Counting the Costs of Cupples 7 Demo or Redevelopment

C7 draft rendering stlcorp2

Cupples 7 is a seven-story, 200,000 sq ft brick building and the last remaining building in the historic Cupples Station district that has not been renovated. That district was constructed by Eames and Young for Samuel Cupples between 1894 and 1917. The buildings are on the National Register of Historic Places. Cupples 7, at 11th and Spruce Street, was condemned by the city in 2008. (summary of the Cupples 7 saga)

Demolition Scenario  
Purchase note from Montgomery Bank $850,000
Demolition cost $660,000
Grade and seed cleared site $250,000
Total $1,760,000

To purchase and demo Cupples 7, then convert the roughly half-acre site into green space will cost an estimated $1.76M. This total does not include the annual cost of maintaining, securing and lighting necessary for a half-acre “mini park.” There are no revenue generating initiatives in this scenario; only expenses. This lot would be added to the numerous empty, non-tax revenue generating lots scattered throughout downtown St. Louis.

Redevelopment Scenario  
Purchase note from Montgomery Bank $850,000
Sell building to developer $850,000
Total (net) $0
Redevelopment $50,000,000
Annual retail sales tax (estimated) $339,640
Annual parking revenue (estimated) $234,000

In the redevelopment scenario, the Treasurer’s Office purchases the building and sells to a developer. The redevelopment of the building provides a great economic opportunity. First is the generation of jobs- a project of this size 200k sf and $50M, is enough to generate 400 temporary (construction related) jobs. That’s easily twice as many workers as it would take to demolish the building. After construction, opportunity arises for new retail/restaurants to open in the popular district. With the right tenant mix, we can estimate an additional $339,640 per year in sales tax revenue being generated by 20k sq ft of retail/restaurant space. The math: 20k sf retail * $200 sales/sf * 8.491% = $339,640.

With a building redeveloped into offices, it provides a new option for the several companies who are currently in the market for new space. C9 reached 99% occupancy by the time it opened for tenants, demand has been proven for such a renovation in this location. For example, if a 400 person firm were to lease office space in Cupples 7, and assume 65% drive their cars to work, the company will lease those spaces from the adjacent garage owned by the treasurer for $234k per year. The math: 260 spaces * $75/month = $234k/year. I’m guessing an additional $200k+ per year will be beneficial to the treasurer’s budget.

So we’re looking at a potential $550k per year in new taxes and fees. The redevelopment scenario presents an economic impact of more than $40M plus an additional 750k per year in new tax revenues and fees, increased construction employment, and permanent employment opportunities. Sounds like a win.

Cupples Station district is steadily becoming a hot cluster for new media, tech and design firms. Whether or not Cupples 7 can immediate attract similar tenants to Cupples 9 (Osborn & Barr, Asynchrony, Mackey Mitchell Architects, and Yurbuds), the stage is set for future success. While Osborn Barr was already located in the district at Cupples 8, the other companies join the ranks of Cannon Design and Rogers Townsend. Creative companies want to be near one another. The ability to brush shoulders and share ideas with other like minded individuals helps to stimulate innovation as well as positively effects quality of work-life issues often cited by firms who relocate from suburban, non-walkable working environments.

These creative firms and other like-minded businesses seem to migrate to “up and coming” areas. In 2001, TOKY led the way to Midtown Alley. Now it’s bustling with more than 20 creative agencies. This is the opportunity for Cupples Station district to continue to growth and attract jobs, adding tax revenue and vibrancy to downtown. This is a prime opportunity for a company to be associated with completing the last piece of the puzzle. Who’s next?