Friday, October 22, 2010

Lance Gilliam Said a Bunch of Stuff About the Walmart

I went to an interesting panel discussion on Wednesday over lunch.  The discussion was geared towards discussing the role of Houston's limited public sector planning or regulatory intervention (no zoning), and how effective its been for development and the creation of 'great places' within and around Houston.  The panel include the following three participants:

Bob Eury, President
Central Houston, Inc.

Lance Gilliam, Managing Director
Moody Rambin Retail

Joshua Sanders, Executive Director
Houstonians for Responsible Growth

Anyone thats a fan of the whole Walmart discussion should probably be familiar with Lance Gilliam.  He's heading up the retail leasing for Moody Rambin on the project.    

So obviously, I was really curious what would be said.  I took a bunch of notes on the whole discussion, so here it goes.  And if any one of y'all (Mr. Eury, Mr. Sanders, Mr. Gilliam) don't feel my notes are accurate, you're welcome to contact me, and I'll make updates/corrections.

21 Oct 2010 - Planning Panel Discussion
There was an introduction to all three panel members, and all three had a chance to speak and make an opening statement

Bob Eury(BE) -
-Austin is Weird / Houston is Different
-Houston = Tremendous economic opportunities, and Energy is not the only fuel of these opportunities
-Developers do not have many physical barriers, and have a great freeway system to build in and around
-Houston's present zoning/lack thereof, may be challenged over the next century
-the Market is shifting towards an increase in intrest for more compact developments
-Houston & Dallas Walkscore = 51 // Austin = 49
-It is hard to achieve greatness in development without more regulations
-The struggle will be with how Houston regulates moving forward
-The Post Midtown Development is a positive mixed use vision
-Adding the suburban styled CVS across the street means the vision extension breaks down
-Lack of regulation means that the vision cannot be continued block to block
-Walls in Downtown mean that Houston's Downtown is not pedestrian friendly
-Houston is so big and accessible, that regulations in one area mean that developers just look elsewhere to develop how they want to develop
-An increase in complexity makes Houston greater
-Developers presently feel that they don't have to develop unless the city 'gives' them something
-Vacant buildings detract from the City Plan
-There is  presently not a lot of cooperation with developers to collaborate on projects
-To be great, Houston will need more regulation

Lance Gilliam (LG)-
-Loves Houston, and Lives inside the loop
-He applies the rules that are given for his clients
-Likes more rules
-Houston needs more rules, and the rules need to apply uniformly
-LG's clients tend to exceed the rules set forth by the city
-We are presently in the Best & Worst of times
-Public + private partnerships are important
-We need rules to govern those partnerships
-What standards of rules are given, he is happy to apply
-Houston on the whole needs more rules

Josh Sanders (JS)-
-Houston = Unique development
-There is a difference between Public Planning, and Private Planning
-Houston has increased performance standards
-System in Houston is not perfect
-Feels that there will be new rules, but we must be careful about how the rules are written
-Traditional zoning may not fit with Houston / Rules for Houston will need to be special
-We have a Clean Slate for moving forward
-Houston = Affordability & Opportunity
-Houston's system is already the best model in the country
-Houston's system needs to be perfected

At this point in time, the moderator setup the panel to answer three general questions or discussion points, and discuss their individual perspectives on them. 

DISCUSSION POINT 1 - Do Parties exaggerate the costs involved with changing models or increasing regulations?

JS - 
-Regarding CVS in Midtown-
-CVS bought the land for use now, and as an investment for 10 years from now
-Midtown CVS Model works for now, and can be improved on for later if needed
-Regulation can stifle growth, however
-It depends primarily on public involvement how much is effected

-Houston does exaggerate costs
-CVS is also up the street in Downtown Houston with a different model already (Not suburban drive up)
-There is a market in CVS' location for a drugstore
-Thus, if regulation was in place, you would still have a drugstore there
-If CVS sets the bar as they have, then others only have to match, not exceed
-No bar set, then its easy to build the standard, suburban drive up model, as they have

