Forecast: Active Urban Markets

Downtown and Urban Areas Expected to Remain Hotbeds of Construction Activity

By Debra Wood

Southeast downtown development has taken off in the past several years, with dozens of residential and mixed-use projects reshaping city centers.

And the region's downtown and urban areas should remain a focus of future development activity.

"Downtown is about to blossom, with a lot of different things going on" said Steve Surprenant, executive vice president of HDR, a national architecture, engineering and consulting firm in Washington, D.C. "Developers are excited about downtown, in part, because people want to be there. Coinciding with that, government wants to do something with decayed areas-revitalize and bring them back."

William A. Pinto, president and COO of Hardin Construction Co. of Atlanta, agreed. He said downtowns are luring people who want to avoid traffic congestion. "The desire to minimize that commute will keep people focused downtown," he added. "The more residential that happens downtown, the more close-in retail has to happen."

Pinto cited Atlanta, Tampa and Charlotte as examples of regional metro areas with significant downtown development.

Governments have fueled the resurgence with financial incentives or land.

"It's privately developed, but the cities are doing what they can to provide the right incentives or to create the environment where that can happen," Pinto said.

HDR serves as development adviser to Raleigh, N.C., on its Blount Street redevelopment project, and Fort Lauderdale, Fla., which owns about three downtown blocks ready for rejuvenation.

"They put the land out there in a public-private partnership," Surprenant said. "In areas that are downtrodden, governments know they have to make the first move."

But not all money flowing into downtowns has a government connection. Much private development is taking place, and more is coming, said Carol Westmoreland, executive director of Florida Redevelopment Association of Tallahassee. She anticipates greater densities and does not believe Florida cities are being overbuilt.

"The private sector is fully invested in the downtown housing market, retail centers and mixed-use centers," Westmoreland added. "They have a vested interest in not just building it but in seeing it stays occupied."

It all starts with one pioneer with a vision, said Bruce Naegelen, president of the North Carolina Downtown Development Association in Morehead City. Then other developers start showing up, investing money in downtowns.

"It's sustainable, because people are moving downtown," Naegelen said. "There is activity in a lot downtown that hasn't been there for a long time."

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Diversity Brings Sustainability

Living downtown especially appeals to young singles and empty nesters tired of long commutes and wanting close proximity of restaurants, shopping and other services. While downtowns are attracting well-healed residents, a mix of projects increases cities' long-term prospects.

"Anytime you have a blending of projects, that indicates a sustainable downtown," said Frank Billingsley, executive director of Orlando's Downtown Development Board/Community Redevelopment Agency. "We've evolved beyond an office district."

More than 7,000 new housing units are under way in Orlando, as well as six office buildings, a university campus, a federal courthouse and 500,000 sq. ft. of retail space. An arts center across from City Hall remains in the planning stages.

Mayor Buddy Dyer said the mix of office, residential, retail and university projects "positively impacts downtown Orlando, transforming it into a place where people can live, work, play and learn, which is the first step to ensuring the future of any downtown."

Likewise, Atlanta's urban resurgence blends 7,000 housing units, office space, more than 1,500 student housing beds for Georgia State University and new attractions, such as the $200 million Georgia Aquarium, which opened in November, and the new World of Coca-Cola, which broke ground in the summer on 20 acres adjacent to Centennial Olympic Park and the aquarium.

"For the first time in many years, Atlanta will have a density of attractions in the downtown core," said A.J. Robinson, president of Central Atlanta Progress. "We think we're going to get a new level of visitation and that visitors will not necessarily leave downtown after going to one attraction."

Craig Scott, vice president of Brasfield & Gorrie of Atlanta, builders of the aquarium, also sees a rebirth for downtown Atlanta.

"There was a little flight to the north, but with the aquarium and some of the residential components that are happening, you're seeing a return to the market not only for condominiums but for offices," Scott said.

Brasfield & Gorrie has begun site clearing on 55 Allen Plaza, a 14-story building anchored by accounting firm Ernst & Young of Atlanta. Adjacent to Allen Plaza, the company is building TWELVE Centennial Park for Novare Group and Wood Partners, both of Atlanta. The dual towers will contain 517 residential condominiums, 102 hotel rooms, 13,000 sq. ft. of office condominiums and 21,500 sq. ft. of retail space near the MARTA station.

Locating a project near rail or subway lines adds value, and more Southeast cities are seeing the light. Charlotte has a light-rail system under construction, and Miami and Fort Lauderdale are considering enhancing their mass-transit systems.

"People will pay more to be in mixed use next to a transit center," Surprenant said. "Governments are pushing for [public transit], because they know it can bring better economics."

