For the past several weeks I’ve been digging into a phantom project – one that as of yet does not exist and yet is eagerly anticipated among those who follow downtown development.
Such is the power of good renderings. And the above renderings were created by Humphreys Partners and then placed on the Dallas architectural firm’s website.
Typically, when such a project is being seriously developed, the renderings are kept secret so as to not draw unwelcome attention from rivals – especially if the developer has yet to acquire the property. This project had renderings posted online where the location was clearly stated – the lumberyard just south of Harkins Theater in Lower Bricktown.
In February, the renderings appeared on the website OKCTalk. Some posters speculated the renderings were speculative, aimed at drawing investors. Others insisted the deal was real.
I started making calls. A source clued me into the name of the developer – Lou Christiansen of Tuscon, Arizona. I called his number, left messages, and never heard back. I called Humphreys Partners and talked to their media contact. They indicated they would pass along my interest in talking to Christiansen. No calls ensued from the architects or the developer.
On March 13, a local television station did a story on the “development,” and from what I saw, it was based purely on the discussion that took place on OKC Talk along with the posted renderings. I made a couple more calls. Nothing from Christiansen. I called my sources who track these deals. They were convinced it was going nowhere.
The topic next came up in my weekly OKC Central Live Chat:
Nick Emenhiser: Hey Steve, is the Lumber Yard project newly rendered by a Dallas architecture firm on the site newly acquired by OKC Mid Rise LLC, in any way connected to the development you've been attracted that would purportedly make Dallas and Kansas City "jealous." Apologies if this question gets asked 60 times before and after I have gotten this in.
Steve Lackmeyer: No. Be careful about reading too much into renderings discovered on architects' websites. Based on what I know, and folks I've talked to, I will be very, very surprised if this rendering represents anything real. I have not seen any transactions involving the sale of the lumberyard or anything transactions involving an entity named OKC Mid Rise LLC. There are some really great rumors that get batted around on a local website. Some are real, some are not real. This one, I suspect, is not real. And folks in the know say it is not real.
Pat: Good Morning Steve, Probably been asked, but is there any credence to the conceptual drawings for lumber yard site over by the co-op. Thanks
Steve Lackmeyer: I seriously doubt they are any more real than the renderings posted at the same website for a tower designed by a local firm for I-44 and Broadway Extension. Sometimes these renderings are done and posted to attract investor, developer interest. Sometimes they reflect a job that went south.
On March 27, Christiansen finally talked to a reporter – Molly Fleming at The Journal Record. He said he had a contract to buy the 5.9-acre site and that his plans also included a hotel. He said he might be interested in selling part of the site to another developer.
“There’s room for three midsize high-rise towers,” Christiansen told Fleming. “If there’s a business that wants to build an office, it’s a pretty prime spot.”
The story left a lot of my questions unanswered (and unasked?).
What experience did Christiansen have in developing high-rise and residential towers?
How marketable was the property as long as the Southwestern Producers Coop remained in business immediately to the south?
Was Christiansen aware of the foul chicken soup smell that often emits from the cotton oil plant? It’s a scent that is as pleasant as the smell that is well known to those who catch a breeze from the Purina dog foot plant in Edmond.
Was Christiansen aware that the boulevard actually ramps up immediately east of Oklahoma Avenue, and will be an elevated road passing half of the development?
How marketable is the east half of the lumberyard when the north half is blocked by an elevated road, an industrial yard owned by the litigious Moshe Tal is to the east, the BNSF railway viaduct is to the west and an active rail line and the cotton oil plant is to the south?
Did Christiansen know that the cotton coop last listed their property for $120 million? And what price was being asked for the lumber yard?
Having talked to developers who gave serious consideration to building housing atop the new Arts District garage, and then balked at it, I’ve got what I think is a decent grasp of construction costs. And unless Christiansen was getting a heck of a deal on the property’s sale and the construction itself, I couldn’t imagine how this project, as shown in the renderings, might cash flow.
I really wanted to talk to Christiansen. But he wasn’t talking to me.
But as luck would have it, just as these renderings started popping up online, an investment proposal was hitting the streets. The proposal was for Bricktown Towers, a 596-unit apartment complex. The proposal included Cooper Ross’s great aerial photos, renderings that showed an at-grade boulevard and no hint of the railroad tracks or surrounding industrial properties.
“We are raising $18,000,000 in $1,000,000 increments,” The proposal stated. “We can sell the building for $192 million. After our development cost of $138 million and selling commissions of $3 million, the project will have a net profit of $51 million. The partners will get their $18 million back first, plus 8 percent interest, and then 70 percent of the profits thereafter. We anticipate the project being developed and sold over five years. Thus the partners would receive $25.2 million ($18 million plus 8 percent interest for five years), plus 70 percent of the profits, which would be an additional $30.9 million. Thus, the $18 million investment would have a total return of $56.1 million, of which $18 million would be the return of the original investment, and $38.1 million in profit. This is one of the best sites in downtown/Bricktown Oklahoma City. We are very excited about this development opportunity.”
At first glance, those numbers might look really good.
But this proposal goes even further with a detailed estimate by JE Dunn Construction, a national contractor that is currently building the St. Anthony healthplex at Memorial and Western.
“JE Dunn Construction Company has built similar buildings that were designed by Humphreys and Partners Architects,” the proposal said. “Their estimated construction cost is $179.42 per square foot for a total of $108 million.”
Whoa. That figure of $179 a square foot caught my attention. It caught the attention of others. How was this possible when I keep hearing $240 to $280 per square foot for these sort of projects? We’re talking about 596 apartments, a swimming pool, four-story garage and 20-story residential tower according to this March 14 proposal.
At this point, I’m not sure what to do. The developer and architect are not talking. But what about the folks at JE Dunn? Were they really citing a price of $179 per square foot?
I was delayed a couple of weeks in doing more digging due to other pressing stories. But I finally talked to Trent Wachnicht, vice president of JE Dunn. The proposal had not been given to Wachnicht, but he did get to see the renderings and information from the proposal was getting back to him.
“We did some pricing exercise for the architect on the project, for a portion that would be located on that site,” Wachnicht said. “I don’t know how the numbers are being represented. I have seen renderings online. And we could not build what is represented in those renderings for $ 179 per square foot.”
Pricing such projects involves balancing out lower costs for a garage against the higher costs for the residential tower. The costs are blended to come up with the overall cost.
“It comes down to the square footage for the garage vs. what it is for residential, and that determines overall cost. Sometimes that can get skewed to get the price to look good. I’m not saying that’s what they’re doing. “
Interestingly, this past week Wachnicht also received a call from Christiansen. He told Christiansen the numbers cited in the proposal sounded “awfully low.” Wachnicht said the developer proceeded to provide new information for an updated cost estimate.
“We’re one of the largest contractors in the nation,” Wachnicht said. “I lead the Oklahoma City office. People like to use our name in packets- there is lot of credibility that comes with that name … We don’t want to be caught in the middle of anything. We work hard at being a credible company.”