The news that a Chicago developer had dropped, for now at least, a plan to construct a new high-rise condo building at the corner of Washington and 14th Street was not altogether unexpected. Sales of the luxury units in that project had been slow in better economic times than we are now in. The developer, who controls a great site in the heart of the Downtown loft district, says that he will look for something else to build there.
Similarly, the news that St. Louis-based Pyramid, whose fast-growing portfolio of properties includes great historic buildings, had finally run out of financing on some of its projects did not surprise many real estate professionals. Other developers are stepping forward already to continue the projects without Pyramid.
The daily newspaper, itself in something of an economic funk (like almost every other major newspaper in the country), is ready to wring its hands about downtown. Are they right?
What we all need to remember is that home sales are slow, not just in downtown St. Louis, but throughout the region and the country. Residential developments in Clayton, Chesterfield, St. Charles and Chicago are proceeding more slowly than in the past, just like those in downtown St. Louis. And sales of existing homes throughout the region are slow. That’s one of the reasons why downtown loft sales are slow (slow, but still moving). People in the suburbs who want to buy a loft have to sell their existing home first. That’s life in the current era of the credit crunch. But the credit crunch will not last forever: banks are in business to lend money, investors have money that they need to invest, and developers are in business to develop.
What has not changed is downtown’s desirability, and the progress downtown has made (from almost a complete standstill) over the past seven or so years. The major components of downtown’s revitalization are now all in place: new residents, new and expanded employers, new businesses and entertainment options, streetscapes, landscaping, a new stadium, and a new casino complex. Downtown’s advantages —- vitality, walkability, historic architecture, jobs, safety, proximity — are the sorts of qualities that strongly interest young people and empty nesters across the country. The pace of downtown residential development may not be as hectic as it was in the past few years, but development continues — sometimes in new directions.
Owners of some loft buildings are turning to residential apartments, instead of condos. And some owners, like Blue Urban, are turning their attention to office uses. (Osborn & Barr’s announcement last week that it will move from Clayton to the Cupples complex is a good example; so is Cordish’s desire to develop more office space instead of condominiums at BPV; others will likely be announcing plans soon.)
The shift from a residential emphasis to an office emphasis is a good thing for downtown overall. More people working downtown means more people will seriously think about living downtown, and that will be good for downtown’s residential market as the nation’s credit situation corrects itself. Downtown’s mixed-use character and diversity are unique strengths as we weather the current for-sale housing situation.
Here’s my answer to the newspaper: downtown revitalization will continue, thanks to the foundation that’s already been built by banks, equity investors, developers, and our public partners. We probably won’t see quite as much development in the condominium sector as in the red-hot 2005-06 years, but we will see more development in other market areas. And we may not see development at the hectic pace we’ve seen in the past couple of years, but we will see plenty of development at a more rational pace. Add that to the end of the story, please.