CommercialBrokerBlog

COMMERCIAL REAL ESTATEFEBRUARY 22,
By STEPHANIE GLEASON, Wall Street Journal

Commercial real-estate firm Grubb & Ellis Co. filed for Chapter 11 bankruptcy protection, requesting an expedited sale as it faces $30 million in debt that matures on March 1 and insufficient cash to make it through the first quarter.

Grubb & Ellis is requesting that the bankruptcy court approve the sale of its assets on March 23, with a March 21 auction should any other buyer emerge. Grubb & Ellis began marketing itself last year and had solicited 50 companies for offers.

BGC Partners Inc. has agreed to acquire Grubb & Ellis with a $30 million credit bid, or the use of debt as currency, plus $4.8 million in bankruptcy financing. BGC Partners is coming off the October 2011 acquisition of Newmark Knight Frank, another large commercial real-estate firm.

"We agreed to acquire Grubb & Ellis because we believe Newmark Knight Frank's and Grubb & Ellis's broad knowledge and extensive brokerage expertise, combined with BGC's powerful proprietary technology and our strong financial backing, will enable Grubb & Ellis to thrive and grow as part of the BGC family of companies," BGC Partners Chief Executive Howard Lutnick said in a statement.

Santa Ana, Calif.-based Grubb & Ellis blamed the loss of a major facilities account, a merger gone wrong and continued operating losses resulting from the economic crisis and slow recovery for its financial woes in court documents filed Monday with the U.S. Bankruptcy Court in Manhattan.

In December 2007, Grubb & Ellis merged with real-estate investment company NNN Realty Advisors Inc., which specialized in tax-deferred property sales. This sector was particularly hampered by the financial crisis, so "given the focus of NNN's core business, the merger couldn't have come at a worse time," Grubb & Ellis said in court documents. The deal created $10 million in losses during 2011 for Grubb & Ellis and left it with property guarantees and lawsuits.

Grubb & Ellis sold its stake in NNN in August 2011, issuing a $5 million promissory note to NNN as part of the agreement. The note comes due in August 2016 or within 10 days of the company changing hands.

Last month, Grubb & Ellis said it lost its largest property-management contract, which was valued at $40 million in 2011. The termination will become effective at the end of this month and affects 500 employees. As a result of losing this contract, the company said it doesn't have enough cash to make it through the first quarter of 2012 unless the sale is approved.

Grubb & Ellis began marketing itself in March 2011, initially entering an exclusivity agreement with Colony Capital Acquisitions LLC. Colony Capital, joined by C-III Investments, loaned Grubb & Ellis $28 million, which matures on March 1. The loan allowed Grubb & Ellis to defer all interest payments, leaving an excess of $30 million owed.

As Grubb & Ellis's March 1 maturity date looms, the lenders said they wouldn't allow Grubb & Ellis the use of cash collateral unless it took "immediate steps to file to prevent further erosion of their collateral." Grubb ultimately agreed to an offer from BGC Partners to purchase the loan.

The Southern California commercial real-estate and property-management company was recently suspended from the New York Stock Exchange and is awaiting a formal delisting hearing.

Grubb & Ellis, which employs 3,000 people and has offices in 90 U.S. locations, claimed $150 million in assets and $167 million in liabilities and entered bankruptcy protection with 16 affiliates, some of which are no longer operating, according to court documents.

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By ARIAN CAMPO-FLORES

Miami's Design District is about to get a $200 million make-over, thanks to developer Craig Robins. He's also wooing away marquee-name retailers from the swanky, hugely successful Bal Harbour Shops nearby. Video and Reporting by Arian Campo-Flores.

MIAMI—For decades, Bal Harbour Shops has reigned largely unchallenged in this area's luxury retail market. With reported annual sales of $2,327 a square foot last year—more than five times the national average—the mall is one of the most profitable in the country.

But a challenger has arrived on the scene. Developer Craig Robins is creating a new luxury shopping destination in this city's hip and artsy Design District, 10 miles south of Bal Harbour.

