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Thursday, April 24, 2014

Downtown Wichita on its way up

Projects completed, slated for city center generate excitement in revitalization plan

BY BILL WILSON
The Wichita Eagle

Wichita builder Ted Farha is all in for downtown Wichita. Three weeks ago, he moved his Farha Construction company to 120 E. First St. in the old Protection One building.

A year ago, he invested with family members in the Finn Lofts, a new housing project in the city's art district.

"Downtown is cool," Farha said. "There's a lot happening, and a lot getting ready to happen downtown."

Enough happening — with Intrust Bank Arena and Old Town as anchors — that one Wichita real estate analyst calls the last three years of development downtown a "remarkable run."

There are new hotels anchoring an entire city block of planned redevelopment, new business headquarters, new businesses and housing on the drawing board.

All in a period of economic unrest.

"When you think about the economic environment during this period, no one should have been surprised to see absolutely nothing happening," said Stan Longhofer, the analyst who directs Wichita State University's Center for Real Estate.

Jeff Fluhr, the president of the downtown development group leading the revitalization drive, said the focus remains on making downtown a complementary economic engine, one that combines with NewMarket Square on the west side and the Waterfront out east to make Wichita more attractive as a home.

"A calling card," Fluhr said, "and the front door to Wichita, one that helps recruitment and retention to the entire community."

Here's a look at Project Downtown's first year, from the accomplishments to the biggest challenges on the drawing board:

Accomplishments

Ambassador Hotel

The $30 million, four-star hotel is Project Downtown's biggest public-private partnership to date.

The Ambassador Wichita will be a 117-room boutique hotel built in the vacant building on the southeast corner of Douglas and Broadway that once housed Dockum Drugs. That was the site of the nation's first youth-led lunch counter sit-in protesting segregation.

The plans include the independent hotel, a 257-stall parking garage financed by the city and a small public park.

Work began in September, with the hotel scheduled to open late in 2012 — despite a protest petition seeking to invalidate $2.2 million in guest tax revenue the city has contributed to the project.

The hotel joins the Kansas Health Foundation expansion, the planned renovation of the Henry's building, and city garage and park improvements in downtown's first full block project, with investment in excess of $40 million, Fluhr said.

Robert Eyster and Michael Ramsey

Eyster and Ramsey have made six significant downtown purchases, but the plans for only a few have been publicly revealed.

They've acquired the old Protection One building at First and Market. They are renaming the building the Lux and plan to create luxury apartments and possibly condos along with commercial space on the first two floors.

They also have purchased the 20,000-plus square foot two-story building at 100 S. Market; the Board of Trade building at 120 S. Market; Kelly Donham's property on Douglas between Main and Market — jokingly called "Lake Douglas" for the giant hole there; the Zelman building at Douglas and St. Francis; and the Victoria Park Apartments at 612 E. Douglas.

"Put simply, we agree with the city: Participating in revitalizing our downtown is a great investment," Ramsey said.

"The projects we've started are designed to help carry out the plan the city has developed to make downtown vibrant, viable and valuable. We are simply excited to be a part of bringing that plan to life."

St. Francis projects

Eyster and Ramsey's work on the Zelman building, which is being converted into loft apartments, is considered one of the connectors along St. Francis to the new park planned by the Wichita Downtown Rotary Club on the old Coleman site at Second and St. Francis.

Other planned projects there include the relocation of Pixius Communications.

Kansas Health Foundation expansion

The Kansas Health Foundation plans a multimillion-dollar expansion to its downtown headquarters that will add meeting rooms and office space for the group it founded in 2005, the Kansas Leadership Center.

Last month, the foundation announced a $7 million to $9 million project to be built in the parking lot just east of the foundation headquarters at 309 E. Douglas. The building's design will feature a town hall-style meeting room with space for 200 people and another meeting room for 200 that can be divided into four smaller rooms.

Cargill

The $14.7 million, 75,000-square-foot Cargill Innovation Center at 300 W. First opened July 15.

The center houses research, development, culinary, laboratory, pilot plant and distribution capabilities.

Cargill's meat businesses employ approximately 1,000 people in downtown Wichita.

The building houses chemical and biological labs for testing and analysis of meat and meat products. It also includes a seasoning mixing facility.

Keys to the future

Union Station

The future of the downtown Union Station complex remains muddy, seven months after the latest development deal fell through.

Several real estate sources say the sticking points are two-fold: the asking price of the owner, Cox Communications, plus the substantial costs of converting a train station into a retail mecca.

The Union Station campus on Douglas has been listed on the commercial real estate website LoopNet for $6.4 million, although at least one deal fell through at about a million dollars less.

However, other interested developers say the property — which would require an extensive and costly remodel to convert it into a retail center — is priced too high to be a viable business venture.

More housing

Despite some successes with new housing downtown — like the Finn Lofts, the Flats 324, and Eyster and Ramsey's project in the old Zelman building — downtown continues to need more affordable housing.

One particular source of that housing — the Minnesota Guys' $50 million Exchange Place project — remains embroiled in federal grant red tape and the group's ongoing financial problems.

Retail near the arena

Redevelopment around Intrust Bank Arena has been slowed by the economy and by the "show me" attitude of potential restaurant and club investors, brokers say.

With commercial lending almost non-existent since the fall of 2008, money for projects has been difficult to come by.

Mike Berne, a national retail consultant, is the city's lead on some of that revitalization, looking regionally and nationally for the right downtown businesses, Fluhr said.

His targets focus largely on regional niche businesses, clubs, restaurants and shops birthed in the Midwest that have succeeded and are looking for other cities on the move.

A long-term project

Longhofer, of WSU, cautions Wichitans to keep downtown revitalization in perspective: It will be a decades-long project that will be dynamic and evolve as Wichita's economic needs change.

Farha is a believer.

"Everything is convenient," he said. "I'm within a block and a half of three great places to eat, several banks, two blocks from City Hall and 10 major architectural firms....

"If I had more money to invest in downtown, I would and I will. That's how much I believe in it."

Longhofer is confident that faith will be rewarded.

"The only things I see having a major detrimental impact on progress downtown are poor management by the city... and the city has to be very judicious how it uses any development incentive tools," he said.

"I think that politically in Wichita there's a healthy dose of skepticism that many have about their use, and there's a case to be made that while incentives are useful and appropriate in the right circumstances, it's very easy to abuse them."

Reach Bill Wilson at 316-268-6290 or bwilson@wichitaeagle.com.

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