News

Great Expectations

Continued from page 3

Or maybe not. Ironically, the hype surrounding Midtown and light rail inadvertently may serve to protect Joe -- at least for a little while. The land along Main Street may be undesirable for tenants now thanks to construction, but developers say that the anticipation of rail has led many landowners to ratchet up their asking prices. "Everybody thinks that land is worth gold now," says CB Richard Ellis broker Michael Palmer. The land is also divided up into small parcels, with many owners, he says. It's too difficult for developers to put together large enough pieces at low enough prices for the area to be profitable -- with or without rail.

Landowners of prime real estate in Midtown are asking anywhere from $20 to $40 a square foot. With dirt that expensive, developers will have to struggle to turn a profit. They'll need to create high-density, high-rent projects in order to get that much value out of the land. Mixed-use projects -- like the Post properties on West Gray in Midtown -- are the most likely to achieve that kind of value, but Ziegler says it's not easy to convince a lender to fund a large-scale mixed-use development. "You've got a lot of moving parts," he says. "You have to prove your retail rents and your office rents and your apartment rents. You have to show they're going to hit the targets you need them to hit for the property to have a value to support the loan."

Even if land along Main Street weren't astronomically priced, developers are likely to wait until the light rail is completed before they begin trying to develop along the line. "People want to see it, touch it, feel it, see the impact it's going to have," says LeBlanc. His predecessor, Bancroft, is more cynical: "You know what developers are? Sheep." They're waiting for a pioneer to show that a project on the line can be successful. Despite the success of light rail in other cities, including Dallas, there is still some concern over whether the mass transit plan will work here. Continued efforts by antirail groups to bring the under-construction light rail to a vote doubtless don't inspire unflinching confidence in developers. There is also, of course, the worry about the effects of an impending nationwide recession. And some wonder whether the rail line will really be able to change people's habits in this car city.

After light rail, there will be little to no parking on Main Street, meaning that business and development there will depend almost entirely on pedestrian and rail traffic. "Any retail developer would much rather have a clear, unobstructed, multi-lane street in front of them and two driveways into your parking lot," says Sharp. "You know, the standard deal that's worked all across the world."

Despite the questions, few believe that Midtown's Main Street corridor will remain undeveloped forever. "But it may have to wait until some of the land prices come down," says Ziegler. "Or, alternatively, once the rail gets in there and the streets are no longer a mess and people can actually make it to the businesses, you can make the numbers work easier. People will pay higher rents if they're going to actually get a high volume of business."

But it will take time for the market to pull prices back down to a more reasonable level. And it will take time for Metro's light rail to prove itself with ridership numbers and pioneer developments. In the meantime, businesses like Joe's have a chance at keeping their heads above water -- that is, if they can keep their heads above the construction.

Business is better at Joe's Sandwich Shop today, a Friday. The Boy Scouts of America office has put in an order for 30 sandwiches, and for a moment all five little tables in the shop are full. But Joe seems more distracted than usual, rubbing his chin and looking out the barred window. "Sometimes I get depressed," he says. "Don't put that -- people will think I'm crazy. Say that Joe's a happy-go-lucky guy."

Earlier this week, Metro had closed down Webster Street completely. Right in front of his shop. At lunchtime. Without even telling Joe. Today, Metro's community outreach department has called him to apologize, to invite him to a meeting of business owners, and to offer him free space in an advertising coupon booklet. Joe is grateful, but he wishes Metro had taken some of these steps months ago when the construction began -- and maybe waited until after lunch to close down his street.

Besides, there's more bad news. Joe can't open the second shop on Louisiana. It's too expensive, double his current rent. He just can't make the numbers work.

Joe already has had to lay off one of his three employees, and another one will have to go soon. He and his wife sit up nights talking about it. If worse comes to worst, the two of them will run the restaurant alone. At least they'll still have the business.

"They say it's going to get better," Joe says. "I'm already established here. I just have to hustle." He comes upon an idea. "You go see Joe, you get a bag of free chips with any sandwich. Put that in your article."

• 1
• 2
• 3
• 4