Luxury sales have held up better than the rest of the retail sector during the economic downturn, powered in part by demand from emerging markets. In few places is this more evident than here, where the economy has gotten a boost from foreign buyers scooping up posh condos downtown—only minutes away from the Design District—and a growing influx of well-heeled tourists from Brazil and elsewhere.

In the face-off with Bal Harbour, Mr. Robins has spent $90 million over the past year to gain control of about 70% of the Design District. Meanwhile, Bal Harbour, owned by the locally prominent Whitman family, says it posted strong sales increases last year and is itself looking to expand.

One of the pioneers in developing South Beach, Mr. Robins says some 30 luxury brands already have signed, or are close to signing, leases with him, including many that are leaving Bal Harbour. LVMH Moët Hennessy Louis Vuitton SA says it will bring 12 brands, including flagship Louis Vuitton, Christian Dior and Bulgari. Compagnie Financière Richemont SA says it plans to bring 10 brands, including Cartier. Other labels that say they are coming include Hermès, Tom Ford and Ermenegildo Zegna.

The Design District "is the antimall," Mr. Robins says. "It brings back the street and neighborhood as a great retail destination." Already, he has made the district a cultural hot spot that is home to galleries, furniture showrooms and art fairs.

Mr. Robins plans, with a budget of $200 million, call for a three-block-long pedestrian strip anchored on either end by a plaza, as well as a boutique hotel and some residential units. The neighborhood also will feature public art installations and rooftop gardens. It isn't expected to be completed until 2014, but some retailers are moving into temporary spaces this year.

Bal Harbour—an open-air mall with koi ponds and hanging plants—has long had a stranglehold on the market. It achieved that in part by forcing tenants to sign leases barring them from opening another location within 20 miles unless they share a percentage of that store's sales. Though it is a common practice among luxury malls, brands are increasingly rebelling, says Faith Hope Consolo, chairman of the retail group of Prudential Douglas Elliman Real Estate.

Bal Harbour's relatively small size hasn't kept pace with demand for luxury goods in the Miami market. "Miami has been under-retailed compared to the potential for the city," says Emmanuel Perrin, chief executive of Cartier North America Inc.

Despite the departures, Bal Harbour remains an alluring location for retailers. As space has become available in the past year, numerous brands have swooped in, including Balenciaga, Officine Panerai and Stella McCartney, said Matthew Whitman Lazenby, a member of the third generation of the Whitman family, in an email response to questions.

Sales increased 23% last year despite the departures of Louis Vuitton and Cartier, he says. And he says the mall is trying to expand its footprint by acquiring neighboring land.

"They will always be special," Ms. Consolo says. "There are simply other opportunities now in Miami."

Mr. Robins began buying property in the Design District in the 1990s.

As word spread of his plans for a luxury shopping destination, the price he paid for properties skyrocketed, from about $200 a square foot in 2010 to about $1,000 a square foot last year, he says. He financed the acquisitions through cash—including money from the sale of holdings in South Beach—commercial loans and investments from partners such as L Real Estate, a fund in which LVMH is a minority investor.

Mr. Robins says he began wooing luxury retailers in 2008, but repeatedly hit the roadblock of Bal Harbour's radius clause. He finally scored a success in 2010 with Louis Vuitton, which for years had asked Bal Harbour for either more space in the mall or a waiver of the radius clause, says Chief Executive Yves Carcelle. The retailer moved when its lease expired.

Doug Castanedo
Bal Harbour Shops, above, has long had a stranglehold on Miami's luxury-shopping market, but it now is facing a challenge.

"At some point, you say, 'Sorry, guys'…and you leave," Mr. Carcelle says.

Mr. Lazenby said in an email that "although we did propose a number of options in a number of different sizes and locations, none were deemed to be acceptable."

Freed of the radius clause, Louis Vuitton plans to have two stores in the Miami area—one in the Design District and another in a new luxury wing of the Aventura Mall, seven miles north of Bal Harbour. Numerous other luxury brands are eyeing Aventura as well, says Ted Siegal, vice president of leasing for the mall.

