Main Street Journal: Feature Article: Breaking Ground: How building projects in Shelby County are progressing despite the economy

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The following article is taken from the June 2009 issue of the Main Street Journal. Click “Subscribe Online” above to start your subscription.

Breaking Ground: How building projects in Shelby County are progressing despite the economy

By: Jonathan Devin

Everywhere you look the signs of recessions are all too apparent: restaurants empty at dinner, senior citizens bagging groceries at the supermarket, and front page headlines bearing the dismal news of yet another massive lay-off.

Yet throughout Shelby County there are also signs of economic growth in the form of new buildings springing up like daylilies in June.

Many of these projects were planned well before the dire straits of last fall, but even so, the fact that companies and institutions are following through with their plans may well be the source of economic optimism that Memphis and Shelby County so badly needs.

“Actually, developing at this time is a good time so that a hotel is opening to an increasing economy instead of a decreasing economy,” said Greg Averbuch, president of Summit Management Corporation.

Summit is midway into the construction of their third hotel on Court Square in Downtown Memphis. The new eight-story hotel, a Courtyard brand with 131 rooms, will feature amenities for business travelers, a Bistro for guests and the public alike, and architecture that blends the historic features of the block with a few modern twists.

The new Courtyard is Summit’s only current building project. Planning began in 2006.

“The development cycle, not only the planning and development but also the construction, is a very long process,” said Averbuch. “And the hotel business is cyclical so during that development process, you’re at different stages of the cycle. We’ve approached our business overall specifically as development over the long term. We’re projecting opening into 2010 and beyond that we’re planning on seeing increases from the current economic activity.”

Averbuch, who strikes one as a no-nonsense kind of guy, has a good point. Most businesses large and small are looking for ways to retool themselves for the next era of the American economy, whatever that may turn out to be.

But Averbuch doesn’t see himself as playing beat the clock with a $21 Million wager. He said that the investment that Summit is making in Downtown Memphis has been very strategically planned.

“Downtown has a fabric and history of all types of hotel demands,” Averbuch explained. “It is served with conventions, tours, sports, business, religious and government institutions.”

“We like Court Square because it serves all the different constituents of downtown,” he continued. “You’re amongst all the main employers, the residential sector, the convention center, and Beale Street and the entertainment district. It’s a true live, work, play environment.”

Averbuch also noted the many other development projects in the immediate vicinity like the Lowenstein apartment building across the street, which recently underwent a multi-million dollar renovation, construction of the new Cecil C. Humphreys School of Law at the Custom House on Front Street, and the relocation of BankTennessee’s headquarters on North Second Street.

“Court Square has its own micro economic development going on with other developments downtown,” said Averbuch.

Highwoods Properties, the developer and manager of 11 office towers in East Memphis including one of the International Place towers, the Centrum building, the Colonnade, and Atriums I and II, is also thinking about location, location, location.

Highwoods’ vice president, Steve Guinn, expects completion of a 150,000 square foot office building near Poplar and I-240 in November, 2009, just before the Courtyard opens its doors. Called the Triad Center III, the building will complete the triad of two other Highwoods office buildings located immediately behind the Bank of America. The existing buildings were both built in the late 1980’s.

“I think it’s the best ten acres in Memphis,” said Guinn. “There’s always hesitation before you do any kind of spec project, but I think that we felt that the location for this property was so superior to anything else in town. There’s never a ‘can’t miss’ project, but if there was one, this would be it.”

Spec project? Really?

Guinn said that each tenant will be able to design an office suite according to their own needs. He’s envisioning offices primarily for professional and managerial type firms, perhaps those in the financial industries or insurance. In late May 17 percent of the space had been leased by existing companies with a law firm as the lead tenant.

Depending on financial companies to lease a brand new building may sound like a double gamble, but Highwood took steps to keep construction costs in check. For one, they built on a parking lot that they already owned.

“Obviously in these economic times, we got started two or three months before Lehman Brothers went bankrupt,” said Guinn. “It would be speculation on my part to guess what would have happened if we started later, but it’s irrelevant because we started it and it’s within six months of being complete.”

