Highwoods throws in the towel
June 23, 2009 by Aaron Kremer
Maybe Highwoods Properties just lost its patience.
The Raleigh-based development firm announced Tuesday that it is pulling out of its proposal to develop Shockoe Center, a $350 million retail and residential project that was to be centered around a minor league baseball stadium.
Mayor Dwight Jones was tepid on the plan throughout his campaign and the first few months of his administration, never giving it his blessing, nor striking it down all together.
Much of the land is currently a parking lot. Restaurants and shops in Shockoe generally supported the plan.
It’s unclear how much money the firm spent on legal and engineering work to see it be scrapped.
In a statement released Tuesday, Mayor Jones said, “At this time the situation afford us an avenue to fully reengage our regional partners in the discussion of the direction we as a region wish to move in.”
In a front-page story today, the Times-Dispatch reports that consultants hired to study the plan concluded it would be “highly likely” with credit support from the city but not without it. The Times-Dispatch also reports that Highwoods did not intend to pursue financing in the current market.
However, plenty of municipalities have sold bonds recently at reasonable rates of interest, so that may not have been as big an issue as the press releaseses suggest.
BizSense’s take: Several news stories reported that the potential local ownership group could not close the sale because they couldn’t raise the $15 million needed to buy a Connecticut team. But more likely, the indecision of the Mayor to bless the project probably scared off potential investors. The ownership group assembled by Bryan Bostic wanted to run the team in a new stadium with better amenities and more focus on family entertainment. That was part of their business plan. And despite a vocal group of opponents, they believed that with the right management and right marketing strategy, the team would draw enough fans to support the business. However, they did not want to run that sort of business in the dilapidated Diamond. So, it stands to reason, that the investors likely didn’t have enough confidence in the City of Richmond to navigate the politically-charged issue and get a stadium deal done. Again, no BizSense reporter was invited to any negotiations, but several sources have suggested that there was too much risk.
Highwoods was handling the commercial and residential component. The baseball stadium was the key part of the Shockoe Center project. Without a team, there was no reason to build the $60 million stadium. And without a stadium, no reason to build more office and retail space.
Aaron Kremer is the BizSense Editor. Please send news tips to Editor@richmondbizsense.com.
It is so Sad that Richmond continues to blow every opportunity that comes its way. The list is so long it’s really sad. 6th Street Marketplace, Main Street Station, the Canal Walk, The Braves and now Shockoe!
Bottom line here is the Ciy Council, and specifically the mayor, didn’t have the political hoohahs to step up and do what was right for the city because they feared public outcry — they feared for their jobs. Sometimes elected officials have more information than the citizenry. When that hasppens, like here, the elected officials have to be ready to make the tough choices. One more time Richmond’s elected officials would not make the tough choice. This is why Richmond has been left behind places like Raleigh, Charlotte and Atlanta when it comes to becoming a great city. Richmond will never become a great city unless we start electing some people willing to stand up and make choices.
James stated that ” one more time Richmond officials would not make the tough choice.” Perhaps that’s because the previous choices all failed to deliver: The Sixth Street Marketplace; The Convention Center; The Broad Street Bond issue; and The Canal Walk to name those from 1985 to the present. The Sixth Street Marketplace has been demolished; the Convention center is subsidized by the City; ditto for the Bonds for the Broad Street facelift. Hopefully, the Canal Walk can become a success. It only took San Antonio twenty five plus years for its Canal Walk to work.
Isn’t it ironic that the one major success was The Diamond, where the bonds were paid off and regional cooperation limited everyone’s exposure. That’s still the best play. $28 million to renovate the Diamond divided by three jurisdictions comes to less than a t$10 million dollar exposure for each, probably $9 million if Hanover County participates. That would allow Richmond to use the same bond power for $50 million of more worthwhile projects for the community, such as a few new schools, or a new City jail to name just two.
The tough choice, based on past history, would have been to just say “NO !” It didn’t come to that because the developer dropped its plans based on today’s reality that financing of the project wasn’t possible.
Just curious, where was the money coming from? 60 Mil is not chump change and with businesses dropping like flies around VCU, multi-trillion dollar deficits on the way, along with the current recession we are in I bet the Highwoods group wasn’t footing the whole bill.
The problem here is that there has been no champion from the public sector, or benefactor from the private sector. I would look at Pittsburg as an example with Mayor Tom Murphy and benefactor, the Heinz Corporation. The fact is that someone has to subsidize projects like this because the numbers don’t work from a pure real estate investment standpoint.
The question to ask is this, who are the major players in Richmond? Two names come immediately to mind, Phillip Morris and VCU. If either or both of these put their muscle behind this project it would happen. Why weren’t they involved? VCU wants a football team. I can see Richmond supporting VCU football downtown. Create a multi-use facility downtown for all VCU sports, including football, throw in a minor league baseball team, get a corporate subsidy, and the thing can happen.
The ballpark issue is symptomatic of many problems we have as a “city.” The Greater Richmond area still lacks the visionary (elected) leadership to reclaim our place as a great “city.”
There is no plan. As far as I know, there is no Greater Richmond vision for what this place is going to look like in 20 or 30 years (and without one, guess what, it’ll look the same). Do we want to attract more people and/or keep more people from moving away, or are we okay with being a second or third tier city? Do we want to have the best schools or just average schools? Do we want to have great public transportation or just buses for people who don’t own cars?
So, local leadsers, put a plan for the entire Greater Richmond area together by the end of 2009. Enlist Ukrops, Trani, and Lugbill. Get outside help, but get it done. Once done, the answer to baseball in Richmond will be clear – and we’ll all have a plan we can get behind.
[...] Five days after that piece went up the deal collapsed. [...]