Once Louis Vuitton and other LVMH brands like Fendi agreed to open stores in the Design District, others followed suit, including Hermès. "There is a whole new dynamic that's coming into play with the Design District," says Robert Chavez, chief executive of Hermès U.S. "We wanted to be one of the pioneers."

Write to Arian Campo-Flores at arian.campo-flores@wsj.com

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Published: Tuesday, January 31, 2012, 2:07 PM Updated: Tuesday, January 31, 2012, 7:37 PM
By Kathy Jumper, Mobile, AL Press-Register

DAPHNE, Alabama -- Renaissance Center on U.S. 90 first hit the market with commercial lots selling for $7.50 per square foot in early 2007, but prices tumbled, along with the economy, to a low of $1.59 per square foot last summer, according to Realtors.

On Feb. 23, the local owners plan to offer the remaining 13 lots for sale at absolute auction, according to the National Auction Group in Gadsden.

The 17-lot commercial center has the key location just off Interstate 10, adjacent to Sam's Club and Lowe's Home Improvement Warehouse -- and across the interstate from the Eastern Shore Centre on Ala. 181, which now sports a Publix Super Market and has a bowling alley on the way.

And, Renaissance's existing businesses draw plenty of traffic, thanks to Chris Myers Nissan, which paid $6.50 per square foot for 10 acres, and Halls Motorsports, which paid $976,000 or $7.50 per square foot, for 2.99 acres, court records show.

Still, the original developers fell on hard times a couple of years ago, and the lot sales never seemed to revive, according to Realtors and one of the center owners.

"We were passive investors," said Terry Ogletree, a businessman on the Eastern Shore. "None of us are real estate people. All of a sudden we're land owners. We did what it took to complete it and paid off all the debt."

By late last year, they had decided to liquidate. "None of us have the time to devote to it," he said.

The auctioneer advised them to sell the lots without a minimum bid, he said.

Some of the lot buyers have taken a hit and sold at a loss. Perhaps the most notable was the Louisiana investor who paid $1.38 million for a 4-acre lot in 2008 and sold the vacant lot last year for $276,000, according to court records.

Much of the retail center at U.S. 90 and Alabama Highway 181 remains vacant. (Gulf Coast Business/Mike Kittrell)
The annual assessments of $14,000 per acre did not help lot sales, agents said. The development was partly built using improvement bonds in a special-tax district approved by the city of Daphne. The city committed to backing an estimated $8 million bond issue to construct roads, traffic lights and other infrastructure. The bonds are repaid using tax revenues.

The 30-year bond issue has about 27 years remaining, according to Ogletree.

The businesses can reduce their annual assessments depending on the amount of sales tax revenue their business generates.

Retailers and businesses such as car dealerships and hotels can make the sales tax revenues to offset the assessment, according to Ogletree. But, he said, "when the economy died, we were told retail is going to be slow in coming back."

Retailers looking for sites can go where deals are in a slower commercial market, and there are plenty of discounts out there, according to Haran Hunter of REMAX of Orange Beach. He was listing agent for the Renaissance Center when sales started in December 2006, and he moved eight lots in quick order.

At one time, Renaissance was the preferred site for an Academy Sports & Outdoors store and a bowling and entertainment center, according to Hunter. Academy was then wooed away by Jubilee Square on U.S. 90 in Daphne. Ultimately, Jubilee signed a deal with Dick's Sporting Goods, which opened last spring.

"The yearly assessment killed the bowling alley deal," Hunter said. The owners of Gulf Bowl in Foley had 4 acres under contract at Renaissance, but canceled after figuring what they would pay in assessments, he said.

Instead, the Gulf Bowl owners paid $400,000 for 4.23 acres at the Eastern Shore Centre and plan to open 24 bowling lanes, a sports bar, arcade and laser tag in late spring.

