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As an example, the initially demand troubled Water Place Park went to student rental before finally being successfully sold off as condos.
I'd be really surprised if they had much trouble getting most of these units occupied. I doubt they'd even have to go the student route. The market has changed quite a bit since Water Place Park was built. People are paying $2500 to live in mill conversions in places like The Valley and Pawtucket. The Superman Building is a landmark tower in a central location. So long as the conversion is done with a modicum of thoughtfulness and care, it should be in fairly high demand.
I'd be really surprised if they had much trouble getting most of these units occupied. I doubt they'd even have to go the student route. The market has changed quite a bit since Water Place Park was built. People are paying $2500 to live in mill conversions in places like The Valley and Pawtucket. The Superman Building is a landmark tower in a central location. So long as the conversion is done with a modicum of thoughtfulness and care, it should be in fairly high demand.
I agree. The demand will likely be there. And, when its full, its residents will change the entire sketchy street dynamic at its feet.
I'd be really surprised if they had much trouble getting most of these units occupied. I doubt they'd even have to go the student route. The market has changed quite a bit since Water Place Park was built. People are paying $2500 to live in mill conversions in places like The Valley and Pawtucket. The Superman Building is a landmark tower in a central location. So long as the conversion is done with a modicum of thoughtfulness and care, it should be in fairly high demand.
The conversion would be big money. It's not worth anyone's time to do this unless the housing units are expensive. I have serious doubts that there's anywhere near enough demand at prices that would be needed to make this project viable.
And unlike the lofts in the converted mills, there wouldn't be any parking.
Expensive, no parking, nothing to do nearby at night, across the street from a huge homeless camp, drug dealers and junkies...who is this going to appeal to?
The conversion would be big money. It's not worth anyone's time to do this unless the housing units are expensive. I have serious doubts that there's anywhere near enough demand at prices that would be needed to make this project viable.
"Viability" is complicated on a project like this. High Rock has the simplest goal of all of the stakeholders- make more money than they spent converting the thing. As with any rental property, that's a long game (on average, 20 years for a break-even). The current estimates put the construction cost at about $800k per unit. Which means the average rent would need to be in the ballpark of $3,300 in order to hit that goal. Steep, but not crazy for a new apartment in central location. There will also be additional variables: i.e. the "income restricted" units will be less expensive, higher floors/larger apartments will be more expensive (probably substantially so), and the management company can incentivize renters early on with specials and low rates with a plan to scale rents upward over time. This is to say nothing of retail tenants which tend to pay more over a longer period. They could also view this as a "special" project and move the break-even target a bit further back (25-30 years). The tax incentives are indicative that this is not a standard project in the eyes of the city. Assuming costs don't drastically exceed the estimates, rents don't need to be wildly out of reach in order to make this financially feasible for High Rock. If it's not feasible for them even with incentives and tax breaks, you're right that the project probably won't happen.
But High Rock isn't the only stakeholder. A project of this scale means thousands of construction jobs for several years. Putting thousands of (hopefully) mostly Rhode Islanders to work is in the interest of the state. A major chunk of that $230 million estimate is labor, and funneling tens of millions of dollars back into the state's workforce is likely worth the loss of tax revenue from the breaks. Adding hundreds of new housing units is a goal for both the city and state. And rejuvenating a landmark tower in a central location while adding hundreds of people and good 24/7 activity to a prime block of downtown Providence is very much something the city would like to do as it benefits residents and businesses in the area and can serve as a catalyst for more change. This type of stuff is much harder to quantify in dollars and cents than High Rock's bottom line.
Finally, there's a pretty direct cost associated with choosing to either demolish it or let it rot. If you let it rot, it becomes a hazard and eventually needs to come down anyway. If you demolish it, you're looking at $100 or so million to mitigate, prepare, and implode the thing. And there's no return on that investment but an empty lot. I assume you're being facetious about McDonald's, but it's hardly viable for them (or the city) to spend that much money to free up a lot for a fast food franchise.
