Downtown development

Just a few years ago, development in downtown Springfield seemed to be taking big steps forward. When the recession hit, the momentum slowed. While downtown appears to be regaining some lost ground  as of late, it’s not yet enough to restore across-the-board confidence that could draw new businesses.

“Downtown’s still not doing very good,” said Greg Kellogg, operations leader for Paul Mitchell cosmetology school franchise The System Inc., which considered moving from its leased South Kansas Expressway space to purchased space in the south end of College Station.

“When we were first looking at the building, I mean, that McGowan guy from Heer’s was in the newspaper weekly, and obviously, that’s kind of fallen off the wagon,” he said. “The Wheeler building was supposed to be a grocery store, that’s fallen away, the north side of College Station was supposed to be something massive, that fell away.”

The people behind those projects disagree. Heer’s and College Station may appear to be at a standstill, but representatives say there is behind-the-scenes work under way. And construction work on the grocery store and condominium space at 401 South Ave., formerly the Wheeler’s Furniture building, is moving forward.

College Station and The System
The slowing pace of downtown development is one reason The System decided not to take a $496,000 loan that was approved in February by Rural Missouri Inc. and backed by the U.S. Small Business Administration, Kellogg said. Another reason, he added, was the school’s relatively young age. It celebrates its fifth anniversary in October.

“We thought changing locations so soon was too much of a risk,” he said, noting the school plans to wait out the two and a half years it has left on its lease at 3017 S. Kansas Expressway before making any moves.

While Ken Schwab, realtor and leasing agent with Wilhoit Properties said he couldn’t comment about potential clients at College Station or The System specifically, he noted that downtown Springfield is no different when it comes to stalled development than the rest of Springfield.

“You go to the Sam’s Club at the corner of Campbell and James River Freeway, obviously a great retail space, with a national tenant – the biggest retailer in the world – and yet where are the rest of the users or tenants on that property?” Schwab said.

Difficulty obtaining financing is part of the reason tenants are reluctant to sign on at developments, Schwab said, but another problem is that fewer people are looking right now. That, he said, can actually work in a potential buyer’s or tenant’s favor.

“I think there’s more value now, whether that be a landlord or developer, I think there’s smaller demand,” he said. “It’s a better time for a tenant or a party to purchase, because negotiations for acceptable terms might be better than a couple of years ago.”

Still, Schwab is quick to point out that there are parties interested in space right now.

“That doesn’t mean there’s no activity, just less,” he said.

Heer’s and HUD
Heer’s building owner, developer Kevin McGowan of St. Louis-based Blue Urban LLC, said he’s secured the final $3 million of funding for his renovation of the local landmark, as an undisclosed St. Louis bank has agreed to make a bridge loan for the project. McGowan said he’s putting together the final touches on a term sheet, which he plans to take to the city for approval before the end of the month.

McGowan said the term sheet sets the conditions for the project, reiterating the agreement between the city and Blue Urban and laying out what tax credits and incentives the project intends to take advantage of.

“We have filled the gap and we believe we’ve got the financial aspects of this deal laid out,” he said. “But we don’t want to get too far ahead of ourselves. City Council has to meet and give its blessing; the state has to give its blessing.”

Once the proper approvals are received, McGowan said the project will file its application to the U.S. Department of Housing and Urban Development, which would insure the loan for the project.
“HUD is waiting for this application and there is an expectation at HUD and at our end that they’re going to approve it,” McGowan said.

HUD evaluated the Heer’s project during a preapproval process last year, said spokeswoman Dale Gray, adding that a market study was done and the department felt it was a viable project. After the market study, HUD issued an invitation to Blue Urban to apply for the loan, but the company missed a deadline and a deadline extension. Gray said McGowan would not need to submit another preapplication when he’s ready to apply, but all of the information on his application would need to be current. McGowan said he isn’t concerned.

“In terms of updating any information, all updates have been done or are in the process of being completed right now,” he said.

Once the application is submitted, Gray said HUD will have 60 days to review the package, and if it’s approved, Blue Urban will have 90 days to get its closing documents ready.

Wheeler’s plans rolling on
Construction is wrapping up on the first-floor of the Wheeler’s building, where Price Cutter parent company RPCS Inc. is preparing to open a new grocery concept under a new name in mid-August, said President Erick Taylor, though he declined to disclose more information.

“We’re hoping for a little suspense,” he said.

Building owner Morris Dock confirmed the targeted opening, adding that Price Cutter has a long-term lease for 10,000 square feet of space. Dock’s contracting company, MoDoCo Inc., is acting in a construction management role during the infill work, he said. Upstairs from the grocery concept, Dock said he’s continuing to work on the 12 lofts that will be for sale in the building.

The two and three-bedroom lofts range from 1,400 square feet to 2,100 square feet, and prices range from $189,900 to $384,000, depending on whether the buyer wants a “brown box,” or semi-unfinished space, or finished or custom space, Dock said.

The first occupancy permit was issued at the end of 2009, Dock said, and about eight lofts remain unsold.

“I have more interest in our lofts now than when we first started the project,” he said, adding that he believes downtown is actually doing better than other parts of Springfield.

“It’s a concentrated area, and there’s more activity per square foot downtown than in any other area,” he said. “People who live in Ravenwood support a big portion of Springfield, they get in their cars and drive all over the place. If you live downtown, you walk.”[[In-content Ad]]