by Matthew Nuth
Lanny had been unable to imagine a way that the firm could afford to bite off another big investment at this time. Years ago, the company had taken on some large debt with the acquisition of the large plot for future development down in San Diego that had yet to pay off. They had used up a significant portion of the company’s cash and line of credit to hire additional staff and develop the preliminary proposals required before they could even consider breaking ground in California. It had put incredible stress on their finances and it looked as though it was going to be some time before the newest PW Simmons development could generate any positive cash flow. It was Lanny’s job to make sure the company did not get into the cash bind they now found themselves in and he was feeling the pressure. He certainly could not condone making the financial stress worse by embarking on what he thought was a hair-brained, high-risk, low-return investment trying to engender a revitalization of down-town. After all, PW Simmons was a business, and the business’s objective was not benevolence.
The battle lines had been drawn: the emotional obligation Paul felt to rectify the damage he felt he had in some way caused, pulling money from the downtown businesses and flowing it into the suburbs contrasted by Lanny’s pragmatism posturing that PW Simmons just did not have the financial wherewithal to pull off one additional investment at this time. In Lanny’s opinion, the short cash crunch caused by any redevelopment of downtown would not only sink the company, it was based on the folly that the downtown could actually be recovered. What could possibly make this downtown area attractive and safe enough to motivate new business and, more importantly, stimulate new customers to return? Hell, this portion of town wasn’t particularly vibrant even before the introduction of the new malls and new housing expansion south of town. Combine that with the lack of down-town parking in the land of the car guaranteed the project to be a big bust. Although Lanny deeply respected Paul, this whole idea seemed more hope and prayer than sound business.
In spite of his skepticism, Lanny knew he owed Arlin and Paul the courtesy to hear the proposal and yet he was paid and obligated to fight for the fiscal health of the company. He certainly wanted to avoid any internal battle within the firm’s ownership. It would be a battle that could tear the business apart. The options would be terrible: go bankrupt or destroy the company at its very roots. No, the only good result would come from reviewing Arlin’s proposal and, through questioning, allow Paul to realize the folly prior to wasting any more money on the idea.
Arlin started in with the proposal, not by showing drawings of what the redevelopment could look like when complete, but rather by starting with discussion of business objectives and assumptions to ensure business alignment prior to jumping into a sales pitch. Lanny had to give Arlin credit; he was attempting to take as much emotion as possible out of the review.
The conversation actually initially progressed well through this phase. All three concurred the investment would need to have a high likelihood of generating positive cash flow quickly. The rub was the definition of “quickly.” Paul said the right things regarding cash flow, but Lanny suspected he was not realistic regarding the budget to pull off the major project. Lanny was concerned that Paul would seduce himself into believing the redevelopment would miraculously work in spite of facts. For Lanny, the cash flow crunch meant the project would need to achieve break even within the investment’s first year. It was a conservative investment strategy he was championing until their California real estate investment could start to pay off. Although he pretended he was open to ideas that looked to provide significant upside, he had already nixed a number of potential programs over the past year as function of risk. Now, he could not see the downtown reinvestment as something that could provide any of the upside the company needed. It was critical to align on the importance of cash flow neutrality before jumping into the actual project presentation so as not to become overpowered by pure speculation.
Lanny felt he had already learned the hard way the folly of becoming too enamored with “potential.” The land they had purchased in California had looked so exciting. Almost two thousand acres of prime real estate just waiting for a developer to come along and build homes on it. At least that is how Paul had initially positioned it. They had pulled together projections that looked too good to be true. Ultimately, they now appeared to have been based more on hope than reality. The original projections were what he now referred to as financial modelling masturbation; sounding and feeling good, but far from real. Although he was hopeful the project returns might still materialize, it would take years for them to get through the miles of red tape and start generating some profits. Linden Street starting to sound the same way; lots of potential and devoid of any sound logic. Lanny wanted to make sure objectivity was represented in the discussion.
The second portion of Arlin’s presentation centered on demographics. He was sensitive to ensuring his proposal was not just pretty pictures of what the downtown could be, but was based in a pragmatic view of what types of people might be attracted to a downtown venue and what would be required to stimulate their interest and ongoing patronage. Arlin presented a number of market studies and actual data from other cities that had been successful to some degree on revitalizing sections of their communities. The studies outlined the types of commerce and people that might be excited and willing to locate businesses or shop in a revitalized area down-town. It was central to any proposal that PW Simmons might consider.
Within an hour, the three had agreed on a number of items. First, it was true there had been a major shift in demographics for the city; it was becoming younger and more affluent. Second, the affluence had resulted in people looking for, and willing to pay for, higher quality and differentiated products. The quality needs had been addressed by the introduction of some major, national, upscale stores that came with the shopping malls. The need for some type true differentiation and uniqueness, however, had largely been unaddressed. The young, affluent customers wanted to have product and shopping experiences that were new all the time. For the most part this still meant a long drive to the big city, Denver or the eclectic smaller community of Boulder. In either case, it meant dollars flowing out of Fort Collins. The third item of agreement, the impact on PW Simmons cash, essentially meant any investment would need to limited and likely would require help and participation from the city, itself.