"I think the recession has made the site more challenging," said Jeremy Milling of White-Spunner & Associates in Mobile, who sold a Renaissance lot to a used-car dealership for $7.86 per square foot last June. "It would be a great office location, but the office doesn't generate the sales tax to negate the assessment."

The best use for the lots are office, warehouse or possibly an apartment complex, said Tim Herrington of Herrington Realty in Mobile. "You're not going to get a retailer in there," he said. "There's not the visibility for retailers. It's on a highway, but it's a secondary road in comparison to 181. And it's priced a little high."

The owners are motivated to sell the 13 lots, which total about 16.8 acres, according to auctioneers. The auction will be held at La Quinta Inn & Suites at 8946 Sawwood St., at Exit 38 off I-10 in Daphne.

For more information, call 800-650-0882 or 256-547-3434, or go to www.national-auction.com.

© 2012 al.com. All rights reserved.
www.ApartmentsAlabama.com

FEBRUARY 21, 2012, BETHESDA, MD – Beech Street Capital, LLC announced today that it has provided a $3.36 million Freddie Mac CME loan for the acquisition of Blackberry Creek Apartments, a 69-unit townhouse-style multifamily apartment community in Soddy Daisy, Tennessee. The transaction was originated by Chad Thomas Hagwood, executive vice president based out of Beech Street’s Birmingham, Alabama office.
Blackberry Creek Apartments is located in close proximity to the Chattanooga central business district and as of December, is 100% occupied. Constructed in 2006 and 2007, the property consists of 12 two-story apartment buildings on over eight-acres. Amenities include private patios and a leasing center.
The fixed-rate loan has a ten-year term with a 9.5 year yield maintenance payable on a 30-year amortization schedule.

About Beech Street Capital, LLC

Beech Street Capital, LLC is a mortgage banking company engaged in originating, underwriting, closing, and servicing high-quality multifamily mortgage loans for existing and proposed apartment buildings and manufactured home communities throughout the United States. Beech Street is a Fannie Mae DUS® lender, a Freddie Mac Program Plus® Seller Servicer, and an FHA MAP and LEAN lender. Headquartered in Bethesda, Maryland, Beech Street has offices in California, New York, Massachusetts, Illinois, Texas, Georgia, Alabama and Washington. Web site: www.beechstcap.com
####

www.ApartmentsAlabama.com

Published: Friday, February 17, 2012, 2:19 PM
By Roy L. Williams -- The Birmingham News The Birmingham News

BIRMINGHAM, Alabama -- The BJCC entertainment district is drawing interest from potential tenants.

A leasing agent for Bayer Properties, the firm hired to recruit tenants to the entertainment district under construction adjacent to the Birmingham-Jefferson Convention Complex, told BJCC board members during a meeting today that the company has received strong interest from retailers, restaurant and night club operators interested in opening venues in the project.

Sam Heide, Bayer's director of leasing, said the company has seven leasing agents who have been promoting the $20 million 60,000-square-foot entertainment district to potential tenants across the country. They have marketed the district in Dallas and New Orleans, and have a sales trip planned to Nashville next week.

Bayer, best known for developing The Summit retail center on U.S. 280, has also been marketing the project at shopping center trade shows and online through a flashy video they hired Birmingham-based Big Communications to produce for potential tenants.

"We're making a lot of progress," Heide said. "We have talked to several interested prospects with a goal of getting site visits. We hosted a group over the past few days. Several have expressed interest and we're negotiating letters of intent right now."

The entertainment district is being built adjacent to a $50 million Westin Hotel under construction on Richard Arrington Jr. Boulevard across from the BJCC. The 300-room hotel is projected to open in January 2013, with the district making its debut a few months later.

BJCC Executive Director Tad Snider has said the BJCC wants to attract tenants unique to Birmingham that can be a drawing card for downtown.

www.ApartmentsAlabama.com

Commercial Property Directory, Published for 30+ YearsPublished: Thursday, February 16, 2012, 5:30 AM Updated: Thursday, February 16, 2012, 7:02 AM
By Michael Tomberlin -- The Birmingham News The Birmingham News

Birmingham's Litho Publishing Co. will no longer publish the statewide Commercial Property Directory, ending the run for a publication that has been an industry mainstay for more than 30 years.

