Just like Ariel in “The Little Mermaid,” developers want to be where the people are.
“Where are activity centers? Where are people? Where are people taking selfies?” said Kelli Lawrence, principal partner at CityScape Residential, an Indianapolis-based multifamily residential developer with three properties in Louisville.
Those are the places worth developing, according to panel discussion at a Real Estate Venture Exchange luncheon Wednesday.
Louisville is experiencing a period of growth. According to the economic organization Louisville Downtown Partnership, 43 projects are announced or under construction right now in downtown Louisville, representing more than $1.2 billion in investment in the Central Business District. In the Louisville-Jefferson County Metro as a whole, companies are investing more than $4 billion in development.
Projects include five new attractions, four of which are bourbon related, and eight new hotels, or 1,526 new rooms. The development will add an estimated 3,000 jobs downtown by 2018, LDP reported.
“Since 2000, the CBD is tremendously better,” said Louisville developer Steve Poe, founder of Poe Companies. And once the Omni Louisville opens, “the (Louisville Convention and Visitors Bureau) will have a much better city to sell.”
The Omni Louisville will offer an upscale place for visitors to stay. The 30-story hotel and residences will have 612 hotel rooms, considerably more than other high-end accommodations, such as the historic Brown Hotel, which has under 300 rooms, and the boutique 21c Museum Hotel, which has 91 rooms.
With so many hotel projects and apartment projects underway or planned, people are questioning whether the market will rapidly become oversaturated.
However, in a speech following the panel discussion, Andrew Casperson, vice president of operations for Omni Hotel & Residences, said the need for more hotels actually has risen in cities where Omni moves. In Nashville, for example, the hotel room night demand rose by 700 rooms after the company opened a 800-room hotel there.
Lawrence illustrated the need for more multifamily housing saying Cityscape Residential hasn’t advertised its 300-unit apartment building Axis on Lexington in the Irish Hill neighborhood, but it already has a 120-person wait list.
“We are really still in catch-up mode after years of undersupply,” Lawrence said.
With land costs and hard construction costs rising though, “we are very cautious about urban projects that require prices people may not pay,” Lawrence said.
A project that would work in Nashville or Austin may not work in Louisville, where cost of living is lower and hotel rooms fetch lower prices.
Developers are still seeing high demand for apartments in “choice neighborhoods,” Poe said. But the limit on the demand and development will depend partly on whether Louisville has enough high-paying jobs to justify higher priced project that require higher rental rates.
“It all comes back to quality job growth,” said Poe, adding that attracting executives and high-paying jobs to Louisville is the state and local government’s job.
The growth and overall nationwide economic improvement has brought Evansville, Ind.-based hotel developer Dunn Hospitality Group back to Louisville. The company sold a hotel it owned in Louisville before the recession and was out of the market until recently when it opened the Holiday Inn Express at the corner Market and Eighth streets.
Jacob Pendleton, Dunn’s vice president of development, said it is actively looking downtown for a site for a new project.
“There is still plenty of room for that growth,” he said.
While the panel discussion mostly revolved around downtown Louisville and nearby neighborhoods to the east and south, panelists also talked what would take to expand some of the growth the city is seeing into lower-income neighborhoods and areas with a dearth of big-time development, such as neighborhoods in West Louisville.
Downtown didn’t change overnight. It took a commitment from the city to revitalize what is now Museum Row along West Main Street, Poe said. “It’s going to take a real focus and a strong public/private partnership” to improve downtrodden neighborhoods and streets.
The city needs to make sure the updated infrastructure — roads, water lines, electric wiring — are in place before trying to bring in private investment and development, Lawrence said. The neighborhoods also need an identity.
“What’s their thing?” she said. “I think it’s going to take a really big idea to be transformative.”