Sunday Flashback: Sycamore Square, Bricktown and Broadway Failures
Sycamore Square
Starting this weekend every Sunday I’ll feature a story from The Oklahoman archives that casts a new light on downtown’s development and its history. Today is great find – one by the late, great Mary Jo Nelson that explores why Sycamore Square, Bricktown and Broadway were all failed projects (all three are now robust success stories). One more thought before starting – where is Tamarac?
Profit Problems Haunt Projects on Edge of Downtown
By Mary Jo Nelson
Sunday, September 16, 1984
Three major projects intended to bring new life to downtown Oklahoma City are in trouble victims of the economic times, lack of activity after 5 p.m, location and more.
As it was built, Sycamore Square “was a mistake.” Broadway Reunion was an error as well, being a grouping of old buildings that should have been included in the Oklahoma City urban renewal plan.
That frank evaluation comes from Howard Sears, an appraiser and president of Market Data Research Inc. Sears belives Bricktown suffers from having not been completed all at once and from location east of the Santa Fe Railroad tracks that split east from west Oklahoma City. All three suffer immensely from lack of activity after the central business district empties of daytime workers, Sears said.
Moreover, developers Neal Horton and William Peterson of Bricktown, J.D. Lobb of Broadway Reunion and Sycamore Square partnerships were ready to start selling and/or leasing just as the energy boom collapsed, Oklahoma City economist Craig Knutson said.
The collapse brought rent wars on downtown office space, forcing Bricktown and Broadway Reunion to compete with “fire sale” rent offers in the heart of the city, Knutson said.
Bricktown would make it with adequate funding and an infusion of night activity, Sears says.
Sears and Knutson were among market authorities asked to analyze problems that beset the three housing, office and retail projects on the downtown periphery. Foreclosures are pending against Bricktown and the Broadway Reunion developer, while Sycamore Square partners has been sued for alleged non-payment of some borrowed funds. The plaintiff and a Sycamore spokesman said last month the unpaid loans were not related to the condominium construction.
“Sycamore Square was a mistake. It should have been built elevated, as high rise,” Sears said. “The developers were told that. Urban renewal was told that. You don’t build garden apartments on land that expensive, although urban renewal gave the land away. They were told you don’t build there without tying into Metro Conncourse.”
All three projects are hurt by remoteness from the business district, which is tied together by Metro Conncourse, Sears said.
Sycamore Square, part of the downtown redevelopment plan of the Oklahoma City Urban Renewal Authority, would have succeeded as more expensive, high rises with enclosed parking underground, Sears believes.
“Weather and secure access are critical,” he said. “If people want a garden condominium, they go to the suburbs.”
Sears also describes Broadway Reunion as “a mistake. The buildings are old, and should have been included in the downtown renewal plan.”
The sites along Broadway north of NW 7 aren’t historic like Bricktown buildings, nor is there a historic district as in Bricktown.
“Broadway Reunion lacks the charm of Bricktown. Bricktown creates its own environment, its own historic flavor,” he said. “There isn’t enough parking along Broadway, and the street itself is a major thoroughfare.”
Sears believes “Bricktown would have made it with proper funding and if it had all been done at the same time.” He cites restorations in other major cities where projects like it that succeeded. They were done all at once, he said, and included attractions to draw a nighttime crowd.
James Baker, a banking economist and head of James Baker & Co., said projects such as these “require a lot of equity capital because they are high risk.
“I’m not close to any of those projects, but I suspect there wasn’t a lot of equity. So if you are highly leveraged, if you invest a lot of borrowed money, right there, you have one strike against you. The interest expense becomes very burdensome.”
From a banking standpoint, he said, “once a project gets into trouble, it’s damned difficult to get further financing.”
Knutson said the timing was the main factor for the downtown housing.
“Sycamore Square began building around the time of the oil and gas boom, when we had high interest rates and oil and gas prices were on the rise. They (developers) had some verbal commitments from people in the oil and gas industry that they were going to buy,” he said.
“These were to be almost part-time residences for people doing a lot of commuting at the height of the boom. Then the industry fell on hard times, and those verbal commitments turned into empty units.”
The boom collapsed just as sales began. Knutson sees another reason for Sycamore problems. “The prices per square foot were a little high, relative to what you could buy the same unit for in northwest or southwest Oklahoma City.”
Both Sears and Knutson cite the contrast of Tamarac, a successful condominium project at NW 8 and Classen. Sears said underground garages are a factor. Knutson says Tamarac was built for less per square foot than Sycamore, “again a reflection of (Sycamore’s) verbal commitments.”