-Costs are grossly exaggerated
-Retail Development Client Tasks (Including Bentonville) are that a retail store meets the rules, and serves the customers
-In a 'recent case', the retailer wished that there were far more rules in place
-Lighting for this development is going to be better than anything in all of Houston
-No Offsite Signage is fine, and fine personally with LG
-The concern is that without regulation, the same rules don't apply to all developments
-HQ's for a retailer views the rules as a goal
-If the rules are not even, then HQ says that they are at a disadvantage against other developments

-More regulations can equal in increase in rent rates, which can effect a development

-Increase regulation effects on rent = depends on what the regulation is before it affects costs
-Bigger retail companies love rules

DISCUSSION POINT 2 - Ashby, Walmart, HEB Montrose Controversies; are NIMBY issues Unavoidable?

-Community input = Inevitable and Appropriate
-Stronger Rules make getting along with the community much easier
-Walmart is glad to implement suggestions for the WH Development
-If a community can become comfortable, then the development will be ok
-If a development is percieved as intrusive, then it is difficult

-Designs and Developments get better as they are vetted
-How do you vet?
-380 Agreement opens up the developer to vetting
-Without a 380, the developer is only subject to permitting
-Public Works, then, becomes the only oversight
-For Many people, change is not easy
-For the most part, however, change works out fine in the long run
-Will the public sector stop a development?
-'Stopping' a development means that the public dictates how to use the land
-Mayor says that she can't 'stop' Walmart

-The Walmart development is a big challenge to the developer (Ainbinder)
-It is hard for anyone to listen when they're getting yelled at
-They have learned a lot during this process
-Public Input overall is a good thing
-The Walmart process has been painful, but a good thing for the development

-380 = Public Money
-If there's Public Money, then expect a Public outcry
-Houston can do better to manage Public Policies on Developments
-Public involvement means an increase in cost
-Negotiations cost money / Can be problematic
-There are cases of Developers paying off Zoning boards frequently
-Public Sector involvement and performance standards can be improved.

DISCUSSION POINT 3 - Can Houston achieve Great Walkable places without an increase in regulation?

-Can't do it without increase regulations
-Presently, In order to do a big walkable, mixed use development, then a developer must essentially own everything
-Overlaying regulations on established/dynamic areas is difficult to implement
-Presently, good developments happen in pockets, but don't connect presently

-Agrees with BE

-It is a 'Quality of Place' issue
-There are certain factors in changing growth that developers don't have control over
-The City of Houston currently has no responsibility for the pedestrian realm (sidewalks, etc)
-There are opportunities for localized regulations- TIRZ/MUD/Management Districts - effective at localizing government
-Local level Planning exists in districts

At this point, the discussion opened up to some Q & A from the audience.  I've tried to summarize the questions as best as possible. 

Q - Walkable Places; Rice Village, 19th Street (Heights).  Is there any strategic considerations, placemaking considerations, or process' in place?  Is there anything coming? 

-'Urban Corridors' in Houston = Small improvement
-Work on the Houston Parking ordinance will do a great deal to improve
-Relaxing the parking ordinance will increase options for Urban Developments
-The present regulations (parking) are outdated

-CoH is very late on fixing the parking ordinance
-Public Policy needs to lead parking ordinance changes
-Streetscape - There is a presently a model, but outside of model(New designs), there is no ordinance
-CoH needs funding for streets & Sidewalks now (Prop 1 helps)

-Parking directly effects walkability
-Incentives should be in place (hopefully) to encourage such developments with increased walkability
-LG Hopes that it happens soon
-Simples, most tangible thing to help developments become more walkable are potential changes in the parking ordinance

Q - Mixed Use; CVS Midtown, Walmart (West End/Heights) - Should the City incentivize Multi Use Mixed developments? 

