One Court Square: Use vs Bid

Brent Finnegan -- February 26th, 2010

One Court Square HarrisonburgOne Court Square has been vacant for so long, it’s become a sort of unfunny joke among certain downtowners. The city and HRHA bought the property for $1 million in 2004, spent another $450,000 on renovations, and has been unsuccessfully trying to break even on a sale ever since. Despite rumors of businesses moving in, past bids have been well below what the city has put into it.

But now, despite a depressed commercial real estate market, City Council and HRHA are trying to sell it again. There’s a request for proposal announcement on the city’s website.

The sale is considered a “high priority,” but it’s clear that they’re not going to simply sell the 26,000 square foot property to the highest bidder. The RFP [PDF] comes with quite a few special requirements:

Unlike a traditional sale of City-owned property, this RFP approach will provide the Proposer(s) an opportunity to present plans for the use(s) and redevelopment of the property . . .

Through the [competitive market analysis] the Proposer(s) is/are being asked to demonstrate to the City and HRHA that
the proposed uses of the property can be economically viable
within the Harrisonburg market . . . The proposal will need to identify how the use(s) of the building and renovations/alterations to the building will complement and enhance the existing downtown area.

Those interested in responding to this RFP must have a sound understanding of the goals of this solicitation, the skills and financial resources necessary to satisfactorily complete the work and a demonstrated track record of having successfully completed similar development/redevelopment projects.

The winning proposal must be approved by City Council.

Considering the commercial real estate market is in the tank — and expected to get worse before it gets better — it’s hard to imagine the city would expect new bids to exceed offers that were previously rejected for being too low. In 2008, the city turned down an $801,500 bid on the grounds that it “[did] not cover the city’s more than $1.4 million investment.”

Two years later, this RFP sends the message; “use is more important than sale price.”

Any realtors, economists, or insiders have a different take?

(Thanks, John, for drawing this to our attention)

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23 Responses to “One Court Square: Use vs Bid”

  1. Bill says:

    I sure wish a nice hotel would move in downtown, especially a locally owned nice hotel.

  2. A hotel with something else on the ground floor would be ideal.

    That has to be one of the ugliest buildings in town. Every time I see it, I think, “either the architect thought they were building a jail, or they just ran out of money for windows.” I hope they knock it down and start over.

  3. Jeremy Aldrich says:

    Things that would liven up downtown:
    – Second-run or art house movie theater (Court Square Theater has really dropped the ball on running movies)
    – Internet cafe or community computer center (believe it or not, lots of people don’t have their own computers or Internet access)
    – Conference center
    – Convenience store

    And I love the hotel idea. Back in the day downtown had several hotels.

  4. MF says:

    That building is an eyesore. I don’t understand why the city invested so much money into renovating a building so ugly. A hotel would be great, but who would want a room with no windows in it? I think the only things that would work there is either some big box chain store, or a technology firm that needs low light to work on sensitive equipment.

  5. Agreed, MF. If they want it to look good, they need to demolish the building.

  6. Emmy says:

    I have the best mental image of a bar/restaurant in that building. But, it really should just be torn down.

  7. hburg citizen says:

    I am not sure how I feel about Bid vs. Use idea in selling the building. I am a firm believer in letting the market set a price. Looking back (I know hindsight is 20/20) I wish the city would have just accepted the high bid from before and sold the building. But realizing a loss is difficult. However.

    Torn down…then how much money will the city have in One Court Square? That would certainly be the most expensive lot in town. It is a building that has an important historical significance, housing one the city’s largest department stores. We have torn down enough history already. With all the talent in this town I hope that someone can come up with a design to best utilize the building.

    The remodeling that has already occured I believe is taking care of the environmental issues (ie asbestos) and most of the demolition to the interior. If no bid is acceptable to the city I hope that the windows can be at least fixed.

  8. David Miller says:

    It would make a great venue hall for largish scale concerts.

  9. David Miller says:

    Of course if we would legalize bars it would be a perfect club setup.

  10. Emmy says:

    I agree David. I have the best bar all laid out in my head. It’s just not legal.

