Today's Herald-Sun has a good treatment of the issues that have kept NCDOT from moving Durham's Amtrak train station out of the double-wide trailer it currently inhabits on West Chapel Hill Street. (I haven't been able to figure out if Ray Gronberg is the only decent journalist left at the H-S -- please don't get me started on John McCann, whose column's raison d'etre today was totally undecipherable -- or if Gronberg just happens to write on subjects more interesting to me.)
Anyway, the long and short of the issue seems to boil down simply to M-O-N-E-Y. West Village, according to the story, had been looking for $16.50/sq. ft. with a 3% annual escalator for the space in the lease terms. NCDOT and the State Property Office, meanwhile, were apoplectic given that they'd just leased space in Greensboro at $6.54/sq. ft. for their Amtrak station there.
Is it a fair comparison? Well, perhaps not.
I'm assuming the G'boro station is located in the J. Douglas Galyon station pictured at left, a beautiful, historic train station that appears to now be owned by the City of Greensboro and used as a multimodal transportation station. See NCDOT's web site for renovation information and more pictures -- it's a beautiful station. Hey, we should use Union Station here for our multimodal... oh wait, we bulldozed it. Moving right along.
So, the comparison doesn't hold up in two different ways. From the state's perspective, the Galyon station is a publicly-owned facility renovated with $32 million in Federal, city, and state funds. So this lease doesn't seem to represent a market-rate rent, but NCDOT's participation in shuffling money between various government coffers. A better point of comparison for NCDOT would be a "buy vs. build" comparison of what it would take to redevelop Durham's 'Amshack' or to build a brand new station, which they've talked about doing in conjunction with TTA... eventually.
On the other hand, the low lease rate in Greensboro is probably thanks in part to the city's financial participation in the renovation. According to Gronberg's article, Durham is pushing NCDOT hard to relocate the station, but doesn't want to step forward with dollars. Given the benefits to the city, it's too bad this wasn't something local government addressed with the West Village developers and NCDOT during the negotiations over incentives and streetscape improvements for the West Village project. It's easy to imagine a number of outcomes, be it the City agreeing to do renovation and upfit on the portion of the Walker warehouse used for the station, all the way to the City having made incentives for the project contingent upon a below-market rate for the Amtrak station.
That said, I don't really put the blame for this in the city's court but the state's, which seems to be picking a fight over a relatively small dollar figure. To put it in comparison: the annual lease amount for the Amtrak station is about one-third of the cut-rate lease that Compare Foods is paying for space at their discount grocery store on Avondale Dr., according to CoStar reports. A public transportation facility is a point of pride and an amenity that benefits and reflects back not just on the city but on the entire state. That's not worth a third of a supermarket's cost? Do we so devalue public spaces like our train stations?
One quibble with Gronberg's piece:
DDI President Bill Kalkhof said in a memo the city relayed to DOT that space in places like West Village costs anywhere from $12 to $17 per square foot.
Those numbers are in line with those reported by the Karnes Research Co., which says that in the fourth quarter of 2006, downtown office space on average was leasing for anywhere from $13 to $21.62 a square foot. But the upper end of the range was for "Class A" space, the newest and best. Older space was going for an average of $13 to $13.59 a square foot.
Could be a hack job at copy editing, but there seems to be an implication here that while the $16.50 lease rate was within the downtown range, "older space" should be priced in the $13 range while the higher rate should be reserved for "Class A" space... and heck, West Village is as old as it comes, right?
It's important to remember that the renovated warehouse facilities are leasing at the top of market and are treated as Class A space -- in fact, it's the "Ambacco" space that's leasing up in the low-twenties, making it the most expensive office space in the area (much more so than 'newer' buildings like Durham Centre). It's not the age of shell per se, but the general condition and amenities that determine if something is Class A, Class B, etc. And I'd imagine that with the money they're pouring in to West Village, we're talking Class A space here, so the $16.50 rate may not be all that far off the mark.
Comments