Quote:
And unlike the lofts in the converted mills, there wouldn't be any parking.
Expensive, no parking, nothing to do nearby at night, across the street from a huge homeless camp, drug dealers and junkies...who is this going to appeal to?
Parking for an urban high rise apartment isn't the challenge you're making it out to be. It's pretty standard for an apartment or condo tower in a downtown area to have limited or no parking. This is typically addressed by property management either leasing space in a nearby garage or lot (of which there are plenty in this area) and offering valet parking for an additional fee (or building the cost into rent), and/or encouraging residents who want to have a car to lease monthly space in a nearby garage or lot themselves. Both options are perfectly possible here and potential tenants shouldn't be too caught by surprised or put off by it.
The rest of this just seems like a projection of personal preferences. There's objectively plenty to do nearby at night. Lots of good restaurants, bars, etc. People come from all over the region to eat/drink/play in the area. It's a short walk to the mall for shopping, walkable to Trader Joe's and Rory's for groceries, and a quick walk to the Commuter Rail and Amtrak. Many people aren't as terrified of the homeless or addicts as you seem to think they are.
Lots of people already live downtown and are happy there. Tenants in the bank building would be a very good thing. No one expects lots of parking in a downtown core.
Irfox, thank you for your thoughts. I won't repeat what I wrote in this thread on April 3, 2023, in post #47.
I will add a few points though.
Converting the Superman building to apartments proved financially unfeasible when interest rates were at record lows from 2009 to 2022, development finance was available, apartment rents and building valuations were rising, and governments were swimming in stimulus cash.
Spending $800,000 to create an apartment unit in Providence is absurd. No private investor would do it. Witness the Fane tower. The developer killed the project because he couldn't raise the money to build it. Both Fane and prospective investors, such as bank lenders, knew that building the Fane tower would be a financial debacle.
The marketability of the Superman building as modern residential real estate is doomed by lack of onsite parking. The competition, such as Center Place and Park Row Rest, offer secure, onsite parking garages. The reason the developers of these properties spent money to include parking is without parking the apartments wouldn't rent.
One of these years, the city and state will be forced to face reality. Provide a subsidy of more than $100 million to make the Superman building conversion financially feasible, or demolish the property.
The marketability of the Superman building as modern residential real estate is doomed by lack of onsite parking. The competition, such as Center Place and Park Row Rest, offer secure, onsite parking garages. The reason the developers of these properties spent money to include parking is without parking the apartments wouldn't rent.
"Viability" is complicated on a project like this. High Rock has the simplest goal of all of the stakeholders- make more money than they spent converting the thing. As with any rental property, that's a long game (on average, 20 years for a break-even). The current estimates put the construction cost at about $800k per unit. Which means the average rent would need to be in the ballpark of $3,300 in order to hit that goal. Steep, but not crazy for a new apartment in central location. There will also be additional variables: i.e. the "income restricted" units will be less expensive, higher floors/larger apartments will be more expensive (probably substantially so), and the management company can incentivize renters early on with specials and low rates with a plan to scale rents upward over time. This is to say nothing of retail tenants which tend to pay more over a longer period. They could also view this as a "special" project and move the break-even target a bit further back (25-30 years). The tax incentives are indicative that this is not a standard project in the eyes of the city. Assuming costs don't drastically exceed the estimates, rents don't need to be wildly out of reach in order to make this financially feasible for High Rock. If it's not feasible for them even with incentives and tax breaks, you're right that the project probably won't happen.
But High Rock isn't the only stakeholder. A project of this scale means thousands of construction jobs for several years. Putting thousands of (hopefully) mostly Rhode Islanders to work is in the interest of the state. A major chunk of that $230 million estimate is labor, and funneling tens of millions of dollars back into the state's workforce is likely worth the loss of tax revenue from the breaks. Adding hundreds of new housing units is a goal for both the city and state. And rejuvenating a landmark tower in a central location while adding hundreds of people and good 24/7 activity to a prime block of downtown Providence is very much something the city would like to do as it benefits residents and businesses in the area and can serve as a catalyst for more change. This type of stuff is much harder to quantify in dollars and cents than High Rock's bottom line.
