Developers Seek to Catch New Wave of Stadium, Arena Construction
|The $400 million Downtown East development aims to be the “connective tissue” linking the new Minnesota Vikings stadium with downtown Minneaapolis.|
It used to be fairly common for wealthy real estate developers to buy sports teams. These days, owners of sports teams are turning the tables and becoming real estate developers.
Case in point, Tampa Bay Lightning owner Jeff Vinik, who is championing an ambitious plan to redevelop a swath of downtown Tampa’s waterfront district stretching from the city’s convention center to the Amalie Arena to the Florida Aquarium. Vinik has proposed partnering with the city and state to build nearly 3 million square feet of commercial space on the 25 acres between Amalie Arena and the Selmon Expressway he has assembled over the last several years. The development plans, which total $1.07 billion, are being backed by Cascade Investment LLC, an investment vehicle of Microsoft founder Bill Gates.
Across the country, more owners of major sports teams are pushing plans to build mixed-use projects and expanded entertainment venues on property around their venues, banking on an improving tax base and general economy along with sports fans’ demand for newer, ever more luxurious facilities.
Leading the charge is a new generation of NFL stadiums. Only three pro football stadiums were built from 2008 to 2010 — Lucas Oil Stadium in Indianapolis, AT&T Stadium in Dallas and MetLife Stadium in New York — and no projects had been built since 2010 prior to last year’s opening of the $1.3 billion Levi’s Stadium in Santa Clara, CA, the new home of the San Francisco 49ers.
A $1 billion stadium is under construction for the Minnesota Vikings and another five have been proposed, including a $1.4 billion facility for the Buffalo Bills, and new stadiums for the Atlanta Falcons and San Diego Chargers, each with a price tag of $1 billion.
Developers have proposed two projects, each valued at up to $1.2 billion, to lure an NFL team back to Los Angeles. Last week, the city of St. Louis countered with a proposed stadium project to keep the Rams lodged in the Gateway to the West.
The connection between professional sports franchises and real estate development has always been strong, with many team owners also being large players in commercial real estate, including Stephen Ross, who founded the $15 billion Related Companies and owns the NFL’s Miami Dolphins
Bill Witte, president of Related California, said the $6.5 billion City Place megaproject in Santa Clara connected with Levi Stadium “is a compelling and exciting opportunity” for place-making and delivering a world class mixed-use development.
The proximity to the 49ers’ home field provides an opportunity “to create a dynamic city center in a strategic location that will itself be a new destination that better capitalizes on the area’s full potential,” Witte said.
Ryan Cos.’s Downtown East project will serve the Minnesota Vikings stadium by skyway, making it “the most connected stadium in the U.S.,” company officials said. The project totals 1.2 million square feet of office in two 17-story buildings, 28,000 square feet of street level retail, and 400 residential units.
“This project will serve as the connective tissue linking the downtown core to the stadium, the University of Minnesota, the Mills District and the Elliott Park neighborhood,” Ryan said.
Other owners interested in commercial real estate development include Jacksonville Jaguars owner Shadid Khan, a billionaire Pakistani-American businessman who has long expressed interest in becoming master developer of the city-owned Shipyards property on Jacksonville’s downtown riverfront.
Khan, who also owns English Football League team Fulham F.C. and Urbana, IL-based auto parts manufacturer Flex-N-Gate, has been involved in other real estate deals in the city. Stache Investments LLC, an investment fund headed by Khan, provided a $3 million mortgage for the acquisition of the old Barnett Bank Building, which developer Steve Atkins wants to launch a $30 million redevelopment of the property into the Barnett Bank Tower.
Khan has not confirmed publicly whether he is involved in the development.
Braves Project Underscores Opportunities
While stadiums and arenas are clearly a magnet for new development opportunties, existing property owners and tenants often help foot the bill as local governments levy special assessments to pay for bond financing.
For example, Cobb County will shoulder about $300 million of the Atlanta Braves’ new $672 million SunTrust Park project. While the existing tax base and in-place assessments will cover much of the public financing, a proposed new special district could add between 10 and 20 cents per square foot to operating costs for landlords and tenants, according to a Cushman & Wakefield analysis of the project’s economic impact.
A 15,000-square-foot tenant in a newer building would be required to pay an additional $3,150 year under the new assessment, Cushman said.
“Businesses now operating in the area will need to weigh the pros and cons of the new development to determine if remaining in place makes sense, while businesses currently located in other parts of metro Atlanta may decide that the new stadium area is where they need to be.” said Logan Menne, research manager for Cushman in Atlanta, in the report.
The Braves last week released renderings of a $400 million mixed-use development planned for 57 acres next to SunTrust Park. Included are twin office buildings, retail shops, a hotel, entertainment and residential buildings — all to be ready by Opening Day in April 2017.
NBA franchises are also getting a piece of the action. A hotel tower, office, retail and restaurants will highlight $250 million in ancillary development surrounding the new $477 million Sacramento Kings arena, a replacement for the NBA team’s Sleep Train Arena that supporters say will inject life into the long ailing Downtown Plaza area.
Todd Chapman, president of JMA Ventures, the firm developing the area surrounding the arena, said the project “will help usher in an economic renaissance for Sacramento’s downtown core.”
Soccer Becoming an Economic Draw
Professional soccer is coming into its own in the U.S. as both a spectator sport and an economic development tool, with stadium proposals moving forward in Washington, D.C. and Indianapolis.
The D.C. Council last month approved the District’s $150 million contribution toward acquiring land and building infrastructure for a $300 million Major League Soccer stadium for the D.C. United team. The 20,000 – 25,000-seat stadium will be built in the aptly named Buzzard Point in a blighted former industrial area along the Anacostia River. The team will also develop nearby property to support the new facility, with work starting next year and the venue scheduled to open in 2017.
D.C. United Managing General Partner Jason Levien said the new stadium will generate jobs, economic activity and new development already starting to bud along the Anacostia waterfront.
“These stadiums have made a difference in our local communities, and we certainly believe the new D.C. United Stadium will provide an enormous community benefit to the Buzzard Point neighborhood,” added MLS Commissioner Don Garber.
The Indy Eleven, a North American Soccer League franchise, also hopes to develop an $82 million stadium in downtown Indianapolis. The team is asking the state legislature for help in funding the 18,500-seat venue.