Jim Andrews, president of Litho, said the publication has suffered from a "double whammy" of an economic slowdown that has been particularly hard on the real estate and publishing industries.

"It got to where half our energy, effort, time and attention was going into publishing it, and we were 35 percent off our sustained peak advertising revenues," Andrews said. "It made more sense to stop publishing now rather than to keep riding it down."

Andrews said the current fall 2011-winter 2012 edition of the publication, which normally publishes twice a year, will be its last.

To continue publishing would have required a major expenditure to upgrade some of the directory's technology without any significant projected return on the investment. Meanwhile, competition from other web-based directory services has had an effect, as has the lack of new development during and following the recession.

Andrews said he has considered selling the publication if another publisher had resources to devote to it. He is also considering breaking up and selling its separate components -- the published directory, websites, and the property, owners, agents and distribution databases.

Litho will now turn its focus and resources on its other, more profitable publications.

Litho prints apartment guides for Tuscaloosa; Auburn-Opelika; Troy, Anniston-Gadsden-Jacksonville; Merdian, Miss.; and West Georgia. It also publishes the Tuscaloosa Bridal Directory twice a year.

Andrews said while ad revenues are down for the Commercial Property Directory, the apartment guide revenues this year are expected to be up 9 percent while the bridal directory is expected to be up as much as 5 percent. Andrews said the company is also expanding its Internet, social media and mobile application tools for those and other products.

Andrews began working with the Commercial Property Directory in 1987 when he went to work for Quest Publications, which was publishing the directory at the time. He became the publication's editor and took it from being a Birmingham-only directory to one that has marketed properties in 22 states and uses more than just print. Andrews formed Litho in 1999 and eventually took over publishing the directory.

"It was clearly a labor of love," he said of the directory. "It's bittersweet to be bringing the publication to an end."

The directory offers detailed listings on office, industrial, retail and vacant land for sale or lease throughout Alabama. Commercial real estate companies have used it to list their properties as well as advertise their companies or new projects. The final issue is more than 200 pages with thousands of listings.

"What was great about the Commercial Property Directory was the advertising vehicle on the print side," said John Hardin, a broker with J.H. Berry & Gilbert Inc., a prominent advertiser in the directory. "There have since been some very good online products that have come on the market with a national reach and bigger budgets, so I can see where the competition would be greater."

Hardin noted that online property directories by Xceligent and CoStar have been very active in adding Birmingham customers.

Andrews said he is exploring other ways of leveraging his 25 years of experience working with the commercial real estate industry and hopes to have news on that front in the weeks ahead.

Ending the publication now will give the company a big boost to its bottom line this year and allow Litho to pursue other growth opportunities.

"We are very excited about the future as we turn this page and embark on new projects, opportunities and ideas," Andrews said.

Join the conversation by clicking to comment or email Tomberlin at mtomberlin@bhamnews.com.

© 2012 al.com. All rights reserved.
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By Ross Larsen and David M. Levitt - Feb 13, 2012 The company that controls the Empire State Building plans to raise as much as $1 billion in an initial public offering, giving investors the opportunity to own a piece of the landmark 102-story Manhattan (COLA) skyscraper.

Empire State Realty Trust Inc. plans to become a real estate investment trust and list shares on the New York Stock Exchange under the ticker symbol “ESB,” the company said in a U.S. Securities and Exchange Commission filing today. A group of closely held companies will be consolidated to form the REIT as part of the IPO, according to a separate filing.

The offering would give investors ownership of one of the world’s most famous buildings and other Midtown properties as New York’s real estate values rebound after the recession. Midtown Manhattan office values have gained 87 percent since a mid-2009 trough, according to Green Street Advisors Inc., a REIT research firm in Newport Beach, California.

