Monday, May 25, 2009
By Katy Stech
Of The Post and Courier Staff
|Gill Guerry, The Post and Courier|
As it turned out, the demand for residential condos cooled shortly after the $12 million property purchase. Also, the type of retailers that the developers were targeting are now focused on riding out the recession, not opening new stores.
“Fortunately for us, we did not move forward with that project,” said Woollcott, with relief in his voice.
He noted that other developers whose projects got under way shortly before the recession took hold have trudged through poor economic conditions to finish them. As for Woollcott’s group, it is using the slowdown to tinker with its plans, adding more high-end office space and reducing the residential space as it waits for the credit freeze to thaw.
“With what’s going on in this market cycle, (waiting) has come out in our favor,” Woollcott said.
“It’s not a bad thing,” he added. “You want the project to be fundamentally sound.”
The Millennium project is among six major redevelopments valued collectively at more than $400 million that have been proposed for King and Meeting streets at, or north of, Calhoun Street. All have stalled amid the recession.
Most of the developers say they’ve put their plans on hold because of the frozen credit markets, which have made it tougher to borrow money. The unfavorable lending conditions, in turn, have slowed the revitalization of the area, which saw its first jolt of new activity during the last economic boom.
Despite the delays, most developers said they’re confident that their projects will be completed eventually. And Charleston Mayor Joe Riley agreed, saying that even though free-flowing money fueled some of the grand plans, most of the projects are still viable and will help support the peninsula’s long-term growth.
Midtown is one such project. Many expected the ambitious development to do the same for the area north of Calhoun what Charleston Place has done for the area around the City Market over the past two decades.
Proposed by local developer Robert Clement III and an Atlanta investor, Midtown calls for a 235-room luxury hotel and up to 205 condos with ground-level boutiques, shops and restaurants along King, Spring and Meeting streets. But more than a year after a city planning board gave its final approval, the 4.2-acre site remains a mostly empty field punctuated by a few dilapidated, mostly vacant buildings.
Clement said his group had planned to invest a 25 percent equity stake into the estimated $150 million development. But when it came time to finance the rest of the project, the credit atmosphere had changed. As a result, lenders upped the ante, requiring between 35 percent and 40 percent down.
“We were being penalized because of what’s going on nationally in the lending world,” said Clement, who has pushed back Midtown’s groundbreaking until early 2010.
Nearby, a 180-room hotel that was supposed to be built on the site of the Burris Liquor store at Meeting and Reid streets has been scrapped indefinitely. By the middle of last year, local hotel occupancy rates gradually fell to a level that “no longer made the project viable,” explained Charlotte developer Hasmukh Patel.
Right across the street, Savannah architect Patrick Shay wanted to build a five-story project of shops, offices and affordably priced condominiums. But a city board requested he use materials that cost more than what his original “concept could sustain,” he said. Shay is now rethinking the project with no timeline in mind.
Further south on Meeting Street, the aging L. Mendel Rivers Federal Building got its first shot at a second life when Atlanta developer John Dewberry bought it for $15 million in early 2008. He wasn’t specific about his plans for the property, but last summer, the hospitality industry buzzed about a possible luxury hotel at the site.
Today, the building remains vacant. Dewberry, a part-time Charleston resident whose delayed “Miracle Mile” project in downtown Atlanta is facing questions about whether it will ever materialize, did not respond to repeated requests for comment.
While some developers have blamed financing issues for their delays, Mike Bennett’s plans to replace the former Charleston County Library building on Marion Square with an eight-story hotel are caught up in a lawsuit filed by preservation groups opposed to the size. Riley estimated the dispute could last another 18 months.
Despite the sluggish economy, Bennett said he’s ready to begin work as soon as the dispute is resolved.
“I’m real determined to build that hotel,” he said.
Keeping a list
On a recent afternoon, Riley stood in the shadow of the vacant library building and talked about how the site could one day host high-school proms and business meetings while driving more foot traffic to the area north of Calhoun. He said similar large-scale development projects proposed nearby fit into the city’s long-term plan.
“What those anchors will obviously do will further advance the continued revitalization of the area,” Riley said.
The city can keep the area clean and beautify the street like it did several years ago by adding bluestone sidewalks and burying utility lines. But when it comes to moving these projects forward, officials can’t do much else, except wait.
“It’s not frustrating at all,” Riley said. “These bigger projects take time.”
Meanwhile, the mayor pointed out that smaller redevelopments of individual buildings are continuing, and businesses are still choosing to open in the vacant storefronts along Upper King.
Chris Price of the PrimeSouth Group said real estate investors, including those he represents, are moving forward on the less lofty projects because they’re quicker to complete, easier to fill with tenants and typically cost less than $10 million.
“The anchor projects are hospitality-oriented or residential-oriented,” Price said. “Forget residential; it’s not going to be funded.”
And while Upper King has seen some notable business closings — Waterworks, Global Awakening, B’zar and Trusted Palate to name a few — others such as Halls Chophouse and SieMatic are moving in.
Price says some operators of the recently shuttered stores were overly optimistic with their sales forecasts, a situation that likely was made worse when consumer spending plummeted.
Riley keeps a list of businesses that have come and gone in the area. In the last year, his tally shows 12 closings and 11 openings, the latest being a jewelry and art store set to open its doors a week from today at 481 King St.