What Would You Build In The Hood?
I want to do a little brainstorming on the topic of redevelopment in emerging neighborhoods. I don't want the standard "cash advance, cash for gold, gun shop, liquor shop" response or the ever so cliche micro-brewery. What kind of cool developments have you seen in rough areas with the purpose of turning them around?
Some examples:
Pinewood Social (Nashville Bar, Outdoor Space, and Bowling Alley)
Krog Street Market (Atlanta Food Court)
Highland Mills Lofts (Charlotte Decrepit Mill Turned Into Apartments)
bump for these kinds of posts, they are always the most interesting.
I always liked the idea of a destination retail market. In DC, Edens identified the Union Market area as a great location to open a market concept very similar to Krog, where they would curate individual vendor stalls (primarily F&B) and subsidize them to drive activity to the area. Excluding the costs to subsidize rent for these vendors, their initial capital investment in the market was pretty small, so if it failed it there was not a huge amount of capital at risk.
At the same time, Edens bought a lot of cheap land around the Union Market area. Once it became a successful destination retail market, developers caught on, starting planning projects in the area, trading land and pushing entitlements. Edens made a fortune selling parcels, or developing select parcels at a comparatively miniscule land basis. With land appreciating in the area 2x or more over a five year period, it is almost impossible for them to screw up development on the sites they still own.
I would build a golf course, they tend to be linked to lower crime rates.
Golf courses are actually experiencing a downturn, with a lot of them closing or downsizing.
Yes but you need a way to cover up the existing infrastructure of basketball courts. They're known to be linked to criminality and recidivism.
Get it guys... linked :D
I think you got the cart before the horse there, partner.
With the anticipation of lowering retail commercial retail rents due to Amazon etc. This becomes more challenging in on sense (successful retail) but will create opportunity in cheap real-estate. Find how to generate return by solving for those to variables and you are all set.....
At least in the south, adaptive re-use MF. The converted textile mill lofts are sweet- 1200+ sf, 15+ ft ceilings. Highland Mills is one of my favorite deals out there- transit oriented right next to an A+ brewery, very affordable lots of character.
Lots of these in SC
Yup. Never seen an OM on one but they are pretty sweet.
I sometimes see commercial spaces zoned as "community facilities" which are often tax exempt but can still charge market rents. The definition of a "community facility" is pretty broad, but the tenant must provide some sort of service to local residents. Ranges from pre-schools, doctors offices, recreation facility etc, can change use between leases so long as it stays under this definition. Most of the rapid gentrification I see though seems to begin with art related projects like galleries/exhibition spaces, live work spaces etc, and the rest then seems to follow. I guess it all depends what type of neighborhood development you want to see.
I also saw a super running a puppy mill out of a boiler room once.
Grocery stores. Food deserts are real.
^ Exactly what I was thinking.
That's along the lines of what I was thinking, but I'd take it a step further. I don't know if the economics would pan out, but a multilevel building with a grocery store/self-serve restaurant on the ground floor and an urban garden where the food is grown with hydroponics on the upper level(s).
I am no expert on this and have nothing to add, but Krog Street Market is the shit. If I lived in Atl I would eat there nonstop.
KFC/Popeye's
Children's/kids/teens rec centers
Start up incubator. Mix the peasants and down-trodden with the entrepreneurs and watch the empowerment magic happen.
...or an art/music recording studio with a café.
There are some rougher parts nearby and some affluent parts nearby but Dallas Midtown is going in right over where Valley View Mall used to be, and let's just say that everyone knew that you shouldn't go there after dark and then eventually that you shouldn't go there unless you were going to the theater which had a different entrance.
http://www.dallasmidtown.com/
Artist collaborative work spaces, Stadiums without parking in dense areas
You beat me to it. Co-working places for entrepreneurs, art galleries, then as those places start to spin up, cafes and restaurants nearby. Maybe an upscale indie hotel. There's already a playbook for this. West Harlem or Brooklyn. Bishop Arts District in Dallas. East Side Portland.
Anything the government will give me a handout for.
Krog/Union market are good ideas but are well explored at this point, I also wouldn't say Union Market was a truly undeserved area in the way Deanwood/Capitol Heights are. It's adjacent the already gentrified NoMA and H Street Corrdiors. Community facilities allows you to receive CDBG financing which is why you see those built, but do they truly do any good?
These areas usually have an abundance of social programs so it'd be better to bring real white collar jobs if possible, or retail that creates a destination. I will say Union Market has succeeded in bringing white people where they wouldn't go before. Grocery stores are great but they pay shitty rent.
Opportunistic socialist.
That's like calling an NFL team a socialist for stadium deals. I'm just a capitalist praying on the Commies
Regarding spurring a bit of gentrification I've seen successful projects ranging from big catalyst builds such as professional soccer stadiums to mid-sized music venues, and going a bit smaller would be art gallery and warehouse studios. The warehouse gallery spaces are also good for hosting events that can draw an affluent crowd.
A private prison?
