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this article was linked off RetroMetro, and I found it pretty interesting. I’d love to see some developer grab hold of the City Center area and announce a big revamp plan like this sometime soon.
Here are some choice quotes from the article. Tell me if you think this is doable for the City Center.
Phoenix is putting in place the final building block in its plan to construct a new downtown.Next week, it is scheduled to approve a blockbuster agreement with a Scottsdale-based developer that plans to build a $900 million project that will bring more hotel rooms, office space and residents to the city’s core plus give the area its first grocery store in 25 years.
To make the deal work, the city is prepared to purchase the project’s underground parking garage and pay for repairs to an existing parking garage at a cost of $96.5 million. In addition, it will wave the property taxes on the development’s key components for eight years; that financial incentive is worth at least $26 million, according to official estimates.
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Details of the deal, which would bring an AJ’s Fine Foods store to Central Avenue and Washington Streets. It also comes as the city continues to move forward on a variety of big-ticket revitalization projects, including the expansions of the new Arizona State University campus and the Phoenix Convention Center and the construction of a $1.4 billion light-rail system.
The amount of retail space it would bring to downtown Phoenix is one of the most significant components of the project. Altogether, there are roughly 250,000 square feet set aside for dining, shopping and other entertainment in CityScape.
In addition to the downtown grocery store, the project’s developers say they have a commitment from P.F. Chang’s China Bistro to locate a restaurant on the site. The company is also in conversations with a bookstore, a health-club and fitness center and several other national retailers. He said he wants the project to have a mix of local stores and restaurants plus larger chains that don’t have a presence in the Phoenix market.
Plans call for the CityScape development to contain four high-rises. One would be a high-end commercial office tower with roughly 550,000 square feet of space. A second, similarly sized high-rise could provide additional office space, residences or a combination of the two. The project’s final two towers will be residential, and all four will soar well to more than 400 feet. While they won’t be as high as downtown’s tallest building, the Chase Tower at 486 feet, they will still remake the downtown skyline, because they will sit on land that currently houses surface parking.
That document suggests that as many as 10,000 units be built over the next decade. There are currently 2,500 under construction. CityScape will push the city a little closer to its overall goal. City officials also want to construct 60 to 80 for-rent apartments.
In related City Center news…
http://www.dispatch.com/news-story.php?story=216638
The Columbus Dispatch
Monday, October 2, 2006 10:42 AM
The CEO of embattled mall developer Mills Corp. resigned today.
Mills, which has been embroiled in accounting scandals and has put itself up for sale, owns the Mall at Tuttle Crossing and a 50 percent controlling stake in Columbus City Center Mall.
The company said Laurence Siegel had retired as chief executive but would continue as nonexecutive chairman. Mark Ordan is the new CEO and president.
Under Siegel’s watch, Mills’ stock dropped from a high of more than $65 last summer to a close of $16.71 Friday.
City Center is one of Mills’ most troubled properties, with a vacancy rate below 50 percent. Columbus officials have expressed frustration at Mills’ inability to turn the property around or even to put forward a plan to do so.
Mills is based in Chevy Chase, Md.
Wow. So first their President was fired, and the executive VP of leasing is on his way out this month and now the CEO quits?
I really wish they’d just fold and sell off their assets. Quit dragging it out Mills Corp!!!! :evil:
I know…it’s getting really frustrating. The thing is, I don’t even think City Center could be counted as one of thier assets. I’m pretty sure that some city entity owns it and leases it to Mills. As long as they’re staying current on thier lease payments, the city can’t legally give ‘em the boot.
To let them know how you feel about them dragging down our city’s core…send them an e-mail http://www.millscorp.com/static/doc_CORP_CONTACT_US.jsp
I think I may write up a well timed email tonight and ask very politely for them to stop being such a crappy neighbor.
I think it would be perfectly doable to turn City Center into an office tower, park, smaller upscale shopping center, and entertainment venue. I think its time Columbus got an Inter-Continental, Ritz, Four Seasons, or JW Marriott. Perhaps Macys could be turned into a Bloomingdales or be bought out by Saks or Nordstroms so they can build their Ohio “flagship”! Just an idea!
Should have sold short on Mills last year, it seems. (Would have, if I had the $$$$.)
I thought Mills owned at least a partial equity interest in City Center, not just a leasehold interest. Am I wrong?
I’m not sure if Columbus really needs another office tower at this point, especially in that neck of the woods (the mall is already connected to the Capitol Square tower, after all, and our vacancy rates have come down from #1 in the nation but still aren’t spectacular). However, particularly if the southwest greenspace were in play as well, it’s ideally suited for residential development, particularly given the truly massive parking garage immediately to the south. I also hear that the charter school in the mall is actually performing well enough to be growing every year, so I wonder if there might be an expansion opportunity there that would allow them to grow into a new space more specialized for educational use. More entertainment space, particularly anything that might bring people in after 5 p.m., would also obviously be welcome.
Right you are. I should’ve read the article that I linked to before posting that. They are a 50% owner of City Center.
How about some apartments? Not necessarily in the City Center replacement, just downtown in general. We have tons of condos, but hardly any rentals. Someone might want to look into that.
I think the artificially low interest rates of the last five years made condos the right move for developers at that time, since mortgages were more affordable. Now that things are returning to normal, I think we’ll see a natural return to a more balanced state.
Remember, several apartment complexes even converted to condos and sold themselves off in the last couple of years; that’s how lucrative the condo market was. However, if the condo market slows and the rental market picks up, you’ll see both developers and property managers returning to the rental market with both new builds and by renting out condos rather than selling them.
