Questions swirled after the purchase of the Atomic Liquors building and lot by Downtown Project two weeks ago. Nobody could figure it out.
A commercial real estate guru, sipping coffee at a non-DTP café, just shook his head. He didn’t get it: Why would DTP spend $3.5 million for a building and land that was purchased just a year ago for $500,000?
Not only that, but Tony Hsieh’s development project isn’t even going to operate the tavern. Its leasing it to the current owners, letting them make whatever profit they can from it for the next 10 years.
Meanwhile, the real estate guy says, Downtown isn’t as hot as it was even a year ago. Sure, it’s looking better—the first few blocks of East Fremont Street have cleaned up. Some businesses, like Carson Kitchen, are the places to go right now. Eat restaurant has never slowed down. But bar owners say DTP’s penchant to keep building taverns is eating them alive—too many bars, not enough customers to spread around.
And from the commercial real estate standpoint, there’s not much interest.
“I’m getting no calls,” the man said, noting that just a year ago his phone was ringing off the hook from companies looking for big office space Downtown.
Instead, he figures DTP’s massive buys have essentially kept any new developers from coming Downtown, and will for the forseeable future. You can imagine other property owners down there now, having learned of this over-the-top purchase, just waiting for Hsieh to come buy them out and make them millionaires.
All of which comes to the crux of Downtown’s potential failure, and a point of focus that has heretofore been ignored by Downtown Project: The people are missing.
Two years ago, sitting in Hsieh’s top-floor condo in the Ogden, he looked through plans for a mid-rise apartment building with a couple of designers from New York. One of his more brilliant ideas: put a bar in the elevator, so people would stop, have a pop and get to know other up-down customers.
But it never happened. Instead, DTP moved on acres and acres of property Downtown. Then, as it built restaurants, the Container Park and bars, the supposition was that Zapponians and others would move into the area to enjoy the new amenities and businesses.
Existing housing near Fremont is expensive, however, especially if you aspire to be a skylord, living in one of the four mid-to-high-rise condos towers Downtown. We all know Zapponians, and they aren’t getting rich on the job.
Downtown needs more housing. But how is that going to happen now that DTP has, real estate people say, boosted property values with its profligate spending?
One theory goes like this: Seeing things not going according to plan, Hsieh wants to amass property and sell it off in big chunks. I’ve heard this from several people. But I personally can’t see him doing that. From the start, his heart has been in creating a “community” Downtown, even if Downtown Project expunged “community” from its mission statement.
The second theory, which I think has more traction, is that Downtown Project can’t avoid the housing question any longer and will develop residential property on its own or with partners. Sources say there is talk of such a move on the land near and around the Atomic.
Via text, Hsieh said his real estate people have “been exploring the possibility for a while.” He said he didn’t know the timetable, cost or status of the idea, however.
If that happens, and if the housing is operated fairly, is affordable and is open to non-Hsieh employees, expect Downtown to burst.
Because if it’s done and it works—two big ifs—as with every other successful business move, copycats will follow.
And Hsieh’s dream of a Downtown community, which so many people bought into when he first entered the scene three years ago, could become a reality.