The pending election seems to be more and more of an anchor on the prospects for a more robust construction recovery in 2012. Anecdotes from peers and real estate brokers tell of business owners who need more space sitting on their wallets out of concern for how much different the business and tax landscape may appear next year. Most businesses are small around here and the owners get to pull a fair amount of profit out of them. Right now the rhetoric from the administration makes owners worry that this might be the best (last) year they can expect to be taxed at lower capital gains rates for a while.
The word from the right is that Obama has put the economy on the verge of another recession. Not very accurate but definitely not very comforting to business. The word from the administration is that the excess (their words) profits made during the past couple years of recovery need to be redistributed to those without. Again, not accurate and discomforting.
Net result: let’s wait and see who’s standing in November. Not much of a business growth strategy but one that is gaining credence it appears.
In the midst of that uncertainty comes a couple of surprising signals. First, the leaders of the local residential realty firms are all crying about not having enough houses to sell for all the people that want them. That seems to be at odds with the accepted wisdom of an extended housing slump. I also spoke with Colliers International managing director Gregg Broujos about the recent ICSC RECON show in Las Vegas. The big retail show was packed. No official word on numbers yet but the estimates are near the 45,000 people that attended in the mid-200’s hey day. Confident retailers are positive historical indicator of construction.
Finally, Oxford Development announced plans for a new office tower today. The press conference may mostly be intended to drum up interest in the concept but Oxford has not historically been a company that made noise without something to back it up. Rumors abound that USSteel is again interested in downtown as a new HQ location or that one of the oil/gas companies could land as a lead tenant. DL Astorino and Mascaro Construction had been working on some concepts for repurposing the building at 441 Smithfield Street to create the office space but the costs and viability may not be sufficient for Oxford to follow that path, although that scope of work hasn’t been officially ruled out. A new cast of characters would likely be involved in a new mid-rise tower should the developer go that route.
Oxford’s press conference on the 24th revealed Dennis Astorino’s conceptual design and their stated preference to develop new construction at the site rather than renovating the current 441 Smithfield property. One extra advantage of the new construction option is that the new tower would be sited directly opposite the Tower at PNC Plaza on Forbes Ave. that PJ Dick is preparing to start building. The juxtaposition might finally give someone (PNC?) enough motive to buy the Warner Center and do something with it to serve the thousands of workers who will inhabit the new buildings.
Although Oxford’s Steve Guy spoke at the press conference of the direction and schedule being dictated by their success in finding a tenant, Oxford historically hasn’t been a developer that used the press to float speculative ideas. Don’t be surprised if an announcement of a lead tenant follows this summer.