To avoid getting too bogged down in a conversation centered only on financials, Arlin jumped into the third part of the discussion, an open-ended conversation centered on answering what could the downtown be “famous” for? What result would make PW Simmons proud? This question had not been one that either Paul nor Lanny had discussed before, but it was exactly the one they needed to agree on before even thinking about spending a dime on the project. For Paul, it defined how his family’s name would be remembered. For Lanny, it provided an opportunity to be part of something bigger than just the company; it was something that could excite him enough to get on board the project. The question opened up possibilities rather than closing down options based on individual predispositions. Lanny and Paul became animated as they took turns jotting ideas on the conference room’s white board. The animation reflected none of the anger that had polluted the room no more than an hour earlier. Instead, animosity and frustration had been replaced by the energetic synergy of sharing of ideas; one building on another.
Arlin was excited to see this conversation outlining a vision of what Linden Street could be sparking the creativity of both Paul and Lanny. One could feel the energy in the conference room grow, the potential was apparent. They began to coalesce on a set of attributes for any successful redevelopment effort. The most important “a-hah” for the team was that the redevelopment needed to take reliance on the car out of the picture. Walking and strolling had to be part of the plan and would be integral in delivering an experience that could not be had in the conventional covered shopping malls of the suburbs. Granted, the whole value premi
se behind the covered mall was to enable customers to walk from shop to shop without ever having to hop back into a car or brave nasty weather, but the purpose was singularly shopping. It was efficient, but not necessarily fun; it reflected a stagnant experience. The redevelopment needed to provide for a high degree of experience flexibility so as to always remain fresh for the consumer.
Business risk could be addressed through project diversification. The area to be redeveloped would include a broad range of occupants including stylish boutiques, art galleries, professional offices, stylish apartments, live music, and trendy restaurants and nightclubs. In order to be exciting, the look needed to be ever-changing with stimulating additions. The redevelopment needed to combine an active street scene with quality indoor venues; a place to see and be seen without necessarily breaking the bank. Okay it sounded good, but how to make it work?
Arlin pointed to his first drawing. It was a street view except all the cars were gone. Instead the street had been turned into a park spotted with raised planters, trees, cobblestone walkways, sculptures, fountains, and a new breed of stores; all upgraded with a common exterior look starting with large awnings and fancy doors. Gone from the buildings were the utilitarian stainless-steel doors and plain plate glass windows that had seemed modern in the fifties, but today looked only cheap and dated. The had been replaced by stylish wood panel doors and casement windows. The look was comfortable and inviting. The post-modern blonde brick was gone, too, replaced by a recovered red brick of an earlier generation, providing a calling back to a simpler, safer time. The look was to provide a destination for young and old alike.
Lanny’s excitement faded and his pragmatism resurfaced. “Looks nice, Arlin, but how does this fit with what actually exists on Linden Street today? You know we cannot afford to tear down and start from scratch?”
Chapter 28
On paper, the Linden Street transformation being laid out by Arlin appeared magical. The existing buildings lining the street along the proposed three block redevelopment were going to experience a major overhaul. Although the majority of the decades-old buildings would maintain their overall appearance, they would need to experience modest external visual retrofits to enable each building to maintain their uniqueness while creating a continuity for the entire street mall. Major construction overhauls were focused on two large, post-modern architectural building atrocities that at one time had been symbols of post-war affluence and efficiency. Today, these were only dated, tired, plain and ugly. Although replacing the uniform yellow-blonde brick on the two large buildings and adding some exterior retrofits to add a little interest would just be too expensive, Arlin reflected a white-washed painting treatment to mask the old color and drab conformity of the post-war construction. The white-washed buildings provided a nice contrast with the rest of the colors and textures on the street; red-hued, aged brick structures of buffs, burnt oranges, burgundies and browns. The smooth white provided a striking diversity from the other, more ornate structures lining the street.
Tying together the eclectic mixture of rich brick colors and textures was a consistent application of dark, forest green awnings. The awnings served three primary critical purposes. First, they provided shade and cover, both to comfort the walker-by and the protect the product on display from the harsh Fort Collins summer sun. The second contribution of the awnings was cosmetically tying the look of the entire street together. They provided a degree of commonality as one walked from store to store. The last and most important purpose of the awnings served was providing a subtle pallet for signage. No longer were the businesses demarked by a mish-mash of post-modern, painted, florescent, and polyester signs, some attractive, some garish, some trashy, and all, outdated. Instead, business names were now a common cream white embellished on a sea of green; with only modest differences in font and design. It was not that other forms of signage had been removed completely; however, only the non-standard signs remaining added to a classy, retro impression, and uniqueness of the entire street mall. Arlin had envisioned a number of examples of large, porcelain painted tin and colorful neon signage extending above street level hearkening one back to an earlier time; perhaps to a time when Route 66 was still the main thoroughfare connecting the country’s east and west.
Another post-modern architectural casualty were the practical, boring brushed aluminum and stainless steel window and door frames. These had all been replaced by wood and masonry, providing each mall visitor with a sense of opulence and adding quaintness the shopping experience.