Finally, there's a pretty direct cost associated with choosing to either demolish it or let it rot. If you let it rot, it becomes a hazard and eventually needs to come down anyway. If you demolish it, you're looking at $100 or so million to mitigate, prepare, and implode the thing. And there's no return on that investment but an empty lot. I assume you're being facetious about McDonald's, but it's hardly viable for them (or the city) to spend that much money to free up a lot for a fast food franchise.
Parking for an urban high rise apartment isn't the challenge you're making it out to be. It's pretty standard for an apartment or condo tower in a downtown area to have limited or no parking. This is typically addressed by property management either leasing space in a nearby garage or lot (of which there are plenty in this area) and offering valet parking for an additional fee (or building the cost into rent), and/or encouraging residents who want to have a car to lease monthly space in a nearby garage or lot themselves. Both options are perfectly possible here and potential tenants shouldn't be too caught by surprised or put off by it.
The rest of this just seems like a projection of personal preferences. There's objectively plenty to do nearby at night. Lots of good restaurants, bars, etc. People come from all over the region to eat/drink/play in the area. It's a short walk to the mall for shopping, walkable to Trader Joe's and Rory's for groceries, and a quick walk to the Commuter Rail and Amtrak. Many people aren't as terrified of the homeless or addicts as you seem to think they are.
You've made some good points, but it really comes down to the price.
There is a housing shortage in Providence and more housing is definitely needed. But, make no mistake, there isn't a housing shortage in Providence at this price point.
Irfox, thank you for your thoughts. I won't repeat what I wrote in this thread on April 3, 2023, in post #47.
I will add a few points though.
Converting the Superman building to apartments proved financially unfeasible when interest rates were at record lows from 2009 to 2022, development finance was available, apartment rents and building valuations were rising, and governments were swimming in stimulus cash.
Spending $800,000 to create an apartment unit in Providence is absurd. No private investor would do it. Witness the Fane tower. The developer killed the project because he couldn't raise the money to build it. Both Fane and prospective investors, such as bank lenders, knew that building the Fane tower would be a financial debacle.
The marketability of the Superman building as modern residential real estate is doomed by lack of onsite parking. The competition, such as Center Place and Park Row Rest, offer secure, onsite parking garages. The reason the developers of these properties spent money to include parking is without parking the apartments wouldn't rent.
One of these years, the city and state will be forced to face reality. Provide a subsidy of more than $100 million to make the Superman building conversion financially feasible, or demolish the property.
I don't think there's ever been a question of whether or not it's feasible for a private investor to convert the building without any assistance from the city/state (this is an issue nationally with these office-residential conversions, not just in PVD). It's clearly a nonstarter. But this isn't strictly a private investor backed project. They're already receiving $30 million in tax breaks which were not on the table for Fane. The question is how much higher is the city (and/or state) willing to go? If I were sitting at the table, I'd get estimates on the cost of demolition and start negotiations there. If you have to spend $50 million to knock it down and create an empty lot, you might as well spend the same money subsidizing a project that'll save a landmark and add hundreds of units to the downtown area.
I don't love the Center Place and Park Row West comparisons. Yes, they're nearby apartments, but those new construction boxes are an entirely different animal from a converted historic building (and generally attract different tenants). There's no reason a reasonably well done conversion of a landmark Art Deco tower shouldn't be able to command higher rents than fairly generic low-rise apartment buildings. Again, I don't think the lack of onsite parking is the problem a few posters seem to believe it is. It's not at all unusual for a building like this to not have a garage or lot onsite. This isn't a novel or unprecedented concept. There's plenty of parking nearby, and valet parking is fairly easy for the property manager to coordinate if they feel that the lack of onsite parking is hurting their marketability.
But yes, the city and state should really figure out soon which direction they want to go with it.
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