“Because it’s got an iconic building as a centerpiece, I expect it will be successful anyway, but you’re going to have more or less a higher percentage” of individual investors, said Lawrence Longua, director of the REIT Center at New York University’s Schack Institute of Real Estate. For institutional investors, the owners “are very recognized names in the industry, so I suspect all in all, it’ll do well,” he said.

Malkin Holdings
Malkin Holdings LLC, supervisor of the company that holds the title to the tower, said in November that it had “embarked on a course of action” that might result in it becoming part of a new REIT. Malkin Holdings supervises property partnerships led by Peter Malkin and his son Anthony Malkin. It owns the 2.9 million-square-foot (269,000-square-meter) Empire State Building in conjunction with the estate of Leona Helmsley.

The REIT would consolidate Manhattan and New York area properties owned by companies including Empire State Building Associates LLC (ZZDIR), 60 East 42nd St. Associates LLC and 250 West 57th St. Associates LLC. Participants can opt to receive cash instead of shares for as much as 15 percent of the value.

Bank of America Merrill Lynch and Goldman Sachs Group Inc. (GS) will advise on the IPO. No price or number of shares was given in the filing.

The companies that would make up Empire State Realty owned 12 buildings totaling about 7.7 million square feet of rentable offices as of Sept. 30, according to the filing. Seven properties, including the Empire State Building, are in Midtown, totaling 5.8 million square feet. The other five are in New York’s Westchester and Connecticut’s Fairfield counties.

Chain of Ownership
The REIT would also hold rights to develop land near the Metro North railroad station in Stamford, Connecticut, plus four standalone retail properties in Manhattan and two in Westport, Connecticut.

For years, the Empire State Building underperformed because of friction and litigation between parties in a complex chain of ownership. The landlord, Donald Trump’s organization for a time, leased the entire building to a venture controlled by Peter Malkin and Lawrence Wien, which then subleased it to a Helmsley partnership.

The Malkins bought out the Trump Organization in 2002 and settled litigation with Leona Helmsley in 2006, giving them management rights to the tower. They began renovations, making larger office suites to attract higher-paying tenants, at a cost that may exceed $500 million by the end of 2013, according to the filing.

Energy Makeover
The improvements included retrofitting the tower to reduce its energy consumption and carbon emissions, in part by replacing all 6,500 windows. The $20 million makeover, on which former President Bill Clinton’s foundation was a partner, won the building the second-highest rating in September from the U.S. Green Building Council.

In 2010 and 2011, Li & Fung Ltd., a Hong Kong-based consumer products marketing company, signed leases for 588,944 square feet in the tower.

The Empire State Building -- the tallest in the world from its completion in 1931 until the World Trade Center’s north tower was finished in 1972 -- accounted for 41 percent of Empire Realty’s revenue in the nine months through September, the company said in the filing. The tower’s observatory, one of New York’s most popular tourist attractions, provided 17 percent of the company’s revenue during that period.

Some proceeds from the public offering will be used as payment to investors who choose to receive cash for their equity in existing Malkin entities, according to the filing. Other proceeds will be used to pay fees in connection with debt, and possibly for future acquisitions.

Competition for Assets
Funds the Malkins raise in the public markets should strengthen their hand in the competition to acquire assets, according to Stuart Saft, chairman of the global real estate practice at law firm Dewey & LeBoeuf LLP in New York.

The offering is “well-timed because the market is looking for investment vehicles,” Saft said in a telephone interview. “It frees up equity in their properties, enables them to invest in other ways, and it gives them interest in the IPO that they can use to trade for additional properties.”

The money also will help defray the renovation costs, he said. The company needs $55 million to $65 million more to complete the work, according to the filing.

“From the Malkins’ point of view, the only risk is all the public exposure they’re going to have to give when they file their quarterly reports,” Saft said. “The problem with going public is the fact that you’re public.”

To contact the reporters on this story: Ross Larsen in London at rlarsen2@bloomberg.net; David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net

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BOSTON—This city is finally preparing to heal a hole in its heart: the site of the former Filene's department store that for more than three years has been a stalled real-estate development in the center of downtown.