What had once been a wide, sterile road for car traffic and street parking had also gone through a significant transformation. The black-gray asphalt was gone. The cracked and damage sidewalks were gone. The traffic lights were gone. The curbs were gone. Replacing these remnants of a tired, second rate commercial segment of town all centered around the almighty automobile was a broad walking boulevard of a mosaic of red brick and smooth concrete. Interspersed along the boulevard were raised planters, trees, and a large, trapezoidal reflecting pond, punctuated by a large bronze sculpture of a hawk just taking flight over the large curled horns of a ram resting on a boulder, at its center. The modern pool, although a striking anachronism to the retro feel and look of the rest of the mall, added to something Arlin referred to as the feng shui, binding the mall life around the ambient sound of trickling water and the vision of a slice of nature caught forever in bronze.
At one end of the outdoor mall, a new building had been added, effectively closing off one end of the mall and extending into the cross street. An antique brick façade belied the modern construction that dwelt underneath, provided the same look and feel as the rest of the buildings making up the mall. Behind the façade was a dual-purpose structure for both parking and upscale apartments. The intent was to provide easy access to the downtown mall while contributing some needed diversification to the project. The residential aspect was critical. It not only contributed an incremental and lucrative revenue stream, it provided an opportunity to develop a sense of community around the project, one in which the resident could shop, work, and play without ever getting into the car. The luxury apartment residents also benefited the commercial tenants by creating a local population of relatively affluent workers, clients, and customers.
Appended to the base of the parking structure, facing and extending into the mall, Arlin had created a modern, single-story glass and brick facility to house multiple restaurants or pubs. The intent was to provide a destination far beyond shopping, pulling in people from the entire region to an eclectic night experience. It was a striking deviation from the rest of the architecture on the street.
Arlin pulled a second series of drawings from his stack and jumped into his ideas on the building interiors. All of the old buildings were to get a significant retrofit to their interiors as part of the process. Although the majority of building skeletons were in reasonable shape, their internal organs were a mess and woefully outdated. This had been Lanny’s primary area of concern, financially. Gutting internal walls, remodeling the long neglected upper levels, replacing wiring, plumbing and the heating and ventilation systems was going to cost a fortune. This was even before considering unanticipated cost over-runs that would invariably surface once walls were torn out and environmental or bio hazards like asbestos or mold were found.
For interior renovation, Arlin had taken the novel approach to clear all the street level building interiors down to exposed brick. Conduit, plumbing, and air vents would remain open to view, enhancing the rustic appeal of the buildings and providing a stark contrast to the pristine, sterile, large shopping centers south of town. The benefits to the PW Simmons Corporation were obvious, significantly lowering the cost of the initial renovation while maximizing flexibility for future retrofits as new tenants occupied space. Interior walls had been limited to the rear portion of each building to provide for alley access, restrooms, warehouse, and needed administrative space. Ceilings were a chall
enge for Arlin. Although he had wanted to maintain the rustic nature of an unfinished ceiling, total exposure of the second-floor ceiling joists also meant no sound insulation. As a compromise, he had spec’d in acoustic batting material that would be inserted between floor joists above all vents and lighting.
The look was appealing, different, and timeless. Instead of drywall and paint that could easily get dinged and damaged, Arlin’s interiors were almost indestructible and yet provided an almost organic feel. Even better, the walls would remain fresh through tasteful application of art rather than repainting.
Another of Arlin’s innovations eliminated the need for each building having its own individual stairway access to upper floors. Today the upstairs floors were accessed by dark, steep, stairwells. They were a hazard by modern building codes and, in effect, severely limited the value of all square footage above the street level. These floors had fallen into disrepair and essentially represented wasted or underutilized square footage. Even in the rare cases where the square footage was occupied, the ability to generate any significant income was lost as a result of poor maintenance, foot traffic, and access. Arlin not only wanted to make these floors more integral to the entire downtown experience, he wanted the redevelopment to radically increase the value of the heretofore wasted square footage. Given all of the buildings in the mall had three to four levels, the amount of potentially marketable additional square footage was huge.
In tackling this challenge, Arlin had taken the novel approach of linking the formerly separate and distinct buildings together. He eliminated the individual, narrow, dark stairways that currently originated at narrow, orphaned, locked, street-level doors stuck in between major shops. They were dingy and dangerous looking; certainly, uninviting for the casual passerby. Instead, Arlin had taken the daring approach to carve out a glass walled atrium stealing square footage from the middle of each block’s building structures on each side of the mall. Within each atrium, he had included two elevators and steps leading to the floors above. Access to the square footage on the second through fourth floors had been enabled by extending a continuous passageway along the rear of the buildings, cutting through what were now exterior brick walls and providing an unimpeded access to all the buildings on one side of the street. Although expensive, Arlin’s approach opened the upstairs to a multitude of potential uses: offices, apartments, light warehousing in support of the businesses at street level, or even eclectic shops and art galleries that had no need for the significant floor space provided below them. It certainly opened these floors to a completely new level of rent potential. Keeping the hallway to the rear of the buildings maximized window views to the mall below. Keeping the atrium enclosed provided for year-round access even in the most unfriendly weather.