“I think we’ve got pretty decent activity, meaning people interested in leasing, on the building right now,” said Guinn.

Public interest is also brewing over the massive new Life Time Fitness Family Fitness and Recreation Resort and Waterpark, which is expected to open on June 11 at 3470 Houston Levee Road in Collierville.

The two-story, 112,000-square foot center will be Tennessee’s first project by Life Time Fitness, which is based in Chanhassen, Minnesota. Life Time Fitness already operates 83 other facilities in 18 states, including two other brand new centers which opened this year in New Jersey and Texas.

“Unlike the typical health club, Life Time offers a facility that is much more like a resort than a club, complemented by a comprehensive range of programs and services designed to meet the health, wellness, recreation and entertainment needs of the entire family,” said Life Time’s executive vice-president of operations, Jeff Zwiefel.

“With a focus on delivering incredible value, our luxurious environment exudes ‘friendly’ and ‘inviting,’ while providing the ultimate in personalized services in a relaxing and rejuvenating atmosphere. We are proud to join the Collierville community and to begin serving members seeking healthy and active lives.”

The luxurious environment begs the question of whether or not Collierville residents are prepared to pay for a new gym membership. Then again, in tough economic times, stress relief and low-cost family activities may be just what the doctor—not to mention the CPA—ordered.

For its part, Life Time Fitness decided to play it safer as well. The company had originally planned to open 11 centers nationwide this year, but as of early spring decided to open six in 2009 and the rest in 2010. The Collierville center’s opening was pushed back by two months.

A company spokesman, Jason Thunstrom, said told the Commercial Appeal that the facility would cost about $35 million.

It will be open 24 hours a day as will a new student residence complex at the University of Memphis.

The new dorm, as yet unnamed, on Patterson Street won’t be like any other dorm in the state according to a university official. It seems that tiger blue is turning green.

“It’s the most green residence hall in Tennessee and possibly it’s the one of the greenest buildings of any state building in Tennessee,” said Danny Armitage, associate dean of students and a 25 year veteran of the university’s Residence Life department. “The nice thing about this is that we went at it from a perspective of what really is going to create savings for us? What really is going to help the environment? What really is the appropriate way to look at this and not get so wrapped up in things that are more show than actual value?”

Green is certainly a buzzword in business these days, but the university is making good on its promises. For one thing, 85 percent of the materials from West Hall, the aging dorm which was demolished to make way for the new dorm, are being recycled for use in the new construction.

The variable refrigerant flow heating and A/C systems will actually extract and transfer heat from areas requiring cooling to areas that are in need of heat. Students will even have individual temperature controls in every sleeping room.

“That’s unheard of,” said Armitage.

The building will cost $26 million all told, but Armitage said that as counterintuitive as it sounds, 2009 is the right time to build a new dorm.

“When the economy turned down, we looked at a number of things, but one thing we noticed was that oftentimes more people have a tendency to go back to school because jobs are not available,” said Armitage. “We anticipated seeing some growth. Right now we know that the acceptances to the university for this fall are up significantly, so we’re anticipating some growth will take place with the freshman class, so it will be coming online at an appropriate time.”

Each year 97 percent of the university’s 2,400 beds are occupied.

The new dorm will also feature small communities within the dorm for students studying music, those in ROTC programs and other areas. That, said Armitage is not a new concept, but one that is becoming pervasive in major universities hoping to support students’ retention.

“Students, particularly freshman, are learning their best when they’re in supportive groups with common interest goals,” said Armitage. “Support mechanisms develop. Grades goes up. Graduation rates go up.”

So is it the time for optimism in the American economy or are business leaders simply doing what they’ve always done to navigate as best they can into a completely unknown future?

Averbuch summed up his theory most poignantly that, in effect, the seed that is never planted certainly will never bloom.

“I think that our economy will be on the rebuild,” said Averbuch. “We don’t know when, but those days are somewhere ahead.”

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