Why Intrator is attempting 20-story buildings, and why it may work
JACOB STEIMER | MEMPHIS BUSINESS JOURNAL
The Carlisle family tried for years to develop skyscrapers at the corner of Beale Street and Riverside Drive.
They could never get the numbers to work, which is why the One Beale project is now made up of buildings no taller than nine stories.
With a lack of new tall buildings in Memphis, multiple members of the local commercial real estate community have expressed skepticism of Tom Intrator's plan to develop 20-story buildings in the Pinch District.
On Tuesday, Dec. 3, Intrator discussed the necessity for such density and dismissed the skepticism.
"If somebody wants to be a skeptic, they can," Intrator said. "If you didn't put any money [in the project], if you didn't risk anything, what do I care if you're a skeptic or not?"
The developer — who has primarily been in the suburban apartment business — said density is key for the Pinch District because a significant amount of office space, apartments, and retail need to be built for any of them to be successful. If he just built the 940 apartments that are projected to be part of phase one, he doesn't think they would be leased.
"The premise is, we need to create a market," Intrator said. "You need to create all the elements [of the neighborhood] in order for any of it to get absorbed."
Downtown Memphis Commission (DMC) president Jennifer Oswalt said she likes Intrator's ambition and optimism.
"He doesn’t have the Memphian view of things," Oswalt said. "Local developers have a certain risk tolerance, and his is a little bit different."
Along with this tolerance, Oswalt said Intrator will be able to pull off 20-story buildings because of his big-city connections and the site's location in a Tourism Development Zone (TDZ).
Location in the TDZ will allow Intrator's development team — if it wins City, County, and State approvals — to receive $66 million in state and local sales taxes on everything sold in the development’s hotels, stores, and restaurants. It will also allow the development to raise another $76 million via a 5% additional sales tax at those establishments.
If the project were not located in the TDZ — and thus only eligible for the $122 million, 30-year PILOT (payment-in-lieu-of-taxes) Intrator is also applying for — it likely wouldn't succeed, Oswalt said.
Despite her confidence in Intrator, Oswalt said the development agreement will include terms aimed at ensuring the project doesn’t end up half-completed, which she said is a concern that St. Jude Children's Research Hospital and other stakeholders have raised. For instance, the agreement may require finalized financing and a certain amount of pre-leasing before Intrator can start tearing down buildings.
The TDZ and PILOT incentives were approved by the DMC on Monday, Dec. 2, and City Council on Tuesday, Dec. 3. A County Commission committee sent them to the full commission meeting Dec. 9 with a positive recommendation.
Intrator's Pinch District development, phase one:
Residential: 976,000 gross square feet / 801,000 net square feet, approximately 942 units
Hotel: 290,000 gross square feet / 240,000 net square feet, 406 rooms
Retail: 169,000 gross square feet / 160,000 net square feet
Office: 222,000 gross square feet / 200,000 net square feet (at least 150,000 square feet to be built spec at the start of the phase)
Total: 1.66 million gross square feet / 1.4 million net square feet of space