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Downtown Still Going Strong; Neighborhoods and Inner Suburbs Need Leadership

I got a call from developer Kevin McGowan on Saturday, you may recall the last time he called me was to defend himself over the pets issue in his own building (see post). So McGowan calls me all excited and thought I’d be interested in his news — super fast loft sales. I’m not in the business of acting as a free PR service to profitable downtown developers but as we talked I saw enough in this that it is more than a press release for his firm.

OK, here is the story. McGowan | Walsh has been unsure about what the composition should be for their three buildings at Cupples Station located to the due west of the ballpark (#s 7, 8 & 9). They’ve hung banners on all three for “Ballpark Lofts” but they’ve been looking at office use instead of residential or in addition to. They began to market lofts in the center building — #8 to test the market. They’d been taking deposits to get on a list. Saturday they asked potential buyers to firm up and pick their units — wanting to really see if the buyers would stick around or seek their deposit back. Well, McGowan reports they sold 57 out of 68 units — in just over an hour. Needless to say, he was ecstatic. This represents, he said, over $12 million in loft sales.

So I began to ask more questions. The selling prices were roughly $146K to $400K for square footage ranging from 750sf to roughly 1,500sf. Just a few years ago lofts were easily ranging from 1,200sf to over 2,000sf but we are seeing a shift to smaller units. McGowan confirmed the smaller and more affordable units are where the market it going. Still compared to other lofts downtown these prices seem on the low side but there is a good reason for that. Parking.

You see, McGowan | Walsh did what is called “unbundled” parking — a parking management technique discussed in Todd Litman’s book Parking Management Best Practices whereby a parking space is not included with the unit. Some rental units downtown have unbundled parking that costs extra each month but I don’t know of any other for sale loft downtown where this is the case, save for perhaps the Marquette building by The Lawrence Group. Anyway, buyers at McGowan’s Ballpark Lofts were given the option of purchasing a parking space for the tidy sum of $18,000. Parking is expensive to provide and it is good for people to see the real cost by not hiding it in the purchase price.

McGowan said that roughly 20-25% of the buyers decided against a parking space which, to me, is a very big deal. McGowan credits the MetroLink stop a block away for the buyers willingness to forgo parking and presumably a car. They do have a free scooter with each loft so perhaps these buyers are comfortable with transit and the occasional scoot.

While they are still undecided about the other two buildings this latest round of fast sales may push them toward residential and away from commercial office space. McGowan fully acknowledges the impact of the new Busch Stadium on the marketability of his lofts. He also gives credit to two unbuilt projects — the ballpark village and Chouteau’s Lake Greenway.

The area needs something because the most activity is the on and off ramps that intrude into the area. I’d like to see these simplified a bit so some of the land can be recovered for in-fill construction. Hopefully residents of these lofts will be open to walking, biking or scooting up to City Grocers, which will be moving to a bigger space in the Syndicate Building late next year (see Biz Journal story).

But we have a housing bubble right? Well, yes and no. The “Creative Class” have been seeking urban living options for a while now and downtown St. Louis is the only choice for such a lifestyle in the region. As such, downtown continues to see demand whereas tract homes in the hinterlands are stacking up unsold. The fact is nationally families are becoming a smaller and smaller segment. Singles and empty nesters are the norm, especially as the baby boomer generation ages. For many boomers there kids are long out of the house, they are divorced or have lost their spouse. They 4-bedroom ranch in St. Charles County just doesn’t appeal to them. But this doesn’t mean downtown developers can write their own checks. They are learning buyers have a ceiling they are willing to spend, unlike in the ‘burbs where many buyers will become house poor to own as big of place as they can get. No, urban dwellers want to enjoy life and need money for travel and other things often given up to afford the big house in the suburbs and the two (or three) cars in the garage. This is resulting in smaller living spaces — with residents getting out on the streets more often rather than go from the den to the living room to the family room to the sitting room to the media room when they feel restless.

Transit is a big factor, in my view, toward the choice to buy a loft without a parking space. This is also a factor for the conservative bankers to finance a project without a space per unit — McGowan said MetroLink was a key part of showing their bankers they did not need a space for every unit.. Sadly, we have very few places downtown where that remains a reasonable option. The development future of downtown is in the west area between 18th and Jefferson and into Midtown toward Grand. The near north side has great potential with the vacant Pruitt-Igoe and the largely vacant area between Washington Avenue and the emerging Old North St. Louis neighborhood. Getting a permanent transit option to these locations will enable developers to use vacant land not as parking lots for adjacent buildings but for new in-fill construction. We are at the key point in the development around the CBD and without good localized transit (aka streetcar or guided tram).