In the Saint Louis area a model that seems to be working is a mix of outside "anchor" development coupled with incentives to promote local small business development growth. Efforts to get people to spend time and money in a previously blighted location is step one. Next you have to compel people to come back and even interact with the locals. Several of the areas have their own distinct personality and that is critical to that success. These redevelopments only seem to take root when there is a robust exchange, on a personal level, between the locals and those from outside that community.
A farm.
Franchises. Magic Johnson has killed it putting franchises like Starbucks in areas that the average investor won't touch.
The only problem I have with that is that it promotes unhealthy eating and wasting a precious small amount of disposable income. The unhealthiness will arise in future health care bills that everyone in the country will have to subsidize, and people are wasting away precious income on an overpriced mocha. It has been repeatedly shown that it is much cheaper cooking your own food than buying McDonald's everyday.
I could be COMPLETELY wrong about this, but what I said above could be two small downsides to building fatty restaurants in the less affluent areas.
Franchises don't have to be unhealthy. Lots of healthy eating options.
To my knowledge, Starbucks doesn't offer franchising if it's a standalone Starbucks. It has to be inside of a business (book store or some other retail setting.) Your point still stands.
EDIT: Why does Starbucks autolink to Howard Schultz's book?
Looks like they bought him out - but there was a point where he owned more than 100 Starbucks.
It's sad, here in San Diego, California, people are spending a little more than half of their income on rental expenses already. What used to be $700-$1000 for a 2Bed/2Bath is now $1700-2100 for the same place. I believe the term, "gentrification," is what was stated earlier.
However, we see a lot of fitness places sprouting up like weeds around the ghetto area recently.
Opening a Planet Fitness is a great idea. It's the one gym franchise whose business model is predicated on people NOT going to the gym (not being sarcastic).
They did exactly that, actually. The parking lot is filled with guys working out. It does promote healthiness, in a way.
Ironically, there's a strip joint next door.
I like the idea of creating a mini "hub" within a neighborhood first and establishing a creative and vibey atmosphere which will attract others from neighboring (hopefully more affluent) areas, promoting spending - I went to a local night market at Maboneng (see link below) and it was great! Hopefully, over time (if the numbers stack up and the banks are willing to lend) the market will mature as other developers enter into the fray. This is what is happening in one of our local sub-markets in South Africa - http://www.mabonengprecinct.com/
KFC
Nothing - some of those areas like Detroit will keep on experiencing population exodus. The jobs are not coming back and people are still leaving. The shitty programs the city is trying to install won't do the trick, there are so many hipsters and coffee shops that can be built... Core fundamentals are fucked - and it's the case for most ghetto in America
If you are building next to an oversprawling rich neighborhood than yes. And in this case I would build simply residential development for people who are unable to afford said city - they will come as the city grows and you will reap the benefits.
Unfortunately, people are moving into California.
Truth. Watch the documentary Detroitopia.
A munitions factory , gun range and recruiting station.
Barbershop strip club
I've seen some class A Spec office buildings doing a pretty good job at revitalising areas. They buy up a big swath of blight stricken property on a major arterial road for cheap. Put up a fancy building, get some large non F500 companies to move their call centers in there, boom. 1000+ people under the age of 30 working in the area, retail and residential are soon to follow. This only seems to work in MSAs with populations that are growing fast though.
This is interesting- don't see a lot of this in my market. Mind posting some examples or PM ing me?
This would be like the Southside Works in Pittsburgh where the American Eagle HQ is and a Hofbrauhaus, cheesecake factory, REI, LA Fitness, anchor the retail. I'm pretty sure the developer nearly defaulted on their debt though, at least from what i've heard. There's also a few hundred apartments where the 1brs are like 2.10-2.25psf... which is absolutely nuts. Wonder what the occupancy is...
But there's a few other Class A office developments in this site in the pipeline but they have not broken ground and I have no idea if they are
Interesting. Sb'd
Townhomes for middle class hipsters, gentrify!
Simple but true: Grocery stores are great anchors.
"Why Whole Foods is moving into one of the poorest neighborhoods in Chicago" --Washington Post or Crains etc.
I can't post the link.
Or even an urban farm (from the article)
"The strange economics of food in Englewood are apparent on Wood Street, at an urban farm about a mile and a half from the Whole Foods site. Here, a nonprofit group called Growing Home churns out more than 30,000 pounds of produce a year, much of it on a once-abandoned industrial lot it bought from the city for a dollar.
The farm is in the middle of the neighborhood, bordered by a stretch of defunct railroad tracks and disputed gang territory. In the beds and hoop houses here, Growing Home is raising beets, cucumbers, greens and thousands upon thousands of tomatoes, all of it organic."
--Washington Post
This is what you gotta do:
Public transportation on highly accessible roads, preferably rail with high density mixed use grocery and fitness anchored with mid to high rise amenitized apartments within walking distance to the public transit. Then you get the 20-30 year old white collar/school crowd moving to these areas where they can bus/train to work. You need subterranean parking or parking garages.
