MAKING THE NUMBERS WORK Renovating old buildings is a costly undertaking. Aside from acquiring the real estate, developers must bring the structure up to modern building codes and safety standards. Commercial real estate sources say converting the vacant Lamar Building and the gutted Marion Building into residential space would require the installation of $1 million worth of fire escapes and sprinkler systems alone. That cost exceeds the market value of either building – the Lamar was purchased out of a bank foreclosure by a South Carolina investor in 2016 for $820,000; the Marion was acquired in 2010 for $200,000 by a limited liability company headed by Augusta businessmen Clay Boardman and Barry Storey. Even with tax breaks such as Georgia’s 25% historic tax credit program and the 20% federal program, which was weakened by the 2017 Tax Cuts and Jobs Act legislation, Augusta’s historically low rental rates makes banks skittish of financing large rehabilitation projects. “As rents increase, there will be more investment, more vitality and more variety downtown,” Boardman said. With the exception of a few smaller loft apartment projects by developers such as Bryan Haltermann of Haltermann Partners and Mark Donahue of Peach Contractors, most new redevelopment of downtown buildings has been by “enduser” tenants such as Loop Recruiting and software developer TaxSlayer, the latter of which turned the former YMCA building into its headquarters and “Innovation & Technology Campus” earlier this year at a cost of $10 million. Loop Recruiting and Milestone Construction has put more than $1 million into its building renovation. Wall said the cost would have been higher had the building’s previous owner not already Downtown Augusta’s two largest vacant high-rise buildings, the Lamar Building (foreground) and the Marion Building. [FILE/THE AUGUSTA CHRONICLE] performed substantial demolition work and his development partner not been a general contractor. Although Wall believes property owners may be overspeculating the demand from tech- and cyber-related industries spurred by the state’s $100 million Georgia Cyber Center complex along the riverfront, he said there are still plenty of opportunities for smaller companies such as his to plant a flag downtown. “In Augusta, you can still afford to own here, whereas most places you can’t,” he said. On large-scale developments, such as the $94 million Riverfront at the Depot mixed-use project, public-private partnerships are needed to make the risk-reward ratio work through incentives. In the case of the Depot project, the city is issuing a $14 million bond for a parking deck, some of which will be dedicated to the nearby Unisys office per a previous commitment by industrial recruiters to provide its employees 500 parking spaces. A public-private partnership would also likely be required for the development of vacant land at the north end of the Augusta Common, which would link downtown’s central park to the riverfront. The majority owner of the vacant space, Augusta-based Morris Communications, envisions a riverfront development featuring a variety of mixed-use buildings that could house restaurants, retail and up to 400 apartment units. The proposal also calls for a 1-acre tract across the street from the city convention center, once slated for a third Marriott-branded hotel, would become a 90-unit apartment building. Bob Kuhar, Morris Communications’ vice president of properties and facilities, said the project would require some level of city participation, given the amount of public infrastructure needed to support the public greenspace the company would deed to the city. Informal meetings with city officials have so far yielded no commitments. As for turning existing properties into productive use, McMahon said he has seen previously stubborn property owners become more willing to engage in realistic negotiations once they see the rest of the community begin to pass them by. “Nothing succeeds like success,” he said. “As redevelopment and revitalization get rolling, people realize they don’t want to get left behind.” However, McMahon acknowledges that some property owners will remain intractable no matter how much a downtown grows. “There are some people you can’t work with, and just don’t care,” he said. “Sometimes, you just have to wait until the old timers die or move.” 28 | <strong>1736</strong>magazine.com 0818_T_10_AM____.indd 28 7/30/<strong>2019</strong> 12:32:29 PM
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