A New York developer, Millennium Partners, has agreed to buy a controlling stake in the long-delayed project with new plans for developing a mixed-use tower, the city announced earlier this month. If finalized, the deal would bring to an end a high-profile war waged by Boston Mayor Thomas Menino against Vornado Realty Trust, which has controlled the site for years.

A five-term mayor, Mr. Menino tried for two years to publicly bully Vornado into restarting its planned project, a 39-story hotel-office-apartment tower that was halted in the middle of excavation as the economy soured. He called the developer arrogant, threatened to use eminent domain and revoked its permits to build.

"It's my fiduciary responsibility to make sure a property like that gets redeveloped as quickly as possible," Mr. Menino said in an interview at City Hall. "You're not going to hold up the city of Boston."

CloseMr. Menino said he met recently with officials of Vornado, one of the country's largest owners of office and retail property, and they agreed the company and city would start a new chapter. Vornado had previously said the drop in property values and the economy meant it couldn't restart the project.

Under the Millennium agreement, Vornado would keep a noncontrolling stake in the project, according to the mayor's office.

Millennium declined to go into detail about its plans, saying in an emailed statement that it "will design and construct a building worthy of the site's significance and prominence."

Mr. Menino's aggressive approach comes at a time when similar stalled sites dot cities across the U.S., a vestige of the real-estate boom turned bust.

New Jersey Gov. Chris Christie has pledged tax abatements to developers in an attempt to complete the Revel casino in Atlantic City and a stalled $1.8 billion retail and entertainment center previously named Xanadu in the Meadowlands outside Manhattan.

In New York, an array of government agencies in 2010 pledged hundreds of millions of dollars to aid completion of one to two privately owned office towers at the World Trade Center site, depending on how much space is leased.

Other cities, meanwhile, have taken a more laissez-faire approach such as Chicago, where prominent development sites have remained boarded up, including a giant circular foundation along Lake Shore Drive that was to house what would have been the tallest tower in the U.S. at 2,000 feet.

In Boston, frustrations over the halted Vornado project resonated throughout the city. Ire over the pit has been the subject of numerous editorials in both of Boston's daily papers. The stalled site was the main focus of an environmental design class at Northeastern University last fall, and earlier this year, the City Council president, Stephen Murphy, sought to block an unrelated casino project in which Vornado was an investor until the company made progress downtown.

Such frustrations speak to the nostalgia some Bostonians have for their compact downtown and its rich history. The pit was the site of part of the flagship Filene's Department Store and Filene's Basement, a discount-shopping institution in the center of a once-vibrant shopping district called Downtown Crossing. Both Filene's and Filene's Basement have gone out of business.

The exterior of the oldest portion of Filene's still stands, protected by a historic-preservation designation but awaiting a new use. A Macy's operates across the street in what for decades was Jordan Marsh, Filene's arch rival, while numerous smaller stores draw shoppers past the hole in the ground.

The area declined through the past half-century, and in recent years, the Menino administration made its revitalization a priority. The planned office, condo and retail project was to be the centerpiece. Instead, after Vornado stopped construction in 2008, the pit left more blight.

"It was a key part of the rejuvenation of the area," said Jerold Kayden, an urban planning professor at Harvard University. "To have a hole there is devastating."

To be sure, the start of new construction is by no means a fait accompli. Millennium hasn't yet completed its deal, which involves acquiring the stakes of Vornado's current partners—a fund managed by J.P. Morgan Chase & Co., Mack-Cali Realty Corp. and Boston Global Investors—and putting in an unspecified amount of new money, according to the Boston Redevelopment Authority.

It's a tough time to get construction financing for any project, one of the reasons it has taken so long for Vornado to bring in a new partner.

The redevelopment authority said it believes Millennium will be able to start work within a year, and that it enjoys a good relationship with the company, a major developer in New York and Boston that recently started work on an apartment building nearby.

While the deal is still a work in progress, it appears the mayor's public pressure has sped up the process of luring a new partner.

