Still on the market, Union Station is a key ‘connector’ in downtown Wichita

Historic building links downtown to arena; city’s past, future

09/15/2013 6:36 AM

08/05/2014 11:22 PM

It is the iconic piece of real estate in the drive to revitalize Wichita’s downtown: a historic train station that once was the front door to a growing city.

Yet five years after Union Station went on the market at 701 E. Douglas, the ornate, cavernous train station and its 110,000- square-foot campus remains unsold. It’s a potential-filled – yet costly – project that could tie Old Town and Intrust Bank Arena together, or keep them apart if developers and city officials can’t work out a plan to revitalize the historic building.

The building’s owners, Atlanta-based Cox Communications, say nothing has changed: The company remains committed to getting the century-old campus into the hands of a developer who will integrate it into the revival of the Douglas Avenue corridor.

“We recognize that the building is an important piece of Wichita’s history,” Cox spokeswoman Sarah Kaufman said. “It’s our hope to pass it on to someone who will see its potential and develop it as a key piece of downtown moving forward.”

But starting that momentum won’t be easy; the project will be costly – it currently is listed at more than $6.million – and it will likely require a long-term public-private partnership to be financially viable, developers say.

But if that partnership can be forged, it might not be long until Union Station’s future is solidified, those developers say.

“Frankly, I think the real opportunity and challenge for Union Station is its scale,” said David Dixon, the Boston-based consultant who led the planning for Project Downtown, the city’s comprehensive plan for downtown revitalization.

“It offers a unique opportunity to create a vibrant mixed-use environment that could be highly competitive and significantly expand the market for downtown living and working.”

But Dixon cautions critics against comparing Union Station to suburban developments like NewMarket Square or the Waterfront.

“All this will require deep pockets and patient capital,” he said. “And probably a long-term public-private partnership that envisions 10-plus years of expanding development.”

The reason for the partnership is simple, said Occidental Management’s Gary Oborny, a longtime local and regional developer with experience in retrofits and new construction: cost. Oborny estimates that the revival of any historic structure will cost between 20 and 30 percent more than a new construction project.

“There are a lot of limitations and regulations that have to be met when you’re dealing with a historic structure,” he said. “That’s expensive, and when you tap into a building already on the historic register, it isn’t a choice. You do it by the regulations or you don’t do it at all.”

Union Station’s role

The train station’s future is as a connector, said Jeff Fluhr, president of the Greater Wichita Downtown Development Corp., who’s leading the drive to lure businesses and residents downtown.

“It is part of that connective fabric of downtown with Old Town to the north, Intrust Bank Arena to the south and Douglas as the arterial between the two,” Fluhr said. “This building is in position to be a connector, if you will, between two major anchors in our downtown with some great opportunities for unique uses.”

The roadmap for Union’s Station’s future is found in the blueprint of Old Town, Fluhr said, which is made up of three roughly equal parts: residential space, commercial space and destination entertainment, like restaurants, retailers and hospitality.

“Urban centers don’t operate in silos,” Fluhr said. “If they’re viable, the uses interact with each other.

“So when you look at Old Town, the footprint here at Union Station can become … an extension of those viable uses that we see complementing Old Town to the north – commercial into the day, residents into the evening and mornings, and the other destination anchors drawing people into our area.”

The building is replete with some interesting history-based opportunities to link downtown Wichita’s past with its future. Perhaps the most obvious is a restaurant in the space once occupied by one of America’s first concept restaurateurs, The Fred Harvey Co.

And the infrastructure is in place if high-speed rail returns. But Fluhr was clear: Any decision on rail service as a component of Union Station’s use will be up to the developer.

Union Station finds itself in the middle of some momentum downtown, with some projects completed, others planned and the future of the Douglas Avenue corridor drifting into focus.

“What you’re seeing happen in Wichita is the market strengthening each month,” Fluhr said. “We saw $60.million in projects open last year and $94.million that started in 2011 carrying forward into this year.

“Part of what happens with buildings of this nature is a patient capital component. But I think we’re nearing the opportunity to see something happen here. There’s activity along Douglas, activity north of this building. I think the probability continues to increase that we’ll see something happen here soon.”

Possible obstacles

But there are some significant barriers to revitalizing the old train station.

First is the price, which remains on LoopNet at $6.42 million, although officials think it can be had for at least a million dollars less. The current price is too steep to make the deal profitable, several potential bidders say.

And then there’s the building itself: The city added a mezzanine years ago to make the building attractive as a two-story office complex instead of a cavernous train station with thousands of square feet of wasted space off the floor. That mezzanine has no use to Union Station’s future, Fluhr said, so any buyer faces their own costly dilemma of creating a second floor of usable space.

Finally, there is the controversial subject of tax credits for historic renovation. With the state of Kansas’ program set to sunset this summer and Gov. Sam Brownback proposing their elimination, the death of those credits could spell the end of any short-term plans to revitalize Union Station.

Occidental President Chad Stafford said the city – and the state – can’t afford to lose a valuable economic tool.

“Without the tax credits, it doesn’t make financial or economic sense to do these deals,” he said.

“When you have companies looking at us from the outside, one of the factors they’re going to consider is how vibrant downtown is. We’ve seen things happen downtown, vibrant things, and momentum has been created downtown. The tax credit piece is key from the economic development standpoint.”

Dixon, the downtown consultant, agreed.

“The historic tax credit is much more critical … for the stock of older downtown buildings that don’t come with significant developable land,” he said.

“Losing the credit would likely delay development until downtown values rise because development of (Union Station) … itself would be significantly more expensive and harder to finance.”

‘Structurally sound’

The building, which has been vacant since Cox left almost five years ago, isn’t falling apart. During an Eagle tour last week, the only observable issues were some peeling paint in spots.

“It’s a structurally sound building, and Cox has done a great job maintaining it,” said Patrick Ahern of Grubb & Ellis/Martens Commercial Group, which is brokering the property for Cox.

And Cox has no plans to back off that commitment soon, said Paul Shaw, director of risk, safety, security and facilities for Cox’s central region.

“We’re protecting an asset,” Shaw said. “We currently have employees here routinely to make sure the building isn’t deteriorating. With a vacant building, we certainly understand the concerns about that.”

The company also has maintained full power, heat and water.

Other sale efforts

The building went on the market in the spring of 2008, about a year after Cox left for bigger offices at 901 George Washington Blvd.

A deal in 2009 to sell the building to a Clay Center investor fell through in a dispute over parking. Businessman Phil Frigon’s $5.5 million deal to buy the campus collapsed when he failed to reach an agreement for the city to lease parking from him for Intrust Bank Arena.

Also included as part of the property for sale are the old Rock Island depot and baggage facility, and the old Wichita Grand Hotel, once occupied by Sullivan Higdon and Sink before becoming Cox Media.

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