The Elephant In The Downtown

The Real Estate Espresso Podcast

The Elephant In The Downtown

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The Elephant In The Downtown

I’m your host, Victor Menasce. On today’s show, we’re talking about the elephant in the downtown. This is that property that was once a symbol of success that has now become a central embarrassment to the city. It seems almost every city has one, and in some cases, more than one.

In Houston, it’s the one city center building with 600,000 square feet that’s currently 80% vacant. In Portland, Oregon, it’s the 45-story tower affectionately called The Big Pink, which is now 50% vacant and party overrun with homeless people sleeping on vacant floors. That building just sold for $0.20 on the dollar.

In Chicago, it’s the old post office. This colossal art deco building, one of the largest in Chicago, sat vacant and decaying for nearly two decades after the U.S. Postal Service moved out in the mid-1990s. Its sheer size and prominent downtown location made its vacancy a significant issue. The building’s deterioration and vacancy were a concern for the city, and the City of Chicago took proactive steps including threatening and eventually moving towards eminent domain, compelling the then-owners to re-develop it or sell it to someone who would. That pressure was a key factor in the eventual sale. The building was eventually purchased and underwent a massive $800 million re-development into a modern office and amenity space. Major tenants like Uber, Walgreens, and Ferrero Candy have been attracted to it.

Los Angeles has the Ocean Wide Plaza that’s a very current and high-profile example of an elephant in the downtown. It’s a massive unfinished mixed-use development consisting of three towers in Downtown L.A. right across from the Cryptop.com arena, formerly the Staples Center. Construction stalled in 2019 when the Beijing-based developer ran out of funds, leaving the towering structures as an empty shell. This gained international notoriety when it was extensively vandalized with graffiti artists tagging dozens of floors in early 2024.

In Memphis, Tennessee, the concern is the Sterick Building. This striking Gothic Revival tower was once a premier address in downtown Memphis, but it’s been vacant since the 1980s. Its size and distinctive architecture make its emptiness very prominent. While perhaps not universally seen as an embarrassment by all, its decades-long vacancy in a key downtown location has been a challenge for the city’s efforts to revitalize the downtown.

New Orleans has two examples of massive structures that have been left for dead, both successfully redeveloped or completely demolished as new structures developed. The Charity Hospital is an enormous million-square-foot, 20-story Art Deco building that was severely damaged and controversially closed after Hurricane Katrina in 2005.

So, the question for you is, are there opportunities hidden in plain sight right in front of you that you could potentially redevelop if you can put that right deal together? As you think about that, have an awesome rest of your day. Go make some great things happen, and we’ll talk again tomorrow.