"It had an impact," said John Hynes III, chief executive of Boston Global investors, a minority investor in the project that is getting bought out. The city, he said, "wanted to create a sense of urgency and impatience to get this fixed, and that message was loud and clear."

Write to Eliot Brown at eliot.brown@wsj.com

www.CommercialPropertyDirectory.com

Published: Monday, February 13, 2012, 6:30 AM
By William Thornton -- The Birmingham News The Birmingham News
COMPARING OLD TO NEW

Cost: Old plan, $200 million. New plan, $130-$140 million.

Retail: Old plan, 206,300 square feet. New plan, 166,000 square feet.

Office and commercial: Old plan, 39,626 square feet. New plan, 25,000 square feet.

Inn: Old plan, 99,105 square feet (85 rooms). New plan, 99,000 square feet (100 rooms).

Parking: Old plan, 1,118 spaces. New plan, 1,200 spaces.

Source: Evson Inc.

Evson Inc. is ready to roll out a third version of its Lane Parke at Mountain Brook Village development -- with smaller retail and office space, a lower cost and a residential component.

Evson Inc., owner of the current Mountain Brook Shopping Center, delivered the plan to the city Friday afternoon for the development's 27 acres. John Evans, principal of Evson, said he hopes the $130 million to $140 million incarnation of the four-year-old project will be accepted by the city and that construction can start this fall.

"We still believe this is a legacy project, and we're very satisfied with this design," Evans said. "We believe the community will embrace it in a much more favorable fashion than the past."

Evson first proposed Lane Parke in 2009 as a replacement for the 63,000-square- foot shopping center, which opened in 1955, and the 276-unit Park Lane Apartments, which date from 1948. It went through two other designs before city officials approved Lane Parke for planned unit development zoning in 2010.

Last year, Evson announced it would scale back the project due to the economy. Because of this, Evson will have to seek city approval again for any new version.

Evson brought in Daniel Corp., based in Birmingham, as the project's developer. Daniel has shepherded much larger projects in the area, such as Greystone, Ross Bridge and Grand River.

Jeffrey Brewer is once again the lead architect on the project with Goodwyn, Mills and Cawood. He said the plan for the retail and commercial office space portions of Lane Parke is 22 percent smaller than the design that won city approval.

"With that reduction, obviously the scale, density and parking plans are all reduced," Brewer said. "We think this will be a very comfortable plan."

The new plan, like the previous one, calls for a buffer block of one-story retail buildings facing Culver Road and a new street to be built -- Jemison Lane. Another street, which designers are calling Main Street, will run lengthwise through the project.

A second block of two-story buildings, with office space over retailers, will include a two-story parking garage which will be inside the development and away from public streets, Brewer said. There will also be street level parking in front of shops, along with three green spaces throughout the development. Facing Lane Park Road will be a 100-room inn across from the Birmingham Botanical Gardens.

"Our objective is to continue to provide the same number of units but with a design that is up to today's standards," Evans said.

Brewer said the buildings will be designed to look like a natural extension of the existing village, with some simulated English Tudor along with other styles which had been included in the previous development design. The aim is for a "pedestrian-friendly" shopping experience, he said.

"Having a first class, upscale, multi-faceted development that remains an integral part of the village is the most important part of the plan," said Doug Neil, vice president of development and marketing with Daniel Corp.

Construction is once again slated to be over several phases. The two-story retail portion will begin construction behind the existing shopping center. Once this phase is completed, the shopping center's tenants will move into the new building. The old shopping center will then be demolished to complete the one-story retail section.

The first version of Lane Parke was pulled in late 2009 while city officials were considering a rezoning request on it. Residents and some retailers said the proposed 27-acre development was too big in scope and would threaten the existing shops of the village.

In 2010 a smaller development plan covering 14 acres, with 206,000 square feet of retail space, 20 townhomes and enclosed parking decks won approval from the City Council by a 4-1 vote. The approval process was sometimes contentious, with hundreds turning out for public hearings and signing petitions. The rezoning became an issue in three City Council races.

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