I got a call from developer Kevin McGowan on Saturday, you may recall the last time he called me was to defend himself over the pets issue in his own building (see post). So McGowan calls me all excited and thought I’d be interested in his news — super fast loft sales. I’m not in the business of acting as a free PR service to profitable downtown developers but as we talked I saw enough in this that it is more than a press release for his firm.
OK, here is the story. McGowan | Walsh has been unsure about what the composition should be for their three buildings at Cupples Station located to the due west of the ballpark (#s 7, 8 & 9). They’ve hung banners on all three for “Ballpark Lofts” but they’ve been looking at office use instead of residential or in addition to. They began to market lofts in the center building — #8 to test the market. They’d been taking deposits to get on a list. Saturday they asked potential buyers to firm up and pick their units — wanting to really see if the buyers would stick around or seek their deposit back. Well, McGowan reports they sold 57 out of 68 units — in just over an hour. Needless to say, he was ecstatic. This represents, he said, over $12 million in loft sales.
So I began to ask more questions. The selling prices were roughly $146K to $400K for square footage ranging from 750sf to roughly 1,500sf. Just a few years ago lofts were easily ranging from 1,200sf to over 2,000sf but we are seeing a shift to smaller units. McGowan confirmed the smaller and more affordable units are where the market it going. Still compared to other lofts downtown these prices seem on the low side but there is a good reason for that. Parking.
You see, McGowan | Walsh did what is called “unbundled” parking — a parking management technique discussed in Todd Litman’s book Parking Management Best Practices whereby a parking space is not included with the unit. Some rental units downtown have unbundled parking that costs extra each month but I don’t know of any other for sale loft downtown where this is the case, save for perhaps the Marquette building by The Lawrence Group. Anyway, buyers at McGowan’s Ballpark Lofts were given the option of purchasing a parking space for the tidy sum of $18,000. Parking is expensive to provide and it is good for people to see the real cost by not hiding it in the purchase price.
McGowan said that roughly 20-25% of the buyers decided against a parking space which, to me, is a very big deal. McGowan credits the MetroLink stop a block away for the buyers willingness to forgo parking and presumably a car. They do have a free scooter with each loft so perhaps these buyers are comfortable with transit and the occasional scoot.
While they are still undecided about the other two buildings this latest round of fast sales may push them toward residential and away from commercial office space. McGowan fully acknowledges the impact of the new Busch Stadium on the marketability of his lofts. He also gives credit to two unbuilt projects — the ballpark village and Chouteau’s Lake Greenway.
The area needs something because the most activity is the on and off ramps that intrude into the area. I’d like to see these simplified a bit so some of the land can be recovered for in-fill construction. Hopefully residents of these lofts will be open to walking, biking or scooting up to City Grocers, which will be moving to a bigger space in the Syndicate Building late next year (see Biz Journal story).
But we have a housing bubble right? Well, yes and no. The “Creative Class” have been seeking urban living options for a while now and downtown St. Louis is the only choice for such a lifestyle in the region. As such, downtown continues to see demand whereas tract homes in the hinterlands are stacking up unsold. The fact is nationally families are becoming a smaller and smaller segment. Singles and empty nesters are the norm, especially as the baby boomer generation ages. For many boomers there kids are long out of the house, they are divorced or have lost their spouse. They 4-bedroom ranch in St. Charles County just doesn’t appeal to them. But this doesn’t mean downtown developers can write their own checks. They are learning buyers have a ceiling they are willing to spend, unlike in the ‘burbs where many buyers will become house poor to own as big of place as they can get. No, urban dwellers want to enjoy life and need money for travel and other things often given up to afford the big house in the suburbs and the two (or three) cars in the garage. This is resulting in smaller living spaces — with residents getting out on the streets more often rather than go from the den to the living room to the family room to the sitting room to the media room when they feel restless.
Transit is a big factor, in my view, toward the choice to buy a loft without a parking space. This is also a factor for the conservative bankers to finance a project without a space per unit — McGowan said MetroLink was a key part of showing their bankers they did not need a space for every unit.. Sadly, we have very few places downtown where that remains a reasonable option. The development future of downtown is in the west area between 18th and Jefferson and into Midtown toward Grand. The near north side has great potential with the vacant Pruitt-Igoe and the largely vacant area between Washington Avenue and the emerging Old North St. Louis neighborhood. Getting a permanent transit option to these locations will enable developers to use vacant land not as parking lots for adjacent buildings but for new in-fill construction. We are at the key point in the development around the CBD and without good localized transit (aka streetcar or guided tram).
And of course the bulk of the city is not downtown yet it only gets passing attention. The inner-ring of suburbs in St. Louis County are as urban as much of St. Louis and deserve renewed focus as well to offset losses in population many of them are experiencing. Natural market forces are coming together downtown with the trick being keeping the “leaders” and their outdated zoning and thinking out of the way. The same simply doesn’t work outside the immediate downtown area — the neighborhoods of the city and adjacent inner-ring suburbs need strong leadership to bring good zoning to them. Unfortunately, with a few exceptions it is just not happening. Downtown will continue to strengthen while the rest of the region is going to suffer from our 1960s urban edge growth mentality. Meanwhile, other regions in the U.S. will continue to outpace our region in terms of population and job growth.
Yes folks, it seems Alderman Fred Heitert (R-12th Ward) has a vision for the not-so-old 7-11 put out of business by the new mega QuikTrip: a Kentucky Fried Chicken. At a recent neighborhood meeting Ald. Heitert told the residents, many of whom opposed the QT on the basis it would leave a vacant 7-11, that his wife enjoys KFC and it takes him 20 minutes to drive to the nearest KFC and bring her back some extra crispy. 
I was so thrilled to learn yesterday that Heitert is being challenged for the aldermanic seat he has held for nearly 28 years. I’m not endorsing Matt Browning just yet, I need to see if anyone else files for the position before making a decision. But I’ve already concluded that Mr. Heitert has had plenty of time at City Hall. Someone get this man a gold watch and a bucket of KFC, then show him to the door.