View Full Version : Downtown Deals Raise Questions



metro
11-13-2007, 07:40 AM
Curious deals downtown raise questions

By Steve Lackmeyer
Street Talk

What does it all mean?

That's the question that's popping up a lot this week after some curious transactions downtown.

Consider first Oklahoma RedHawks owners' refusal last week to submit a minimum $8.53 million bid for a city-owned parking lot east of the AT&T Bricktown Ballpark. Bob Funk and Scott Pruitt, who have a long-term lease for the lot, spent the past two years trying to convince the city that the spot is prime for development.

And, if McDonald's is ready to build a restaurant across the street at Reno Avenue and Lincoln Boulevard, who is to argue otherwise? Funk and Pruitt were working with established developers on plans for a mixed-use center involving retail, housing and a hotel. They threw out a lot of brand names like Ritz and Whole Foods, and suggested their investment could total $200 million.

Neither the city nor the team owners ever disclosed purchase offers submitted during closed negotiations, but numerous sources have indicated the amount was far less than the minimum bid ultimately set by the city. And that minimum bid was based on an appraisal that was calculated from other recent Bricktown property sales.

The whispering in some circles is that the city's failure to get a bid indicates that Bricktown property might not be as valuable as hyped. Even before last week, more than one broker confided that Bricktown may be suffering from "irrational exuberance.

A lot of Bricktown property is for sale right now, and has been for months or even years. Homebuilder Jeff Moore turned heads by buying an entire block at Oklahoma and Sheridan avenues two years ago for $10.9 million. He started out with three restaurant tenants and a fourth lease pending. Now he's down to just two tenants.

Other recent buyers, including Gary Berlin, who bought the Oklahoma Mercantile Building, and oilmen Charles Harding and John Shelton, who bought the Zio's building along the Bricktown Canal, had no prior downtown development experience before entering the entertainment district. And former car dealership owner Gary Cotton has bought and sold several Bricktown buildings the past couple years and has yet to start any substantial development.

Bricktown has always been cyclical: boom in the spring and summer, bust in the winter. But tally it all up, and the amount of empty space seems to be heading up, not down.

The opposite is true in MidTown and the adjoining Arts District. And veteran Oklahoma City developer Nicholas Preftakes has spent millions this past year buying up properties along Hudson Avenue between Main Street and Sheridan Avenue. He's being coy about his plans, though he's generating a lot of speculation as to what he's up to.

Preftakes is not the kind of guy who would buy property in Bricktown. He prides himself as one who buys wholesale, and not retail. So he is seeing an opportunity along Hudson Avenue but what is it?

A look at the overall site suggests that it is large enough to build a pretty impressive office tower with a view of the Oklahoma River, the Myriad Gardens and the downtown skyline. The block is immediately across the street from the Central Business District, within walking distance of City Hall, the courthouse, the art museum, and the City Center Garage.

And, as some have observed, it's also across the street from a site rumored to be the future site of a new Devon Tower (which may or may not be close to becoming a reality).

Certainly Preftakes isn't the only person buying up chunks of west downtown. Chip Fudge has been very active along Sheridan Avenue in an area being dubbed the Film District, while Greg Banta has recast MidTown as a localized entertainment district where one can live, work and play without paying $5 or more to park.

All this leads to the question: Is the east fringe of downtown over-rated, and is the west fringe the next big development bonanza? We might very well find out within the next couple years.

metro
11-13-2007, 07:44 AM
Yes, I believe Bricktown is over-rated and this is one of the best articles by Lackmeyer yet. He finally exposed Bricktown what it really is OVERHYPED. The newby developers in Bricktown keep holding out for the big bucks while the vacancy rates keep going up in Bricktown, can't wait until they have more competition from other downtown districts.

SpectralMourning
11-13-2007, 08:14 AM
And what if it dies? People visiting the city for a few days normally do not see Midtown or Paseo, they see Bricktown because it is over-hyped. As a city, we've established Bricktown as a premier showpiece and no one is delivering. Perhaps we will need to seek eminent domain or another legal procedure to evict these "developers" but it will have to be done if they only squat on the land or reluctantly build sub-par, suburban developments when it's more than likely that no other competition in the city will stop them. It's no question that because of Bricktown's status, further development within the district and other districts have been extremely hampered to the point where this is a city-wide dilemma and not just downtown infighting.

CuatrodeMayo
11-13-2007, 08:40 AM
It would seem Bricktown in on a path to be the new West End.

Pete
11-13-2007, 09:08 AM
Property owners in Bricktown merely need to get more realistic. There is plenty of demand but when you are trying to charge mutliples of areas just blocks away, buyers are going to exercise their options.

