Sunday, April 01, 2007

Quick Update 2: Heed the sins of Raleigh

An interesting article in today's N&O profiles the upcoming demolition of Kings, which, for those who aren't familiar with it, is a music club in downtown Raleigh, set amongst a row of one-story early 20th century commercial structures on McDowell St. It's the kind of homegrown, grassroots place that has the right setting and substance to attract a wide array of people - kind of like Joe and Jo's did here in Durham. (They call the structure cinderblock, when the picture clearly shows that it is brick; seems like a quibble, but has definite value connotations.)

The article in the Independent back in February emphasized the fact that the structure was going to be torn down only for a temporary staging area for construction of the parking deck for Wake County; the N&O adds the information that the owner plans for it to be a surface parking lot when that staging is done.

"Honestly, you can make as much from leasing parking as leasing buildings."

... is the comment from the owner, who bought the building 10 years ago as an investment, thinking the RBC center was going to be built around that spot. He evidently sees the parking lot as a better blank canvas for whatever bounty he sees coming down the pike.

We have a tendency to get starry-eyed over the glory of grand new development, and as one whose childhood play options seemed revolve around Legos, blocks, or Tonka trucks, I understand the appeal. Despite my frequently malcontented posture on this blog, I still feel the passion evoked by construction.

My concern arises from what I think is a tendency to lump all of our economic hopes into big landscape changes - whether it be wholesale demolition or fancy new buildings or both. In the slash, burn, and build process, we risk nullifying the small seeds of economic change that can accumulate to form a greater whole. The new construction market is going after the kind of leases that can allow them to bring in a 17-20% IRR to their equity investors. And that's fine - I'm not against people making money. But it is necessarily going to exclude small businesses that are struggling to put something together at the outset. Part of saving old builings is to provide those opportunities for businesses like Kings, which the owners say is "viable, but no one has gotten rich from [it]". They create positive externalities though, both by attracting the market to that geographic location, and by the more ephemeral 'cool' or 'interesting' factor.

And really the issue for me is how government plays its role. Do they get starry-eyed, and throw millions of dollars at large-scale projects without a clear sense for the pitfalls? Do they demolish old buildings (opportunities) because their economic development programs are not successful at alleviating poverty? Do they demolish music clubs for staging areas for building parking decks while building convention centers that rely on booking conventions who base their location decisions in part on the entertainment options around the site? (Sorry for the intended run-on sentence.) What preconceived notions are in play? That the high-end convention-goers want 4-star restaurants, not unscrubbed clubs?

While the decisions to demolish the mansions of McMannen St. (now Mangum St., where the ballpark, Diamond View and the Durham Freeway now intersect Mangum) and all of the other businesses and homes taken by urban renewal long preceeded the coming of our own new downtown south of the tracks, it is our public funds chasing our public funds in an effort to alter the economic circumstance of downtown Durham. We don't know what small businesses would have started on S. Mangum and what a cool neighborhood McMannen (Mangum) St. might have become had we left well-enough alone in the 1960s - or how much tax renvenue might have been lost from these neighborhoods. The same mindset predominantes in our current decision-making - witness the upcoming demolition of all of the structures in 300 block of East Main St. for a county surface parking lot.

We continue to try to change the market by changing the venue, a policy that, nationally and historically, as well as locally, has very limited efficacy. To date, in Durham, the successful market has come from people renovating the structures that survived demolition, primarily at the hand of government, in the 1960s. Why our elected and un-elected officials can't digest this notion, I don't know.

7 comments:

Kevin said...

Gary,

Great post this morning. I think you're right on with this.

One thing that I think is an actual blessing about Durham's underdog status in the metro area is the fact that we *don't* have the big equity players beating down the doors to Durham. Sure, Gary Hock sold his little Hock Plaza for a crapload of money to a national equity fund... but he (who comes from a Durham background) was the first to see and seize an obvious opportunity. Ditto American Tobacco. It took a philanthropically-oriented yet self-interested (Durham Bulls owner) local media magnate to see the value in redeveloping AT -- heck, even the voters here didn't when it came up as a bond. And Goodmon couldn't even get conventional long-term financing for the project, which is why and how Self-Help holds the mortgage on ATHD Phase One. Of course, other lenders beat down the door for later phases once AT was a success.

The plus side to all this is that the locals and smaller developers -- and I'm including the West Village guys, Goodmon, and others -- are a lot more willing to work with smaller businesses. The article in the Indy on Scientific Properties and the Venable Bldg. gave a great example in terms of how Rothschild found space for some of the folks he displaced when renovating that facility, for instance. One risk of course is that our 'success' will push out more of these good, local guys in the same way that Kings is being turned out on its ear.

I think this is one reason why we've been successful in maintaining as many old structures as, as you correctly put it, survived the collective madness of the urban-renewal period here. At the same time, though, it does seem like we're on the verge of it happening all over again on the eastern side of town. Why does it seem that our public officials are the ones who don't seem to get that our historic buildings are one of the biggest relative strengths we have as a community?

Gary said...

Thanks Kevin - your last question is the biggie, and I wish I knew the answer to it. I don't think they can see that our neighborhood commercial districts - Little Five Points, West End, Driver and Angier, Angier and Alston, etc. can be both opportunity and blight at the same time - by demolishing them, we lose both.

Good point about the equity funds - I was thinking of the nameless equity investors behind people like Greenfire and what kind of cash-on-cash returns they are expecting from the redevelopment of these properties. Again, that isn't meant as a knock on Greenfire - just that developers are typically under a lot of pressure to build something that can pull in high rents

I agree with you that we're fortunate that developers have seen the value in many of our historic structures, which will probably save most of them. How to save the ones that the market is currently ignoring is still a struggle.

GK

grady said...

A couple of clarifications/amplifications re: Kings (I have no quibble with your main point) . . . I got an email a couple of weeks ago from a Raleigh planning dept employee, who said "the parking deck being built is for the Wake County Courthouse expansion, not the convention center. The city of raleigh isn't involved in this development . . ."

Also, the N&O article quotes Steve Popson, one of the Kings owners, as saying that the subs doing the actual work had offered to go out of their way to *not* damage Kings (which apparently is 7" over the property line), but that the owner had elected to take the free-demolition offer from the county.

So it's down to (a) Wake County and (b) the property owner. For once the City of Raleigh is more or less off the hook ;-)

Gary said...

Grady

Thanks for the additional info - I looked back at the original articles, which seem to conflate the issue of what the deck is for as well, but they definitely say Wake County, and I missed that. I've updated the post.

I certainly didn't intend to imply that the owner isn't a primary problem here. It sounds like he would have demolished the building at the next opportunity if this hadn't come along. But I definitely don't agree with $20,000 of gov't encouragement.

Thanks again

GK

307knox said...

Thank you for this post.

mel~

bullcity76 said...

There might be space for Kings near Berkeley Cafe or in the Warehouse District but they will probably be priced out of the next location also.

Gary said...

Mel - thank you for visiting. Love the label!

bullcity76 - you are probably right. The shifting economics of communities are so hard to predict. I still think we stand a better chance with older structures that don't meet chain-retail standards for sheer volume, but there's no guarantee that even if we retain those they won't become a bunch of frou-frou boutiques.

GK