I instantly agreed with gramarye when I read his post, but decided to see if the numbers bear that out.
Data from the Downtown Housing Report [url]http://downtowncolumbus.com/publications/HousingPipelineReport.pdf[/url]
There have been 849 rental units built since 2002. The big ones were Brewers Yard (303), Arena Crossing (252), Commons at Grant (100), New Village Place (100), and Sixty Spring (68).
There are also 299 in the construction phase with most of them coming from Liberty Place (132), The Seneca (77), and The Jeffrey (76).
There are 537 in the pipeline as well (some of which could eventually be cancelled). The big ones there are The Foundry at Jeffrey Place (216) and Liberty Place Phase II (178)
All together that adds up to 1,685 units. That seems like a nice balance to me when I look at the approximately 2,120 condo units in various stages of develpment/completion.
Tuesday, October 03, 2006
Tim Doulin and Debbie Gebolys
THE COLUMBUS DISPATCH
It has been a renter’s market in the area.
In Franklin County, the median gross monthly rent was $687 in 2005, according to data released today by the U.S. Census Bureau. Adjusted for inflation, that is $12 more than in 2000, or less than a 2 percent increase.
Economist Bill Lafayette of the Columbus Chamber said area landlords went through tough times until the end of 2005.
That means the gravy train for renters might soon crawl to a stop. As mortgage rates and housing costs rise, more people will be encouraged to rent, drying up vacancies and discouraging landlords from offering enticements.
Columbus also fares well compared with the 6.7 percent increase nationally in real median cost of renting a home. Among the 15 most populous cities in the U.S., some of the larger rent increases since 2000 were in San Diego, 27.2 percent, Detroit, 22.5 percent, and Los Angeles, 15.9 percent.
READ MORE
That’s an encouraging sign for renters, though not as much for construction of new rentals (though of course demand has to be increasing gradually if rates are holding steady despite supply going up, since that only happens if demand rises as well).
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Sigh. Why don’t we just post paper-mache vultures all over City Center until someone gets the hint?
I’m considering moving to a new apartment and I’m amazed at the number that offer “rent to own” options, something heretofore I’d only associated with sofas or dishwashers from Rent-A-Center. I guess that’s the ultimate sign of a renter’s market, when your landlord wants you to buy him out at the end of your lease.
Business First of Columbus – 4:59 PM EST Tuesday
A San Francisco hedge fund has offered to put $499 million into struggling Mills Corp., which co-owns Columbus City Center and the Mall at Tuttle Crossing.
“We believe that this is a better alternative than selling the company at or below a depressed valuation,” Farallon said in the letter.
READ MORE
I feel like Dick Vitale all of a sudden. R U SIRIUS?!?!?!
This might well be the last thing I ever expected to hear regarding Mills this week.
Well, on the one hand, *if* Farallon manages to turn Mills around, they’re going to make a *fortune* because they bought in when the share price was going to leave a crater in the earth if it fell any harder. On the other hand, I wonder what exactly they have in mind to do with their newfound clout … not that Mills’ management wasn’t incompetent, but even new and more competent management is not going to fill City Center easily. It’s just not a viable property in its current form.
Of course, Farallon is only investing in Mills Corp., not City Center, so maybe they’ll take a hard look at City Center and look to sell it off.
Nevertheless … I confess to being completely blindsided.
That’s my take. I’m thinking if Farallon decides to go with a turnaround plan to shed underperforming assets and looks for a rebound in the share price. I’m sure City Center has to look like one of the top canditates for being dumped.
Yeah, I see one of two scenarios happening.
1) The more likely, already mentioned, selling off of City Center as an underperforming asset. Then we can finally get some progress on revamping the old beast.
2) The new management at Farallon decide that the City Center is a prime example of how an urban renewal mixed-use project can be revamped to be profitable and will work with the city in turning it around themselves.
I’d like to see 1 happen over 2, but either way something has to be done with the City Center as it’s doing nothing but losing money in it’s current state.
Hmm. I kind of think your #2 is a stretch. That would require a lot of attention, and is not exactly something that’s in their normal line of business, either (operating shopping malls). They’d have to develop an entirely new business specialty only to take an unorthodox gamble on a financial sinkhole, in a location that’s a pretty out-of-the-way place from the perspective of a national corporation based a long way off (I think Mills is in Virginia, and Farallon is in SanFran).
Survey says: bzzzzt.
(w00t! 1000 posts!!) 8)
Mills Corp., part owner of City Center, Tuttle, sold for $1.35 billion
Associated Press
Wednesday, January 17, 2007 11:56 AM
COLLEGE PARK, Md. (AP) — Mall developer The Mills Corp. said today it has agreed to be acquired by the Canadian investment company Brookfield Asset Management for $1.35 billion.
Mills is part owner of Columbus City Center and the Mall at Tuttle Crossing.
Under the deal, Brookfield will pay $21 per share for each Mills share, an 18 percent premium over Mills’ closing price on Tuesday. Including debt and preferred stock, the deal is worth $7.5 billion.
http://www.dispatch.com/news-story.php?story=240617
Yeah, it’s farfetched, but I don’t think anyone was expecting any company to make a half-billion dollar offer to Mills anyway, right? Sounds like they’re willing to take risks.
Congrats! 8)
LOL So does Farallon still get to buy in at their $20/share and then immediately turn around and sell at $21? Not bad for a day’s turnaround if it turns out to be true. Then again, from reading the CBF article, it looked like the Farallon offer wasn’t binding yet, it was just an open-market tender offer … but I could be wrong.