More hotels and living units would go a long way towards building demand for retail and other attractions... Restaurants alone aren't going to do it.

Midtowner
11-13-2007, 09:11 AM
Luckily, most of the new construction in Bricktown is quite disposable. Bigger and better things can still be done.

jbrown84
11-13-2007, 09:19 AM
It is disconcerting, especially with how quickly the Funk/Pruitt deal fell apart and so many other projects with no movement lately (Candy Factory, former Lauging Fish building).

soonerkev
11-13-2007, 09:33 AM
As a geography major at OU I am doing a research project on Bricktown, and it just amazes me at the greed of the five or so big property owners. Their price per square foot is out of the roof. All I can say is that these property owners better get smart and lower the prices, because Core 2 Shore will be the demise for Bricktown!

BDP
11-13-2007, 09:50 AM
Ahhh, the big pink elephant in the room has been noticed. Wasted development opportunities, resting on the idea that it's "better than it was ten years ago", and pricing based on fantasies instead of reality have all finally been noticed by the media that is usually used to pumping bricktown up as some sort of envy of the region. Mediocrity is a virus and it has infected the entire east side of downtown, while the west side is quietly shaping up to have the potential to be much more exciting and much more in line with what the east side was promised to be by the city. And it's doing this more organically, without bold promises or unfounded tag lines. I doubt it will ever be what bricktown could have been, but it should be more local, more interesting, and more colorful for sure. At least, that's where I am staking my hope on this city gaining some sort of vitality in the future.

The only real possible setbacks to the west side are, not surprisingly, the developments that the city has had the most direct control over: Legacy Arts Summit and maybe the Mercy Overholser thing. We'll just have to wait and see if these guys intend to really reinvigorate the area for the long term or just make it something that's not as bad as it was.

But, soon, and maybe articles like these will help, Bricktown will have to go through a serious reality check if it wants to be relevant in ten years. It is clearly on the back side of its product life cycle and that won't change unless someone comes up with a comprehensive plan to inject new life in it and if the city realizes that it can help out by not following the unjustified pricing that the other dead beat owners do. You can only rest on potential for so long before it crashes.

Midtowner
11-13-2007, 09:56 AM
As a geography major at OU I am doing a research project on Bricktown, and it just amazes me at the greed of the five or so big property owners. Their price per square foot is out of the roof. All I can say is that these property owners better get smart and lower the prices, because Core 2 Shore will be the demise for Bricktown!

For housing, these developers are selling all they can produce at $225+/sq. ft. If the market will bear it, they'll continue to sell at that price. I agree, Core 2 Shore has the potential to wreck all of that and make a lot of Bricktown homeowners lose a lot of money on their real estate investments.

Pete
11-13-2007, 10:01 AM
When the Sonics come to OKC (hopefully next season) Bricktown will really benefit, especially over what has been traditionally slower winter months.

I still think the area has tons of upside and I think it's very important for OKC to have it succeed. It remains the only place in town to take visitors and actually walk and show them around.

betts
11-13-2007, 12:29 PM
I think Core to Shore may have prices that dwarf the Triangle area. How much do you think it will cost to live on the park or near the river? We're looking at 5 to 10 years from now minimum, and I suspect you'll be lucky to touch housing there for much under a million dollars, much less parkside real estate. I'd like to know what builders costs are for the current housing there, because I had a custom house built 6 years ago, and the wholesale costs for me were just over $100 a foot, exclusive of any builder's fees and the price of the lot. Especially if you're looking at housing like Maywood Park, I doubt you would save money with concrete construction, slate roofs, copper guttering, brick and cast stone and elevators anywhere else. We're got what I think are unrealistic ideas of what housing should cost here, relative to other cities, simply because housing has traditionally been so cheap.

HOT ROD
11-13-2007, 03:06 PM
yeah, I think the city needs to step in with a fiscal policy change for Bricktown. They should not let developers hold out for so long and let the district die just because they want to maximize their profits.

I too will hate to see the demise of bricktown but then again I dont think it will totally demise like the West End either. Even with the rise of Midtown and Automobile Alley and the C2S, those would still be the ONLY options of a true urban living experience - so you add 3 urban districts; bricktown would still be one of them.

All it should do is lower prices in Bricktown so that they could compete. And Bricktown has something that none other district has (other than C2S) and that is a waterway!!! Like Midtowner said, much of Bricktown is disposable and therefore we can always make it better later.

but it is a shame that the greed of a few is resulting in the stagnation of arguably the state's best entertainment district. I sure do hope they get this crap cleared up before the Sonics come - that's why I think it's time for the city to step in (get HOGAN out, get BREWER out or make him DO SOMETHING with his property). Get somebody with vision, like Banta and McDermitt, and others - who can and will come in and make Bricktown the best urban area in the SW (instead of just 'saying' that it is like the city does now).

metro
11-13-2007, 03:16 PM
HOT ROD, you're forgetting the potential of the Triangle and Arts District as well.