And of course the bulk of the city is not downtown yet it only gets passing attention. The inner-ring of suburbs in St. Louis County are as urban as much of St. Louis and deserve renewed focus as well to offset losses in population many of them are experiencing. Natural market forces are coming together downtown with the trick being keeping the “leaders” and their outdated zoning and thinking out of the way. The same simply doesn’t work outside the immediate downtown area — the neighborhoods of the city and adjacent inner-ring suburbs need strong leadership to bring good zoning to them. Unfortunately, with a few exceptions it is just not happening. Downtown will continue to strengthen while the rest of the region is going to suffer from our 1960s urban edge growth mentality. Meanwhile, other regions in the U.S. will continue to outpace our region in terms of population and job growth.

 

Currently there are "15 comments" on this Article:

  1. Craig says:

    There is no doubt that other regions in the US will outpace the St. Louis region in population increase and job growth. But I don’t think that’s anything that even the smartest zoning and development planning could change. Our climate is not as hospitable as the sun belt and California, we don’t have oceans or beaches like the coasts, we don’t have accesibility to mountains like the coasts and much of the sunbelt, and our region in saddled with the baggage of post-industrial America (aging infrastructure and undereducated citizens) while much of the sun belt and west coast has the advantage of starting anew.

    Like Candide, we must make the best of our garden. So, it’s good to see that loft developers are now focusing more on the young people who are willing to move downtown. Let’s face it, very few families will be moving down there and our region isn’t gaining people. So to focus on the youngsters is a smart thing to keep the downtown momentum going.

    Isn’t this all a cycle though? Eventually, these youngsters will want to raise a family and they’ll move out of downtown. Where will it be fashionable for the next set of youngsters to live? Probably not downtown. Maybe living in the burbs will be fashionable again.

     
  2. Margie says:

    If St. Louis is anything like Chicago, by the time (some of) the youngsters are ready to leave their lofts to move to the burbs for better schools and a swingset, (some of) their parents will be ready to give up mowing the lawn and will want to walk to Copia.

    Also, not everyone is raising a family. Whenever these discussions are had, the huge and growing population of single/childless folks seems to be ignored.

    [UR — Exactly, if you listen to the Home Builders Association you’d think their was an unlimited supply of families wanting new houses on the fringe but that is changing. The HBA is in for a rude awakening. Young families that do leave the city because of schools will want to locate reasonably close — inside the I-270 loop. As Margie says, their parents will be in the city enjoying life — they won’t want to drive out to Wentzville to see the grandkids.]

     
  3. Jim Zavist says:

    I pretty much agree with all your points. The only real challenge gets into demographics and the cycles of life. Living without a car is easier when you’re either young and single/just starting out after college or when you’re retired or semi-retired. It seems that when people marry and start having kids, the need for minivans and SUV’s (and good schools) intensifies and urban living loses some of its attraction. It’ll be interesting to see how the market matures along with the residents. Will the original sales be primarily to empty nesters, yuppies, or both? Who will make up the resale market? Will the lack of parking be viewed as a negative or not?

    The only thing I have to go on is the Denver loft market, where price appreciation over the past decade pretty much precludes downtown lofts as a starter home market anymore (with prices running between $300 and $400 a square foot), changing the demands for parking. Then again, when you’re paying that kind of money for a residence, coming up with another $30,000 – $80,000 per parking space isn’t such a big issue . . .

     
  4. josh wiese says:

    One thing I see missing from the loft boom IS the creative class once they have kids. I was in chicago this past weekend and the idea of kids and a loft was accepted because the burbs are so far away and they are really expsensive.

    Personally, I’m finding more folks my age who were once in the creative class moving to the inner neighborhoods because we want space for our kids, our cars, and to be part of a community. How much that makes up the city neighborhood’s I really dont know. It does feel like alot of my neighbors are my age and are in the same boat- kids are coming and I want a house and some roots- loft doesnt necessarily say “roots” to me personally

     
  5. My goal is to not have a car and my have one small sedan for the wife to drive to work. Children are too spoiled and they do not deserve a 50k land yacht SUV. If parents happen to actually want one, then thats their decision, yet they should consider that 50k would be better spent invested, or used for vacations. “Big with lots of bling” is usually a waste of money, especially when the item in question depreciates significantly and has fringe costs (gasoline and repair).

    Honestly, the way to get people from moving out of the City is the school system. I am hardcore, therefore I will pay the extra dollar for private, or hopefully win the charter lottery. Many families are not as drawn to urban life, thus they won’t pay the extra cost once Timmy and Tommy arrive. Their solution is to move right outside the boundary, where there is better schools and they don’t have pay for the Cities easily accessible benefits or obvious problems. Some may get tired all together and move far away. A better SLPS would really make a difference and that will occur when the SLPS is under the control of either the City or the State.

    I commend McGowan and others for their hard work Downtown, yet for the City to make big improvements, there must be a better SLPS. With a better SLPS, McGowan would see increase sales now and well into the future. The key is to keep the City viable once these people have children.

     
  6. style police says:

    ^

    Doug,

    Your use of the phrase, “the wife”, does not exactly promote your heretofore progressive image.

    SP

     
  7. City Parent says:

    To all the childless adults living in the city: We may have some common ground!

    If we are to accept the idea that city offers little to families with children, then maybe we should go ahead and close down the city public schools.

