In what may be the first new downtown project directly attributed to the planned streetcar line, a Colorado developer is proposing to replace a parking lot with a five-story apartment building in the Crossroads Arts District.
Scott Richardson, managing partner for Linden Street Partners of Boulder, has an option to buy a lot at 1914 Main St. just north of the Rieger Hotel Grill & Exchange. His plan is to build a 45- to 50-unit apartment building with first-floor retail and restaurant space next year.
Richardson was straightforward about what’s motivating his company, which has built more than 1,000 apartments, mostly in Southern California, to be interested in downtown Kansas City.
“The streetcar is the big thing that drew us, absolutely,” he said. “We like the demographics and the economic trends. I walked the area and liked the site.”
The two-mile streetcar route along Main Street is not expected to be rolling until late 2015, but Gib Kerr, the broker at Cassidy Turley representing the property owner, Great American Bank, said Richardson’s proposal was the kind of development streetcar advocates hoped for.
“This is the new phase we’ve been waiting for,” Kerr said Tuesday, “from redeveloping historic buildings to refilling these old parking lots. That’s exactly what the streetcar is designed to do, encourage development in these infill sites.”
The vast majority of the new residences built downtown have been in older buildings, with developers benefiting from federal and state historic tax credits as well as property tax abatements. New construction is considered financially challenging because the market still doesn’t command the rents required to make the numbers work.
For example, the only other new-built residential projects downtown, the 137-unit River Market West project under construction and the 311-unit high-rise planned by the Cordish Co. at 13th and Walnut streets, are receiving cash subsidies from the city. Cordish is getting $8 million, the River Market developer $2 million.
Richardson acknowledged it will be tricky financially, but believes the design of his building — the apartments are expected to be smaller — and the trend toward higher rent will make it work.
“We’ve seen enough rent growth in that area,” he said. “It’s obviously not San Francisco or Los Angeles, but it’s on the cusp of making financial sense for us. We feel the tipping point will be soon.”
Richardson said there are still some steps to be accomplished before moving forward with the estimated $10 million development. His firm is discussing potential incentives with the city, and there is no final design. Parking also will be provided, but the number of spaces hasn’t been determined.
Linden Street — its namesake is in San Francisco — is beginning to expand into the Mountain and Midwestern states after doing much of its work on the West Coast.
“We’re big believers in markets away from the coast,” Richardson said. “We’re looking at what we consider big-league cities, not Chicago or Houston, but places like Denver, Kansas City and Cincinnati, particularly with momentum to transit-oriented development.”
Linden Street Partners plans on completing its purchase of the property by year’s end. Kerr was helped in the transaction by Jeffrey Bentz of Cassidy Turley.