Special Reports

Development downtown awaits thaw in market

There are commercial and residential projects on the table downtown, many with a local flavor, according to a variety of city officials. But the reality is that completed deals will come slowly in 2010, as the commercial credit crunch sorts itself out and as a Boston-based consultant finishes work on a long-range master plan for downtown redevelopment.

It's a classic case of wait and see, even as Intrust Bank Arena holds its grand opening Saturday and its first event — a Brad Paisley concert — on Jan. 9.

"I think that there will be opportunities to get something done downtown next year," said Old Town developer Dave Burk.

"But it's going to have to have cash and it's going to have to be something that really works. Speculative deals will be out. Well-capitalized familiar local names, maybe."

What shape those deals will take is less certain with the market wide open for residential and retail developers, officials say. Downtown needs to double its 1,000 residents, but it also needs the retail services those residents will demand.

Wichita City Manager Robert Layton thinks commercial projects will come first, ahead of residential developments.

"I wouldn't be surprised at all to see some commercial announcements in the first six months of next year," he said.

"Right now, it's just harder to get rooftops downtown because of the struggles of the current projects. That makes people a little risk averse."

Commercial prices are coming down, brokers say, from up to $30 a square foot to between $15 and $20 for good property within blocks of the arena. That's consistent with the $20 per square foot Sedgwick County paid property owners it relocated to build the arena.

There are still big prices on prime property near the arena and on Douglas, where prices range from $75 to $200 a square foot.

"I still see a healthy optimism from investors and tenants about downtown," said Marlin Penner, president of NAI John T. Arnold Associates, which is brokering the commercial property at WaterWalk. "Wichita has some very good, very well-financed local retailers."

That's WaterWalk developer Jack DeBoer's opinion, too.

"I'd say almost all of our activity thus far is local," he said, "people who care about the community, who know that this is a good business judgment and something that will assist this community."

Many of the interested developers are service retailers, Penner said — restaurants, dry cleaners and other services for people already downtown.

"But it's tinged with caution," Penner said. "Goodness, everything is right now."

Downtown uncertainty

There are a number of obstacles before new businesses and housing developments open downtown, officials and developers say.

Commercial loans require anywhere from 40 to 50 percent down, liquidity that's hard for developers to come by in a tough economy.

And many potential commercial developers won't move until arena-goers establish their favorite parking lots and foot paths for arena events.

"It is the travel patterns of people and where will some of these businesses be able to best locate to capture the before-event and after-event arena traffic," said Steve Martens, whose Grubb & Ellis/Martens Commercial Group is brokering several downtown properties.

Other developers are waiting to see what Goody Clancy thinks about the economic viability of business downtown. The Boston-based development consultant's first economic update is due in mid-January.

"The great thing with our master plan is it's driven by economics," said Jeff Fluhr, president of the Wichita Downtown Development Corp.

"What we have coming out Jan. 13 is their initial analysis on housing, commercial and retail. From an economic view, there will be some foundational pieces of data in that report."

Foundational for developers trying to shake loose some of that commercial credit, Fluhr said.

"It's very important that we have data we can go back and support, to banks and to investors," Fluhr said.

What developers say

Wichita restaurateurs Melad Stephan and Ty Issa say they've been approached by developers about new eatery concepts near the arena.

Both said they will wait to measure the arena's popularity and any increases in customer traffic before proceeding.

"I'm going to sit tight until the economy improves," said Stephan, who owns several restaurants, including Sabor and Uptown Bistro. "If this was a couple of years ago, with the economy and things going good, then maybe. But right now, it's hard to just keep up with the restaurants I have."

"You have to wait and see," said Issa, owner of Larkspur Restaurant and Grill in Old Town. "Certainly, there's room for other concepts near the arena... I have the Hereford House license for a second restaurant. Will I wait? Yeah. I'd rather tap into a hotel with a restaurant."

Other investors don't want to dally, urged on as downtown commercial property prices fall under the weight of the economy and the credit crunch.

"I'm not waiting. I don't think you can," said Burk, the housing developer. "As good deals come along, you've got to try to make them. Again, housing is a fairly open niche downtown."

Road map

The first steps are done, Fluhr said: Wichita is "on the radar" of major national entertainment and residential developers.

And there are projects in the works — almost 100 housing units in the old Wichita High School on North Emporia and the Commerce art district, the Airbus expansion in Old Town, DeBoer's efforts to revive WaterWalk.

City officials, including Mayor Carl Brewer, the council and Fluhr, are talking with downtown business prospects.

But talk is easier than closing deals, they say.

"It's our job now to start turning those calls into visits," Fluhr said, "those visits into exploration of our opportunities, that exploration into securement, and securement into actual downtown development."

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