Crane watch: 7 mega-billion mixed-use projects
Up until early this year, megaprojects dominated the U.S. construction market, growing larger and increasing in number and complexity.
An FMI study last fall found that the annual value of U.S. megaproject starts increased from 3% to approximately 33% of all U.S. construction starts over the past decade.
As the COVID-19 outbreak hit, many massive, mixed-use projects were in various stages of development. For those that were already underway, the pandemic hasn't seemed to significantly change developers’ decision-making.
It remains to be seen, however, what the ultimate effect will be as remote working has gained popularity, and potential tenants and residents have eschewed urban living for the suburbs in order to gain some physical distance from each other.
Here are updates on some of the country's largest mixed-use projects in progress.
Related Santa Clara
Santa Clara, California
Previously dubbed City Place, this 240-acre development will eventually total 9.2 million square feet and offer residential, hotel, commercial, retail and plenty of green space, all positioned next to the San Francisco 49ers home at Levi's Stadium.
The Santa Clara City Council approved the first phase Development Area Plan on March 24 just as the U.S. was coming to grips with the extent of the COVID-19 pandemic. That phase includes:
- 440,000 square feet of offices.
- 21,400 square feet of retail.
- 29,600 square feet of food and beverage space.
- 480 hotel rooms.
- 200 apartments.
- Below street-level parking.
This phase of the project was supposed to start construction in May and wrap up in 2023, but an executive representing Related Cos. told the city council that that timeline had been pushed back a few months due to the pandemic.
The council later approved Phase 2, but city officials have raised concerns about the elements of the overall project such as the anticipated 5.7 million square feet of office space at a time when the large companies expected to sign up as tenants have moved many of their employees to remote work because of the coronavirus. Related told the city council that it expects usage to normalize during the next few years.
Developer Sterling Bay Companies made a number of concessions and compromises with residents for its $6 billion mega development Lincoln Yards in order to get the green light and about $900 million in the form of a Tax Increment Financing (TIF) plan from the city of Chicago in 2019. TIFs help fund development projects through the diversion of property taxes, the amount of which is calculated based on increases in property values in a designated district.
Locals were able to get Sterling Bay to nix plans for an 18,000-seat soccer stadium, give up on development of a Live Nation venue that would have displaced neighborhood entertainment establishments, reduce density and building heights and increase park space by 40%.
Sterling Bay announced last year that the joint venture of Walsh Construction and Riteway-Huggins Construction would perform the development's public infrastructure work.
The latest news from Sterling Bay came this summer with the announcement that the developer would break ground on Lincoln Yards' first building in early 2021, an eight-story, 320,000-square-foot property that will offer up both office and laboratory space. The Gensler-designed building will go up on the south end of the 55-acre property along the Chicago River.
The $5.5 billion Port Covington development is still underway albeit with some changes since Kevin Plank, founder and former CEO of Under Armour, and his company Sagamore Development first proposed the megaproject in 2016.
Weller Development stepped in for Sagamore after Plank's resignation from Under Armour last year, and the initiation of an Securities and Exchange investigation into statements the company made about its sales have cast doubt as to whether the company will move forward with plans for a new headquarters at Port Covington.
The first $700 phase of the project, the Rye Street Market complex, is still in progress with Whiting-Turner Contracting heading up construction. There are already a smattering of dining and entertainment venues in operation there, as well as some existing office space, Baltimore Sun facilities and incubator space, but when the first phase is complete, total space will include more than 2.5 million square feet of new offices, retail, residences, hotels and green space. The first new buildings are scheduled for a 2021 opening.
Just last month, California developer Alexandria Real Estate Equities announced that it will build a 170,000-square-foot, six-story building with both laboratory and office space on a site to the northeast of Rye Street Market.
Destination Medical Center
The six-district, $5.6 billion Destination Medical Center is expected to take 20 years in total to complete. When finished, it will build on the city's current offerings for those seeking medical care and wellness, while also expanding on Mayo Clinic's medical industry research and innovation.
The Destination Medical Center Economic Development Agency provided an update at the end of last month on the Heart of the City district, which will offer residential, commercial and retail space in downtown Rochester. Currently, crews are engaged in site and utility work there.
Mortenson is developing and building in the Discovery Square portion of the project, which includes not only residential and commercial space but will also provide a research, medical, innovation and technology hub. Mortenson completed its first building, the $35 million One Discovery Square, in 2019. The 90,000-square-foot biomedical sciences building has collaborative lab space scattered throughout and features a lobby that can be converted into a lecture hall.
Late last month, Mortenson announced that it has started construction on its second building in the district, Discovery Square 2. The 125,000-square-foot building will connect to One Discovery Square and will include collaborative work space, energy efficient construction and a Wired Certification rating, which recognizes superior tech connectivity. Mortenson expects to be complete with that building in 2022.
Developer CIM Group announced plans to build the $5 billion Centennial Yards project (formerly known as The Gulch) in downtown Atlanta in late 2017, but progress has been limited because of a lawsuit over the $2 billion tax incentive and bond financing package the city approved in 2018. The approval, which represented the largest such deal in the city's history, came partially because Atlanta had hoped to draw Amazon's second North American headquarters there, a prize that ultimately went to Northern Virginia.
CIM has also committed to a community benefits program for the 40-acre development, which includes $28 million for affordable housing and $2 million for workforce development. The developer has also agreed to set aside 38% of construction contracts for minority- and women-owned businesses.
When complete in five to 10 years, Centennial Yards will include approximately 9 million square feet of office space, 1 million square feet of retail, more than 2,000 apartments and 1,500 hotel rooms.
Heartland Town Square
Islip, New York
Although developer Jerry Wolkoff, who started planning the 450-acre, $4 billion Heartland Town Square development in 2002, died in July at the age of 83, his son David told Newsday that he intended to see "his father's legacy" through.
When all phases of the project are complete, which should take about 30 years, it will provide more than 9,000 apartments, 1 million square feet of retail space and 3 million square feet of office space on the site of a former state psychiatric hospital. Wolkoff's team said the project should also create 1,500 temporary construction jobs along the way.
Heartland Town Square, despite city approvals, has not broken ground yet and has one lawsuit pending against it filed by local school officials. The Brentwood School District in Brentwood, New York, claims that the residential piece of the project will add 7,000 to 8,000 extra children to its schools and not only overburden facilities but negatively impact the quality of education.
This mixed-use project was supposed to deliver office space, for-rent and for-sale residences and even a bowling alley and movie theater, but the project shut down in late 2017 due to millions in unpaid contractor bills. Owner Stan Thomas said he intended on securing additional financing, but, lender Gamma Real Estate took over the property in August 2019 after threatening Thomas and Wade Park Land LLC with foreclosure multiple times.
When Gamma took over the property, it said it was committed to continuing the project but, according to other media reports, the lender has been looking for a buyer. In the meantime, Stan Thomas is still fighting Gamma for ownership of the property, but his Wade Park Land LLC business filed for bankruptcy this summer.
Article top image credit: Sterling Bay