  11. Drew Richard says:

    Not sure what the inside/structural guts look like, but it seems a waste to knock it down after all the work they did to it. In my 30 seconds of thinking about this…I would love to see the bottom 2 floors be floor to ceiling glass walls. The bottom floor would be a cool internet cafe with maybe a lounge or something else…maybe an electronics boutique, photography store…something to catch people’s eyes as they walked/drove by. The second floor would be a nice restaurant with a cool view of Court Square. I’m imagining kind of a hotel bar, but maybe a little nicer. Dimly lit at night, quieter music playing, mixed drink specials. I just had friends come into town and we wanted to get drinks and catch-up over drinks, but JB’s was packed, bands at Clem’s and Dave’s meant they were packed or had covers…ended up at Cally’s, which was decent. Then the rest of it would be hotel rooms. I know Rosetta Stone would love to have some rooms close since Urban Exchange is really the closest place to get a room (recently started doing nightly room deals), otherwise it’s out to the other side of town. Not sure how much of all that is viable…but I would love to see it happen. The movie theater thing would be cool too, or concert hall.

  12. Andy says:

    Court Square should be the civic nerve center of downtown Harrisonburg. Before you can decide what should fill One Court Square, you have to ask yourself what kind of community you want in downtown Harrisonburg. With that in mind, I would hope that the next occupants would offer something of cultural significance (something related to the arts, food and drink, music, etc).

  13. Jeff says:

    The business community, taken as a whole, tends to be fairly smart. 1CS remains empty because it’s not a viable location, both in terms of the building and the downtown area in general. Major retail? Not enough traffic and convenient parking. Hotel? Can’t imagine there’s sufficient demand. Arts? Sounds great, but it appears CST already struggles to fill seats. Conference center? Not enough demand, not a good location. (I wouldn’t choose it.) Break it up into office spaces? Surplus of supply already exists; making it a “destination” sufficient to entice tenants to leave existing spaces requires a big investment (and lots of creativity.)

    What would work in the space is a Rosetta Stone-like tenant, a business not reliant on location for customers but simply needing a large, inexpensive space. But those tenants are few and far between… and unlikely to choose a downtown location. (I’m guessing Rosetta Stone would never have moved into the old police station if they weren’t already established across the street.)

    While “use is more important than sale price,” no one will buy unless the price is low enough to offset all the negatives. Few businesses will ignore economic realities in order to help create a more vibrant downtown, however noble that goal may be. Even fewer will want to prove they will “complement and enhance the existing downtown area.” The person spending the money makes the decisions; limit my options and I’ll go elsewhere. Who wouldn’t?

  14. Brandon says:

    Shop a unique boutique. Indulge yourself with a fresh muffin while you sip on your latte. Pick up a souvenir from your visit to the Valley. Visit the candy shoppe with that dollar mom gave you. Trade-In those worn rubber or leathers for a new pair of hard to find shoes. Visit the Clock Shop that has the largest and most unique selection in VA. The Cigar and Magazine Co. Buy your Unity Candle or a special scent for your home at the candle shack. Pick up your new RC plane at the Hobby store. Stop at the Bulk Food Store for those last minute ingredients for dinner. Shop for a custom piece of furniture. Enjoy the view of the city at Harrisonburg’s only 5 star restaurant located on rooftop.
    You get the drift. Endless possibilities. This building can/could house many shoppes for independent store owners. Lets say 1000sqft – 3000sqft shoppes. Wow, we have a downtown mall and has rent affordable for someone with a vision and dream of owning a business. Gee, I bet there are grants and special terms for a project like this. Tearing down 1 Court Square is nothing more than lack of vision.
    If Harrisonburg wants a thriving downtown, then Harrisonburg needs to listen to the right people. Not people that want to eat every fish in the sea.
    Downtown is so focused on Rosetta Stone’s employment to be the driver. Yes, it helps tremendously. But, I caution anyone that has more confidence in Rosetta than their own self. Rosetta is now a public company. Pubic Companies NEVER EVER run efficiently. My point is Rosetta can buy buildings, add on, fix them up, but they can pull the plug whenever they want. There is No Assurance. All of this is said because it’s the small shoppes that are resilient and true to community. If property owners don’t keep rent in check, they holdout, or depend on Rosetta mostly, then they will end up with an empty bag.
    Ok, so now I’m rambling. If anyone is interested in further discussion I’m looking forward to it. If anyone has the money to lend here or has the “connection” for money….lets make 1 Court Square the best 1 Court Square while others said it was worthless.

  15. Jeff says:

    Brandon, I don’t think and did not mean to imply 1CS is worthless; I do think the price will need to be low enough to justify the risk a buyer will take, and “best use” restrictions will only make a sale more difficult. And while you raise interesting possibilities for independent stores, keep in mind there is already empty space downtown, and many of the ideas you mention already exist in town (even downtown) and appear, at least to me, to struggle. I wouldn’t take the challenge on at any price. I’m not smart enough – or creative enough – to see how the investment would ever pay off. But I do hope someone can.