Charlotte's downtown also includes an entertainment component, with the fall completion of the $265 million Charlotte Bobcats Arena. As the city hoped, the arena has spurred additional growth - plans for more than 3,000 residential units have been announced since the news of the new sports center. More than 2,700 of those units are located in nine high-rise towers due to open in early 2007.

"The explosion in residential is directly attributed to the arena," said Moira Quinn, senior vice president of Charlotte Center City Partners, an organization dedicated to promoting initiatives in Charlotee's central business district. "That's where the excitement is."

Batson-Cook Construction of West Point, Ga., is finishing construction on Courtside, a 107-unit, 17-story residential tower for developer Boulevard Centro of Charlotte.

The Ghazi Co. of Charlotte, is developing EpiCentre, a 250,000-sq.-ft. retail complex that includes an elevated platform for Charlotte's planned light-rail system. Atop the complex, developer Flaherty & Collins of Indianapolis is building a 53-story, 419-unit condominium tower called 210 Trade.

Verna & Associates of Charlotte plans to start building The Park condominiums early this year. Ritz-Carlton plans a hotel, and the University of North Carolina at Charlotte has purchased property for a $30 million, five-story classroom building near the arena.

Mixed Use A Revenue Builder

Many projects come out of the ground with space set aside for multiple uses, such as Kuhn Development's $140 million Orlando project called The Plaza, which includes a 27-story residential tower and two towers with condominium offices, retail space and a movie theater.

"Mixed use provides greater return than a single-use development," Surprenant said. He estimated that it adds 5 to 10 percent to the bottom line because "one use builds off another and generates more profit."

The Tower Group of Fort Lauderdale is building The Shops at Midtown, the retail component of Midtown Miami, a $2.3 billion mix of eight residential towers, hotel and retail on 18-city blocks. Midtown Group of Miami expects to finish the entire project by 2010.

Also in Miami, Moss of Fort Lauderdale is working on the $90 million Downtown Dadeland for Gulfside Development of Miami. The project includes seven buildings with 416 condominiums and 120,000 sq. ft. of retail shops.

Hardin Construction is building 14- and 12-story condo towers at Grand Central at Kennedy in Tampa. The urban neighborhood consumes one city block and includes 55,000 sq. ft. of office space, 125,000 sq. ft. of retail, an art gallery and a community theater. It's scheduled for completion in 2007.

Also in downtown Tampa, Hardin is building the 21-story Plaza at Harbour Island residential tower and 17-story Ventana twin residential towers.

Further into the future, BeltLine Partnership of Atlanta plans to convert 22 mi. of railroad tracks around the urban core to develop multifaceted public transit, park, residential and commercial projects that would connect various parts of the city. The 25-year beltway project lacks a funding mechanism at this time, but the city, school board and county are expected to vote on establishing a tax allocation district.

Single-use projects

Not everyone has jumped into the mixed-use game. In downtown West Palm Beach, the Weitz Co. of West Palm Beach expects to break ground this spring on a 20-story, 138-unit condo-hotel called The Harrick for locally based Harrick Development.

Weitz recently topped out the 10-story residential Metropolitan, is building a four-story library for Palm Beach Atlantic University and has started site clearing for the $150 million Sail Club, with four residential towers.

"The mayor has pushed for redevelopment and wants to make downtown a living city," said Taras Diakiwski, business development director for Weitz. "It's going to take a while, but it's moving in that direction."

Other South Florida cities have undergone transformations of their downtowns, perhaps none more dramatic than Miami's. The area has had a strong condo market for years. Now, as the $300 million Performing Arts Center of Miami finally nearing completion, a host of bigger or better condos have sprouted up in the area.

The Related Group of Florida of Miami has been a leading force behind Miami's incredible market, where it is currently building 50 Biscayne, a 54-story condominium tower; 500 Brickell Avenue, a 633-unit, 42-story tower; and Loft Downtown, a 23-story tower aimed at young professionals, among others.

Related also has multiple residential projects under way in downtowns throughout South Florida. In downtown West Palm Beach, it is building City Place South Tower, a 20-story building with 420 units. In Fort Myers, it is developing the $500 million Oasis, with five 32-story residential towers, and recently completed The Prado.

"What's driving construction and development for Related is the Florida economy, which reported a growth of 131,000 new jobs in 2004," said Related Group spokesperson Jeneissy Azcuy in an email response. "Downtown development is sustainable because demand for condos will continue."

Useful sources:
Orlando Downtown Development Board
http://www.downtownorlando.com/

Central Atlanta Progress
http://www.atlantadowntown.com/

Charlotte Center City Partners
http://www.charlottecentercity.org

The Related Group of Florida
http://www.relatedgroup.com