Welcome to the April 15 edition of the top-secret, always confidential Monday Business Briefing.
This is your private business intelligence briefing, with Insider Louisville staff and contributors vetting tips collected during the past few days and hours.
A few of which are NOT double-verified as with our daily reporting.
But this is the news about business and trends you’ll be reading about next week or even next month in the conventional media.
Now that everyone is back from Spring Break, the activity is increasing. Alas, not all developments are positive.
• We hate being the bearers of bad news, but the experts are telling us downtown’s office sector is on life support. “I ‘m not even getting calls (about office space),” said one developer. In a full post later this morning, Steve Kaufman will have the actual numbers. They’re not just not good, they may be the worst since 1987. And the vacancies – and the attending decline of central business district street activity – has happened nearly overnight with the decline of Dutch insurer Aegon in Louisville, along with Humana’s shift to the suburbs. So, the evidence is, we’re moving from a downtown that just months ago had unlimited promise to a downtown with unlimited problems. But problems often open the door to positive and lasting change. Obviously, every exit by a huge corporation to the suburbs opens up opportunities for smaller companies to move from isolated suburban office parks to the restaurant-and-entertainment rich central business district. But this goes deeper. We’ve had more than one Class-B building owner tell us they’re thinking about converting to upscale apartments, which are in short supply city-wide. Interestingly, York Towers apartments sold last week. A Nashville company is scouting for a rock music venue downtown. Which – considering there are already multiple concert halls all across downtown – could be a buzz builder. As could buildings that get converted into artists lofts and boutiques and urban distilleries. But the bottom line is, every developer who financed office buildings with expectations of getting $11 per square foot and up is going to have to reassess revenue projections.
• Just as MBB was coming together Sunday afternoon, a sharp-eyed reader sends us this tip about the Bank of Louisville Building from the Jefferson Circuit Court foreclosure auction website.
site: Case No: 12CI403059 D-01
Plaintiff’s Name: PBI BANK, INC.
Defendant’s Name: BANK OF LOUISVILLE, LLC
Propery Address: 500-510 WEST BROADWAY, LOUISVILLE 40202 SALE 85
Attorney’s Name: LEA PAULEY GOFF
Sale Date: 6/18/2013
The complaint is not online, but the amount to be recovered by PBI is about $3.4 million. This is the old Bank of Louisville headquarters, a building that was slated to be refitted for federal offices. Instead, those operations went to two new buildings two blocks west at Seventh and Broadway. More as we see the complaint. But this would be the fourth big building to go into the foreclosure process including the Kentucky Home Life Building, Meidinger Tower and – at least for a while – the former Stewart’s Dry Goods building. As we made calls, sources kept asking us, “Is that the Master’s playing in the background?” No, absolutely not. We were working. But can you believe Bernhard Langer got that close? What’s he? Like 60? Beating 20-year-olds ….
• A positive downtown development – we’re hearing from our hotel sources that the plan for an Embassy Suites hotel in the Stewart’s building at Fourth and Muhammad Ali is back on. Though one snarky source said, “So, when was it ever off?” We have calls into Galt House owner Mary Moseley, who controls the building that’s so pivotal to downtown’s retail resurgence. The sources inside the hotel biz who alerted us said they have mixed feelings. Asked one, will this be a business generator for all the downtown hotels, or will it simply draw off business from established hotels? Hotels that are finally seeing the light at the end of the Great Recession tunnel. We hear that from 21C Museum Hotel on Main Street to the Brown Hotel on Broadway, occupancy rates are up due mostly to a long-dormant transient business – the weekday business travelers who were for so long restricted to conference calls. In 2011, the Stewart’s building owner settled a suit that had put the giant building, which takes up a quarter-block, into foreclosure. BUT, the courts gave the creditor – Stonehenge Community Development XIV LLC , based in Baton Rouge, La. – the right to come back and sue if Eric Batchelor defaults. Who knows on this one.
• Meanwhile, shades of 1985, the far eastern Jefferson County suburbs are buzzing. Amid yesterday’s tweets, texts and calls came this: Don’t be surprised if Whole Foods puts a new store near Costco in Old Brownsboro Crossings. Old Brownsboro Crossings has gone from being a cow field a decade ago to being the hottest real estate in town, with office buildings, restaurants, big box retailers, including a brand new Cabela’s, multiple pieces of the Norton Healthcare hospital system and now another top retailer. The people this really benefits are the developers and real estate agents handling Norton Commons. As we’ve long predicted, this entire area is becoming a mini boom town.
• On a related note, our residential real estate agents are telling us stories of bidding wars breaking out all over town, especially St. Matthews, the Highlands and Crescent Hill. Those sources tell us houses go on the market for $300,000 and sell for $310,000 or $315,000. Part of that could be due to numerous companies bringing people here. Toward that end, we at Insider Louisville decided we’re missing the big story … that Louisville has not just more jobs, but more great jobs than ever before. So we’re creating a regular “great jobs” post to run along with Monday Morning Business Briefing. Let us know if your company has innovative and technically demanding new opportunities ….
• Back downtown, Stites & Harbison is staying at Aegon Center/Mercer Tower. Multiple sources say the large Louisville-based law firm will stay where they are, but give up the 16th floor. Was the whole dance with Nucleus just negotiating with Hines? If it was, it set the city on edge, with Fischer Administration officials wondering how many more jobs could go to the myriad downtown Tax Increment Financing districts, exempt from city employment taxes. More as we get more information.
• The continuing saga of the Marcus Lindsey at Main and Shelby streets may be coming to an end. We hear the famous converted church is most likely to remain an events space under a new management company/caterer. We can tell you that restaurateur/caterer Steve Clements made a run at it, but did not get the contract. The lucky winner was to be notified Friday.
• Our NuLu Business Association correspondent tells us there was a lot of news at last week’s NBA meeting, which we missed. The East Market Streetscape RFQ is to be published this week for the NuLu-Nucleus Connectivity Project. A memo of understanding with the Louisville-Jefferson County Metro Council will be signed at the time of design selection. The Selection Committee for the RFQ has been established: Derrick and Jeff Brown with Public Works, Ethan and Rebecca of Louisville Downtown Development Corp., Bruce Traughber from Nucleus, Maria Koetter, the Mayor’s Green Initiatives director, and a TBA member will be selected from NBA. Gill Holland and Rebecca Matheny with LDDC, will select the selection committee member from the NuLu Business Association. Six weeks will be the turn around so that teams/design can be fully set. Gill Holland has worked with MSD on the streetscape project. MSD equates a $3 million savings on the consent degree for the offset of impervious pavements and bio swells in parking lots.
· The Bridge Area advisory team is working with LDDC to coordinate initial design changes for Gateway Bridge design improvements with Walsh Contracting, the company that’s building the downtown bridge. Those efforts were reported to be going well. Signage for the “NuLu Passage” will be included the bridges project.