder Bread factories, Jacobsen Marine in Seattle, all of South Lake Union's development), bowling alleys. R. thinks defunct country clubs should appear on the list in New England, but I haven't found an instance yet. We still have working farms providing greenfield development opportunities (apparently that's what truly contentious zoning gets you).