-This is a 'painful' conversation
-Washington Heights (Walmart) was intended to be a mixed use development
-It started out as a different development than what its turned into
-'Mixed Use' in Houston is presently very difficult due to the market
-Presently, around 1.3mil sq. ft of space on hold for mixed use
-Developers own the land, have plans, but the projects are on hold
-Generalized estimates; Rent = 10% of sales / for 1.3 Mil sq. ft, an increase of $650Mil in new revenue in for the project (Sales generated) is needed to support such developments
-Thats difficult to achieve
-LG Wishes that the land would support mixed development
-Decision on Walmart = Market dictated entirely
-Design = Decision for today's needs
-Parking Garage for Walmart = Money/Expense about even as a flat parking lot on the Wash. Heights project
-Hopefully, Houston will change to demanding more of an urban/walkable model, but the market is not there yet.

Q - What is the panel's perspective on efforts to change the city's infrastructure?

JS - 
-Developments need Traffic Impact Analysis'
-The City can also conduct TIA
-How/Who pays for mitigating needs to be regulated
-Presently, Costs increase to the private develop, to the benefit of the public

-Pain/Memory from Houston Congestion in the 80's = Still prevalent
-Houston = hysteria from moving service levels on roads; Example B to E, etc.
-Congestion = Increase of flexibility and creativity on all parties
-Little bit more congestion may not be a bad thing regarding how developments are designed

Q - Do Retailers Like Restrictions?  Should it be that Developers and Retailers own the land, so they can do what they will? 

-Developers do a ton of market research before deciding on projects
-Developers do take into consideration what the community wants

-Houston likes to drive
-When Perceptions change on driving in Houston, then design will change
-As long as rules apply evenly, then ok

So that was about it.  My personal conclusions were, that it was an interesting discussion for someone like me who's affected by such a development.  Having never personally met Mr. Gilliam, I can't say I'm surprised by some of his comments.  The reality of financials of such a business can be simplified; when you have more pad space, more opportunities, and positive buzz, you can make more money - thats what a potentially high quality, mixed use development has the potential to provide.  1 story, flat Suburban pad site design ... well, there's not much to get excited about there, and I have to believe that it will translate, in some form or fashion, to lost revenues in the leasing area. 



  1. Nick, save and except for a few tweaks you've quoted me correctly; thank you. That being said, I am not sure I understand or agree with the conclusion you reached or its context. I'd be pleased to visit further if you'd like. To faciliate that conversation, you're welcome to e-mail me. Lance

  2. LG - I do strive for accuracy in such settings, so appreciate the compliment.

    As a quick clarification on my own conclusion; What's been told to the public is that there will be unique, locally owned stores and restaurants, etc. Unique, locally owned, 'cool' is typically not what comes with a Walmart in a suburban style strip center. That's a typical opinion that I've heard.

    If it were mixed use, then ok, I could buy it. Granted, I'm just a guy that is not in the retail leasing or real estate industry, so perhaps there is some inside ball that I'm not aware of already. But frankly speaking, I'm also the target market.

    Appreciate the offer to discuss further, and will be happy to at your earliest. You'll see an email from me shortly.

  3. The thing that resonates with me regarding this meeting overview is the emphasis on the idea that "rules and regulations" will lead to a better product/development. How about good old fashioned professional standards and quality control? You know, the kind that result in a renowned project, that elevate an ordinary project to the extraordinary, that creates a notable, valuable amenity to a neighborhood, a destination? It's not a new design/development concept; it's what separates the great from the simply greedy.

    Nothing is stopping Ainbinder and Moody Rambin from producing a project that exceeds the cheapest and lowest use other than their own will do so. Rules and regulations are great when it relates to development. We wouldn't be in this atrocious mess if we had zoning or other limits on land use within urban neighborhoods. At this point in time, we don't have those protections.

    That, however, does not release Ainbinder and Moody Rambin from the responsibility to produce a project that contributes positively to the neighborhood AND their legacy. It's not hard to do, it just requires genuine respect for the community in which they build. Their reputation, and our quality of life, is as stake.

    Lance Gilliam, Michael Ainbinder and Bart Duckworth should remember that thousands of us are watching their every move. We're contrasting their efforts with that of the Montrose HEB where award-winning Texas architects Lake Flato produced multiple design options for community input. That's how it's done. Now do it.