By Paula C. Squires
A look at macroeconomic trends and cities that developed successful sports stadium projects were among the takeaways Tuesday at the 22nd annual Real Estate Trends conference at the Greater Richmond Convention Center.
A sellout crowd of more than 1,000 turned for the largest conference ever, sponsored by the Virginia Real Estate Center at VCU. Perhaps the biggest sale of the day, though, was from a panel discussing how sports/entertainment projects can inject new life and revenue into downtown venues.
The topic is particularly salient in Richmond, as the city wrestles with several sports-themed issues; namely how and where to build a new $50 million baseball stadium, finding a summer training camp site for the Washington Redskins and preparing for a massive bike race in 2015.
Jeff Beaver, executive director of the Charlotte Sports Commission, told how Charlotte is building a new $54 million, BB&T ballpark for its Triple AAA team, the Knights. Starting in 2014, the team will move from its current location in Fort Mill, S.C., not far from Charlotte, to a downtown facility. The 10,000-plus seat stadium is expected to more than double attendance at games ― from 316,054 to 700,000. The location is within walking distance of other major sports venues and amenities, Beaver said.
According to him, the stadium’s annual economic impact is expected to be $38 billion, and it will create 490 new jobs. The total annual economic impact, including the use of the facility for other sporting events and festivals, should be $66 billion, he added.
Beaver said Charlotte created a public/private partnership to build the project at no risk to taxpayers. The Knights ball team is putting up about $38 million. “It’s not a blank check by any means,” Beaver said. “Any operating loss, overruns from construction, any litigation costs will be the Knights’ responsibility.”
Another source of financing came from naming rights. The city is providing the land for the project and is charging only $1 dollar a year. “We’re adding a venue that will attract affordable events, generate substantial tax revenues … attract new jobs and construction and new economic development growth,” said Beaver.
In another case study, sports entertainment developer Mark Horton shared the impact of a sports arena in downtown Louisville, Ky. His company, Weston Development Co., served as project manager for the construction of a new basketball facility for the University of Louisville men’s and women’s teams. The $238 million, 22,000-seat KFC Yum sports arena opened in 2010 on the Ohio River on a downtown site formerly used by a coal plant. Since then, millions of dollars in new development has followed, Horton said, including a parking garage, residences, office projects and restaurants.
Another speaker on the panel, Tom Murphy, the mayor of Pittsburgh from 1994 to 2005, told how that city built a baseball and football stadium and a new convention center on the river downtown― projects that helped Pittsburgh rebound after the decline of its steel industry.
The city drew from 14 different funding sources, some public and some private, to get the projects done, said Murphy, transforming a downtown district of massage parlors into a Cultural Trust district that combines sporting events with the fine arts. When it comes to building a sports/entertainment project, Murphy said the key issue is “leadership and vision. You’re not just building a baseball park. You’re building a facility that will be a catalyst for other things. .. The ones that fail are put out in a green field with nothing around them. “
Besides sports, the economy was a key topic and speaker Douglas Poutasse offered his analysis of how things are going in the U.S. Poutasse is head of strategy and research for Bentall Kennedy, one of North America’s largest real estate investment advisers.
“It’s important to realize that we’re on a long, slow path,” he said. Just like with the Great Depression of 1929, he cited the possibility of more than one downturn. “We have to work our way through this tremendous deleveraging around the globe,” Poutasse said, noting struggles in Europe, particularly in the economies of Greece and Spain.
Asked if the U.S. might dip into another recession, Poutasse responded, “The election will make a big difference. There’s a fiscal cliff approaching us. Unless that is dealt with correctly, the probability is quite high.”
In the meantime, the U.S. Federal Reserve System and central banks around the world are coordinating their actions and doing all they can, he said, to keep capital markets liquid. “The U.S. is generating about $100 billion dollars of new debt every month. The Fed can only fight this for so long. We need to stop issuing $100 billion dollars of new debt every month.”
Poutasse did share some bright spots in the economy. There has been a solid recovery in jobs in education and health services, and the technology and energy markets also are doing well. Metro areas with high educational attainment, such as Northern Virginia, are positioned for stronger growth. Retail is recovering with sales growing 3 percent this year. A big plus for Virginia, he said, is the Port of Hampton Roads in Norfolk ―one of three main ports of entry on the East Coast, in addition to ports in New York/New Jersey and Charleston, S.C.
Poutasse was extremely bullish on the multifiamily sector, reining in skepticism about a potential bubble. “There have been lots of headlines about a flood of new apartments being built … We have started in the last 12 months about 250,000 units, and we’ve had an increase of 1 million in renters. The net result: the supply is not outstripping the demand.”
In fact, when asked about any safe havens if the economy dips again, Poutasse said, “To me the closest thing to a safe haven is the apartment market, not the fancy stuff. The stuff that people have to live in, that they can survive in, until the economy gets going. “
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