    Oh, hburg citizen: I’m with you on free market. Intervention, price controls, subsidies… I don’t think they ever work, long-term.

  16. Brandon says:

    1. Purchase 1 Court Square (maybe 15 retail store owners)
    2. Build out storefronts on the interior “streets”
    3. Advertise (similar to how Preston Lakes did)
    4. Offer lease terms or even purchase payments that are manageable (base + % of gross)
    5. The surplus of retail space will lower the rents downtown until the empty stores are all filled. Allows retailer to work more so on their terms.

    Build retail destination and many will come.

    Downtown needs a central retail destination hub. An inside mall. Maybe some or all of the downtown retailers could even fill this space. (this would allow current landowners downtown the power to renovate, sell or rebuild their buildings) This will create a collective power of many. Maybe 1QS could be purchased as a collective? Than it’s not just one or a couple of investors taking the risk….what if it where 10-15 or more? Store owners that have much vested in the success of their business as well as the community. I know of many retail shops that lease but there rent payment could have easily payed for a building over 5 years. The obstacle might be they didn’t have the bank, old money or the connections. Cash is king and unfortunately many first generation businesses are at a disadvantage in that department. I would argue even more so in Harrisonburg.

    Yes, there may be similar shops around town. There could also be shops that are scattered around town in locations that they should never have been in the first place. But, it was affordable at the time. Yes, many retailers are struggling. I know my industry was down 30-33% in 2009. I would recommend store owners if they lease to do a base + % of gross type of setup. Many malls are setup that way. Encourages property owners to be more vested in your success. Its kinda like being a waiter or waitress, base salary plus tips for the rest. Hey, it works for restaurants.

    These things might be something the retailers of downtown might want to give thought to. That’s if you can still afford internet and a computer.

  17. hburg citizen says:

    Brandon interesting points but I am not sure I understand what you mean about a central hub for all the retailers that would allow current downtown landowners the power to renovate, sell or rebuild their properties. If you put all the retailers into one “mall” then you have significantly reduced the cash flow of the other building owners and as a result the owners will have less resources to renovate or rebuild their buildings.

    One stumbling block with 10-15 owners is that you then have 10-15 opinions on how to renovate/run/maintain the building. Perhaps a Real Esate Investment Trust (REIT) might work where investors provide the capital and benefit from the returns but have only one entity that manages and makes distributions based upon the number of shares they own. (I know that is an over simplification of a REIT)

    Just curious who’s rent would cover the purchase price of their building in just 5 years? I assume that you are referring to only the purchase price and not the carrying costs (ie upgrades, maintenance, insurance, etc).

  18. Carrie says:

    I would love to see a large ballroom/banquet hall – available for receptions, etc., and allowing outside catering to come in. When I was planning my wedding, if we wanted alcohol, in town, with over 150 people, we were pretty much limited to the country club or JMU…which meant we were also limited to their catering. Really, I imagine my space in the top floor of the Bank of America building (something romantic about that idea – don’t know if it’s feasible), with exposed brick walls and tinned ceiling tiles. It would be wonderful. I’ve got the ideas if anyone wants to help make this dream come true :-)

  19. Renee says:

    I think the main downside to the building’s location is its current parking situation. It’s just far enough from both parking decks to be a little inconvenient for a large group of people, and there’s no real lot nearby that consistently has a lot of empty spaces.

    It just seems that any corporation, indoor mall, restaurant, hotel, etc. would need more access to parking to make something work in that large of a space – unless it’s used for something that takes up a lot of space without having a lot of people in there at once…. like a museum? a sales floor?

    I’m actually surprised JMU isn’t using it for administrative office space or something.

    Maybe each floor can be a giant expensive luxury loft or the whole thing can be a downtown mansion (though they would definitely need to make the exterior prettier for someone wealthy to want to live there).

  20. Emmy says:

    Just saw a watercolor done by local artist Pattye Sites that shows what the building used to look like when it was Joseph Ney’s. It looked really good then. Maybe someone could take it back to something similar.

  21. Jen says:

    I think a concert venue is a great idea. Harrisonburg seriously lacks in that department. Now, if someone would just give me the money….

  22. David Miller says:

    Renee

    The funny thing is that the building is literally one block from the most readily available parking downtown, the Elizabeth deck. Perception is the name of the game with parking though.

  23. Jeremy says:

    Contrary to what some may think, this once was a beautiful building. As a child I used to be mesmerized by their Christmas decorations and window displays. As a kid of the 70s, its wonderful to see some remnant of my childhood still standing. Why its not been utilized properly is a historic shame.

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