Lot J deal could easily be improved but will pass anyway
A rendering of the current $450 million Lot J project.
According to the project description from the original Lot J term sheet, the aggregate cost of the project was estimated to be $450 million and consist of a Live! entertainment district, a 300 unit luxury high-rise residential tower, a 200 room boutique hotel, a 120,000 square foot Class A office tower, 700 surface parking spaces above an existing storm water retention pond and 600 parking spaces integrated into the hotel, residential tower, office tower and/or as street parking.
Although it’s claimed that the Lot J Live! will cost $100 million to construct, Xfinity Live in Philadelphia opened at the cost of $60 million. Both 300-unit high-rise residential towers in Kansas City and St. Louis were constructed at the cost of $105 million. A 200 room Live! by Lowes in St. Louis cost $65 million. Cordish constructed the 7-story, 200,000 square foot Pattison Place office tower in Philadelphia for $80 million.
A rendering of the original $450 million Lot J project.
Throw in $77.4 million for infrastructure improvements and even with 200,000 square feet of office space, the aggregate cost of the real examples above is closer to $307 million than $450 million. This list and scale of proposed uses seriously fail in comparison to other +$400 million projects underway in the region. In Atlanta, Phase 1 of Midtown Union has an estimated construction cost of $410 million. It includes a 26-story, 600,000 square foot Class A office tower, an 18-story, 355 unit residential tower, a 12-story, 205-room hotel, 30,000 square feet of retail space and 1,909 parking spaces.
In Tampa, Midtown Tampa is being developed by the Bromley Companies. Anticipated for completion in early 2021, the $500 million project includes 750,000 square feet of Class A office space, 390 luxury apartment units, 226 hotel rooms, and 240,000 square feet of retail and entertainment space.
Since the original term sheet was publicly released, the Lot J scope was further scaled down to a minimum 350 mid-rise residential units, 120 hotel rooms, 75,000 square feet of retail/dining/entertainment space and 40,000 square feet of office space associated with the Live! component. Nevertheless, the aggregate estimated cost of the project has mysteriously remained the same.
The 120 room hotel at Lot J is estimated to cost $150 million. In August 2019, a joint venture comprised of Loews Hotel & Company, The Cordish Companies and Texas Rangers opened a $150 million, 300 room, 14-story Live! by Loews Hotel at Texas Live!. How can a hotel that’s less than half the size cost just as much to construct at Lot J? (Wiatt Bowers, AICP)
In short, the math surrounding Lot J doesn’t make sense and without knowing the pro forma the developer has refused to share with the Council, it never will no matter how many meetings Council members engage in. Lot J can be a lot of things, both good and bad, but there’s one important thing that it is not at this point, a $450 million development. It’s closer to $250 to $290 million in totality. This is likely why the City Council Auditor has determined that the project’s return of investment would be 44 cents for each $1 of city expenditures. Until that’s honestly acknowledged, everything negotiated to date is based off a bloated and unrealistic estimated project development cost.
There is one potential solution that would save taxpayers millions, get the project open three years earlier than anticipated, be more economically impactful to the Eastside and increase its visibility to more traffic, helping its long term viability. That’s shifting everything proposed to Lots M, N and P (closer to the Eastside and Arlington Expressway), keeping and using the contaminated Lot J as surface parking until it’s time to address stadium improvements and a lease extension. However, none of this matters. The Lot J deal will be approved anyway and several years of environmental clean up on Lot J will finally commence in 2021.
Editorial by Ennis Davis, AICP. Contact Ennis at email@example.com