    With all the money saved we could offer the few of us raising kids in the city vouchers to attend the school of their choice and everyone would be happy!

     
  8. Craig says:

    Doug, personally, I’m tired of your incessant claims that people living in the county, just over the city border, constantly reap the benefits of the city without paying for them.

    County residents help fund, through their real estate and personal property taxes, Busch Stadium and Forest Park (along with its various attractions like the zoo and museums). They also help pay for Metro, which is certainly a boon to the city. And when these county residents cross the border to eat at the city’s fine restaurants, they pay sales tax to…the city.

     
  9. City Parent says:

    Hey Craig-

    Doug’s right. The main downer for city parents is the public schools.

    Our property taxes are over $2,000 per year for a single family home (no loft tax abatement for us!)

    Our private school tuition is about $4,000 per year for one student.

    When high school starts, we’re looking at almost $10,000 per year in high school tuition.

    What to do? We’re thinking of parachuting into a county school system just for high school.

    We figure, move just across the city line to a condo in Clayton, and we’ll save about $40,000 in tuition. Plus, we’d have our child in one of the finest school districts in the state.

    Hey, it’s not tax abatement, but it’d pay for college!

     
  10. Craig says:

    City Parent, I agree with you and Doug that the city’s public schools are largely atrocious.

    My point had nothing to do with city public schools.

    My point was that county residents pay for and support many of the city’s attractions (though not the public schools).

    But even if county residents gave the St. Louis City public schools hundreds of millions of dollars, the schools would still be atrocious. The problem is not lack of money.

    [UR — I can’t believe I am saying this, I agree with you!]

     
  11. City Parent says:

    And that’s the point, Craig.

    It’s like the old saying about getting a cow’s milk for free.

    You get the good stuff, without having to bear the brunt of total commitment.

    Us city parents and property owners, we are totally committed.

     
  12. Yes, County residents do fund certain special districts, such as the Zoo and Bi-State, however there is no revenue sharing program between the County and the City. This would never pass because some in the County are of the mindset that the City is not their problem. They will fund the Ball Park, Zoo, and Metrolink (maybe), since they use them yet this only goes so far. The County also sends their homeless Downtown and is very happy to see I-64 ‘reconstructed.’ As newly elected District 3 Republican Councilwoman Wasinger said, we need it done to ‘get people out of the core.’

    The purpose of my comment was not to get into a City v. County debate. The purpose is to emphasize that if we work on our problems, then we can attract those who would live in the City but choose the County. The SLPS is arguably the greatest factor in this decision.

     
  13. joe b says:

    Even if they’ve sold out for the building, it doesn’t make sense. Downtown lofts are struggling right now-badly. More likely than not, speculators buying the units.

    Secondly, I need much more info about the contracts involved. No info about floor plans, etc is available on the net about these units and I have a difficult time believing demand is that high.

    Think about it.

    I’m 24 and desperately wanting to buy downtown.
    I’m 59 and desperately wanting to buy downtown.

    Here’s my money and my signature, don’t bother with any sort of floor plan layouts or drawings on line.

    A phone call confirmed that they were sold out but somethings still amiss. it just doesn’t add up.

    [UR — Good questions. M|W has been passing out floor plans for the Ballpark Lofts #8 for sometime so I too was surprised they were not online. They have not been a secret.

    Yes, sales have been a bit sluggish downtown around Washington Ave and such. I think a number of things worked in their favor here — the ballpark and bp village as mentioned but also the World Series victory. Their timing & proximity was good.

    Many think that in St. Louis part of what was driving the boom was speculators but that they have all but pulled out — creating a sense of sluggishness. In reality the drop in speculators has presented a more clear picture of reality than before.

    What remains to be seen is if this can be repeated in their adjacent buildings — I’m rather doubtful. If you need more affordable (I know I can’t afford these prices) then look at #60 Plaza Square being marketed simply as “Blu”, see http://www.mybluspace.com/ Prices start in the 80s for studios and go up to the 150s for two bedrooms. In the interest of full disclosure, the project manager is one of my classmates at SLU.]

     
  14. John says:

    No car? No problem. Flex Car is coming. I think.

     
  15. Kara says:

    I don’t currently have children, but if I did I would never live in the suburbs. They would be nice and safe for the first 5 years of a child’s life, but beyond that the suburbs are a prison for children. As a child of the city I could easily walk to my friend’s homes in my neighborhood. This would be limited in the suburbs as it would be a much longer walk, and maybe even impossible due to a lack of sidewalks and connecting streets. In the city I could walk to the small commercial strip in my neighborhood to spend my allowance money. I could take the city bus to see other more interesting things around the city like museums, the arch, etc. In the suburbs I would have been sitting at home in front of the tv waiting for my parents to have the time to take me to these places.

    As a potential future parent I view a strong public transit system and walkable streets that cities offer as essential to raising kids. They are vital to a child gaining independence in small increments at a time, rather than being a prisoner until age 16.

     

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