Knutson said Broadway Reunion and Bricktown were hit by the same combination that hurt Sycamore, and suffer from retail and office overbuilding throughout the city.
“We know that retail typically follows residential development, and we don’t have residential downtown. We’re limited in that what we have is a little too high. We have an 8 to 5 audience and no other attractions going on downtown. We don’t have a captured audience.”
The office portions of Bricktown and Broadway Reunion “are self-explanatory” to Knutson.
“We have a 25 to 30 percent office vacancy downtown and it’s going to be very difficult to attract people to NW 10 and Broadway when the financial center has fire sale rates.”
Like Sycamore, Knutson said the two office/retail developments “came in at a bad time,” with the oil and gas bust alone dropping office occupancy by 16 percent.
“You’ve got rent wars, long term leases for low money and Lobb and Horton have to compete with that.”
Charles Johnson, Liberty National Bank & Trust Co. economist, said the key is Oklahoma had a huge cash flow during the energy boom that disappeared abruptly.
He described Oklahoma as “always extremely capital intensive,” with oil and gas and agriculture as main industries.
“Those consume capital and if we don’t generate enough savings internally to keep them rolling at the high level, they require an intensive infusion.”
Johnson cites as well the aftermath of a land boom, “a conception there is only so much land, and that finite amount has to go up because there is only so much.
“Somewhere along the line,” he said, “there has to be some relationship between what the lands will produce and what they cost.
That is where the adjustment is going on.”
During the boom, oil offices were opening all over town and people moving in. For the past 18 months, oil offices and jobs have disappeared.
That, said Johnson, “means the peripheral locations have an awful time surviving.”
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Comments
I still think the oil bust was as responsible for the failure of Sycamore Square as anything, although I cannot comment on the cost of the land and it’s affect on the prices they had to ask. Perhaps a high rise would have been more cost effective, but they then would have had more units to sell at a time when nothing was selling for close to its cost to build. There is room for all different kinds of development in downtown. Although I don’t think Legacy at Arts Central is terribly attractive, I don’t have a problem with rental units in that area. Nor do I have a problem with garden condominiums. A variety of housing options will give us a more diverse population downtown.
Jill, I’m not sure that Sycamore Square is a failure now. It’s fully occupied, last I heard, and residents are very happy. And it’s no longer separated from the rest of downtown.
Oh, I should have made myself more clear, Steve. Yes, I was referring to its earlier status as a failed project, just after it was built. I agree that it is no longer a failure, and I don’t see the design as a failure, either. Some people want a bit of yard, and that doesn’t mean they can’t also have an opportunity to live downtown, if the developer feels s/he can get a decent return on the cost of the land. I like variety, and I think there should be a variety of options for people, all the way from something as undense (if that’s a word) as Sycamore Square to a mega-high rise.
COMPLETELY off topic, but since comments aren’t possible in your Okc History blog, Steve, I just wanted to say what a neat article you posted on Hells Half Acre: here.
Now back to your regular program …
Thanks Doug. We had some hacking problems over at http://www.okchistory.com, so until we have everything straightened out (we switched the ISP and rebuilt the site), we’ve got to go without comments for now.
I remember reading stories written by Mary Jo Nelson, anxious to know her account of what was happening downtown. Thanks, Steve, for remembering her.
Just because Sycamore Square is “full” doesn’t mean it’s a success. Downtown is highly in demand now, and it is still fairly cheap on the downtown cost scale. It is GATED and very suburban in design. Sorry, but that doesn’t make it successful or URBAN. As a Downtown Worker, Resident and Property Owner, I say it was a failure. I agree that it shoudl have been a high rise or mid rise residential tower, sure it may have taken more years to fill up, and possibly at reduced prices due to the bust (so what), but it would have given the west side/arts district of Downtown some much needed density, and possibly would have encouraged better and more dense developments in the area (possibly a denser use would have been built on the Legacy Stucco apartments.
As a business, it’s a success – and that’s the context of what Mary Jo was look at. I think everyone would agree that no one would want this sort of a design today.
How long until another Regency Tower-style unit is built with condos for sale?
Many people might say, “Well, the current residential lofts aren’t selling so why would anyone build more?”
The reason the current lofts aren’t selling is because they are too expensive. The cheapest (of the new units) for sale are running near $180 a square foot. Is that the best Downtown/Bricktown can do? If it is, then don’t look for a booming residential downtown nor downtown grocery for a real long time.
Thank you, really interesting. And maybe an article that should have been recalled when Urban Renewal was dealing with Legacy at Arts Central-
“If people want a garden condominium, they go to the suburbs.”