Then you get bars, fashion brands, retail shops, coffee shops, brunch spots move along these corridors. You get older folks who buy homes in the surrounding neighborhoods around these areas and as the 20-30 crowd ages a few become buyers and stay in the area.
Problem with this is it gentrifies the neighborhood and lower income folks get pushed out. I'm not sure how you solve that... providing great schools and teachers would help.
I wish this was easy as you make it sound haha
Luckily I read Surfing's post before writing my reply. Surfing, I think you really nailed it.
Long story short, I agree with this approach, and Newark, New Jersey is a great case study. A huge transportation infrastructure already exist: major train station with direct line into NYC via the PATH, all the buses you would want, and an international airport. Furthermore, Newark has a fairly decent CBD within close proximity to an entertainment venue (Prudential Center). Having major universities and medical centers doesn't hurt, either.
The most difficult hurdle to face, even in light of a solid starting point, is the retail/housing chicken or the egg paradox that occurs when championing change in an area with a lack of both. A developer a number of years ago dived headfirst into a huge repositioning of an art deco office building into apartments. The units looked great, but the problem was that no one had anything to do on the weekends as the city's downtown resembled a ghost town. Thus, vacancy tanked, and they ultimately ended up handing over the keys. Those that have experienced success started with smaller mid-rise mixed-use projects that focused on quality housing coupled with complementary retail, just as Surfing mentioned. It wasn't long until you saw Starbucks, Chipotle, and Whole Foods follow. It also helps to work in a city that implements an effective economic development plan that incentivizes major companies to stay and reinvest into the area.
Again, speaking to Surfing's comments regarding how to try to improve an area for all people through the improvement of schools and retention of teachers, The Teacher's Village project smack in the middle of Newark's downtown did just that. I do not know how they are doing, but Goldman made a substantial investment.
Thoughts on the purchase of a laundromat in neighborhoods like these? Small re-investment into purchase to increase cash flow or becomes a real estate play to sell to a developer to build a Starbucks, etc.
The trouble with a laundromat would be the cash flow during the gentrification. As the lower incomes are pushed out, your market will slowly decline, and the market for a new building on that site might not be there yet.
Retail in between poor and rich areas does terrible from a leasing standpoint. There is a bit of cross over for places like fast food restaurants and Target, but you will have too diverse a market to attract high end tenants and not enough poor patrons to keep the 99cent store open.
I'd love to own a laundromat. You hire like one person to hang out there and subcontract the machine service work, seems easy enough.. what are the margins ?
I too watch Shameless.
The big problem with laundromats is the remediation involved with the soil and water tables being contaminated from the solvents and cleaners. It's something in a deal i'm involved in which may present a big issue
See:
This document does not address normal day-to-day operations at dry cleaning facilities or how to ensure that these operations are performed in compliance with various environmental laws and regulations. The Department has another guidance document titled “Pressing Concerns – A Complete Guidebook to Environmental Compliance For Colorado Dry Cleaners” dated December 2002, that was created to specifically address those topics.
Perchloroethylene (also known as tetrachloroethylene, perc, PCE) is an organic compound that is part of a class of chemicals called chlorinated hydrocarbon solvents. PCE is a liquid at room temperature, but readily evaporates into the air and thus is also called a volatile organic compound (VOC). The chemical properties of PCE are such that in liquid form it can readily migrate through unsealed concrete floors and concrete or asphalt parking lots. Thus, even if spills or leaks of the liquid PCE appear to be “captured or contained” by a hard surface, the chemical is actually moving into, and rather quickly through, the hard floor or pavement and entering the environment. The same properties that allow PCE to migrate through concrete floors also allow PCE to migrate rapidly through soil and rock once it is in the natural environment.
There are two primary human health risk concerns associated with the release of PCE to the environment:
1) PCE readily dissolves in ground water and can move rapidly away from the original spill area. The presence of PCE in ground water creates a risk to human health, even at very low concentrations, if the contaminated ground water is used as a source of drinking water. The State of Colorado also has ground water quality regulations that make it illegal to introduce chemical contamination into the ground water.
2) PCE evaporates readily from contaminated soil and ground water and can easily migrate up through the soil to the air, even if the contamination is located many feet below the ground surface. If there are buildings above the area of contamination, the PCE can migrate into the indoor air of the buildings. The PCE in indoor air creates a health risk even at very low concentrations when breathed by humans.
I did a case study on Fruitvale Village in college. It's a transit-oriented development in Oakland, CA. I liked it because parts of Oakland are seriously downtrodden, and they used the development as a catalyst for community involvement and pride to turn the area around. They incorporated not just retail shops and apartments, but community services like a daycare, library, and health clinic. I think they do festivals and farmers markets in the interior space. I haven't checked recently, but I think surrounding areas got a lift in value for the proximity to the station.
A music studio
Commercial aquaponics. Rent a 10k square foot warehouse, sell tilapia and lettuce to major wholesalers in the area. Can average anywhere from 50-80% roi in the first year.
If I built something in the hood it would be fireproof.
.
Gunstore, police station
See. That is what I call "synergy".
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