The Old Downtown Guy
11-13-2007, 04:47 PM
It would seem Bricktown in on a path to be the new West End.

Almost, but not quite. West End is mostly just a bar scene with little else to attract return visitors. At least Bricktown has some solid office occupancy in the 200 block of Sheridan, a new hotel and most of all, The Brick. It's proximity to the convention center, arena and downtown hotels should keep it from falling into the disrepair that plagues West End. However, I do agree totally with the negative comments on this thread about high real estate prices and the over-hyping. Bricktown is a tough place to make a buck . . . especially in the winter.

HOT ROD
11-13-2007, 07:55 PM
I dont think anybody would argue that Bricktown would ever become like the West End, I think we're just saying that it might become EMPTY - like the West End; if the current level of mediocrity and idiotic developments are allowed to persist. The city should not stand for this and should demand developers like Brewer and Hogan (among others) bring quality in their buildings or else get OUT!

I think then the city could justify the minimum pricing on lots, we need some fiscal policy changes in Bricktown and some vision from city hall that attracts developers who will bring quality projects like the Pruitt mixed use development.

By the way, is Steve L saying that the Funk/Pruitt development fell through OR did they bid but that it came in less than the city's minimum???

I think the city needs to let this one happen, we need another injection into Bricktown and certainly this development will be better than anything we've seen!!

Im serious about Brewer, we need him and Hogan OUT OF BRICKTOWN!!!! I can't believe the city would let him SIT on the Amtrak station with it looking like that. That place should be buzzing, with Amtrak counter OPEN, restaurant, bar, and retail space; and the place CLEANED UP!!!

How can we ever hope to become a solid Tier II city if we keep allowing backwater people like this having high profile yet vacant establishments in our Premier district???

dismayed
11-13-2007, 10:29 PM
The country is becoming more upscale and Bricktown has failed to notice this. Just because you are charging $225 a square foot doesn't make your product upscale. It seems that Bricktown is going to have to learn this the hard way.

OKCTalker
11-15-2007, 08:03 AM
Im serious about Brewer, we need him and Hogan OUT OF BRICKTOWN!!!!

What's wrong with Randy Hogan's work in Bricktown?

Midtowner
11-15-2007, 08:30 AM
What's wrong with Randy Hogan's work in Bricktown?

You're kidding, right? Compare what he promised to the city in order to land the contract versus the end product.

Consider the fact that he's building motels in the city's premiere entertainment district. He couldn't even do an Embassy Suites?

He's made lower bricktown into a joke.

BDP
11-15-2007, 10:52 AM
I just want to be clear that when I bitch about real estate prices and leases, I'm talking about the commercial real estate and the practice of leaving prime bricktown space undeveloped and empty. I can comepletly understand the residential prices, just because there isn't that much of it at all. There is TONS of commercial space and empty land (I count surface parking as empty), that could be for tennants, but they want to charge people like it's Dallas or something when there really isn't that much in bricktown at all.

Now, the housing prices are inflated based on the idea of what bricktown could be. The funny thing is that if you fill up bricktown, then all of the prices would be justified. Right now it is choked with surface parking and the canal is at least half empty. The business model right now is speculation not development, but we're all going to lose really fast if they don't get off their butt and make bricktown a full and desirable place to visit and do business. A crash would straighten this out, but then we've all got to wait for the rebound, which tends to take years in Oklahoma.

betts
11-15-2007, 11:10 AM
I am hoping that we'll see retail and restaurants increase as we've got more people living downtown. Especially without an NBA team, we just don't have consistently full restaurants on weeknights. But, as more people move downtown, they're going to tend to go to the restaurants in their area, and hopefully that will provide impetus for more to open.

Pete
11-15-2007, 12:04 PM
It's a tough situation because you don't want the city or some other public agency to start regulating prices for lease and sale.

It seems the real issue is that many of these owners obtained their property for close to nothing and therefore everything they make is total profit, and they can just sit on buildings and land and wait for the big payoff.

But ironically, by sitting on them it's actually dragging down values in general and then none of them want to sell or lease at those lower prices.

Perhaps the best course is to let competition from other nearby areas force some of these guys to action. Bricktown owners should be very worried about Midtown in particular.

Midtowner
11-15-2007, 12:23 PM
OCURA can always condemn the land.

CuatrodeMayo
11-15-2007, 12:40 PM
yikes.

metro
11-15-2007, 01:09 PM
yeah, we don't want OCURA to condemn the land, then they'll just build a worse stucco development than what is already there.