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REVIEW SUMMARY
Issue. Redeveloping old Amway Arena
Industry. Real estate, digital media
Key. Orlando will create a high-tech neighborhood on the site of the Orlando Magic's old home.
Orlando native Craig Ustler knows his legacy will rest on the success of his next project.
Ustler is leading a team that will build Creative Village, a $1 billion redevelopment project to turn an old basketball arena into a high-tech neighborhood of businesses and universities that could establish Orlando as a leading city in the digital media industry.
Ustler has built a reputation of building high-quality developments in and around downtown Orlando that reflect his desire to create urban neighborhoods where people live, work and play. Over the last decade, Ustler Development Inc. has built $150 million of projects in downtown Orlando and its surrounding neighborhoods.
Creative Village would be his largest development, and he admits the prospect is daunting.
“Anyone in the current market would intimidated by the time and size of this project,” says Uslter.
Still, he has no plans to back away.
The Plan
In 2006, Orlando Mayor Buddy Dyer appointed a committee of local leaders to come up with ideas on how to redevelop the area around the Amway Arena just west of Interstate 4. The Orlando Magic were finalizing plans to build a new basketball arena, leaving Orlando officials with the challenge of what to do with an empty, 22-year-old sports center and a massive surface parking lot in an economically depressed area next to downtown. The site also includes the Bob Carr Performing Arts Centre, Nap Ford Community School, Downtown Recreation Complex and the Orlando Tennis Centre.
The committee proposed turning the area into a dense mixed-use neighborhood with a focus on digital media and high-tech employers. The idea was to build on the presence of the University of Central Florida's Center for Emerging Media, which is located on the south side of the proposed redevelopment, as well as Orlando's growing digital media business sector.
The city issued a request for qualifications from private developers on how best to redevelop the 68 acres of city-owned land, which became known as Creative Village. In May 2010, the Orlando City Council selected Ustler's Creative Village Development LLC over two other development teams, in large part because of Ustler's reputation.
Creative Village Development is a partnership between Ustler Development Inc. and Banc of America Community Development Corp., a Bank of America subsidiary whose mission is to develop mixed-income rental housing.
Creative Village Development's plan calls for building 1 million square feet of office space, 1,500 apartments that will be a mix of affordable housing units and market-rate units, 500,000 square feet of education space and 200,000 square feet of retail.
Under the proposal, the performing arts center would remain in operation until the city builds a new one. The remaining city properties would be renovated.
Build-out of the entire project will take place in phases over 15 years. Including infrastructure improvements, total cost for the project could reach $1.1 billion. During the build-out, the city retains ownership of the land. The development group would purchase the land from the city as each phase progresses. The property sales are expected to generate $120 million.
Once Creative Village is fully built-out, city officials project the site will produce $12 million to $16 million annually in tax revenues.
A city within a city
This is not the first time Orlando has focused on creating a mini-city targeted at a specific industry. Nearly a decade ago, Orlando officials and the private equity company Tavistock Group began laying plans to create a “medical city” at Lake Nona in Southeast Orlando.
A combination of government officials, private industries leaders and incentives have so far been successfully in recruiting an impressive list of medical-related institutions to the Lake Nona area, including the Sanford-Burnham Medical Research Institute, University of Central Florida College of Medicine, Veterans Administration Hospital, Nemours Children's Hospital and research space for the University of Florida and M.D. Anderson Cancer Center Orlando.
Ustler says the Creative Village wants to use the same concept in an urban environment.
“What medical city does — similar to a place like Silicon Valley — is create a critical mass of companies, educational institutions and residents who have multiple opportunities to interact,” says Ustler.
Ustler says Creative Village needs to create an environment that fosters innovation.
Innovation happens not just at the office, Ustler explains, but also as people interact socially. Instead of business-to-business relationships, Ustler refers to it as a “beer-to-beer” interaction.
“It's not so much the IQ of the city, but how you arrange the IQ,” he says. “Orlando doesn't need to recruit a 1,000 new digital media companies to make Creative Village successful, we just need to arrange them better.”
Orlando already has more than 1,200 digital media companies employing some 30,000 people. Combined, those companies have $9 billion in total revenues.
The companies represent a diverse spectrum of digital media specialties ranging from Electronic Arts Tiburon — makers of the popular “Madden NFL” video football game — to L-1 Link Simulation & Training, a leading provider of military simulation systems.
While some Orlando companies will relocate to Creative Village, there will be a need to recruit new entities.
“Honestly, we don't have our arms around the best way to recruit new companies,” Ustler says.
It's not as simple as hiring a real estate agent to sell or lease space, he explains. Part of Creative Village's appeal is the ability to collaborate with other companies, so some thought has to be given to which companies best fit in the project.
Most likely a group like the Metro Orlando Economic Development Commission would help facilitate identifying and recruiting new companies.
“The good thing is we don't have to know right now how to do it, but it is something we're planning for,” says Ustler.
Shift in attitude
Already Ustler is facing challenges. As the city was finalizing the request for qualifications, federal dollars, particularly transportation grants, were expected to play an important role in making the project feasible. A multi-use station serving commuter rail, high-speed rail and local bus service is planned for the east-side of Creative Village.
Florida Gov. Rick Scott nixed the proposed high-speed rail line along with a billion dollars in infrastructure funding from the federal government.
“The business model was to use the federal stimulus to inject the project with value,” Uslter says. “Clearly there has been a shift in attitude.”
That doesn't mean Creative Village is unfeasible. Ustler's development team, on behalf of the city, has applied for and received $10 million in Transportation Investment Generating Economic Recovery (TIGER) grants, and expects to receive another $5 million. That money will go for road improvement projects around the site like re-aligning Livingston Street and extending Terry Avenue north.
“It's still a workable project,” says Ustler, so long as Scott does not eliminate SunRail commuter train system, which is schedule to begin partial operation in 2013.
“If SunRail doesn't happen, we have to redo our plan because the densities are not appropriate,” Ustler says. “The way it's designed, we rely on mass transit because there is not enough parking for the densities we've planned for.”
Ready to move
The most visible sign that phase one of Creative Village is under way will occur in the coming months when demolition crews begin tearing down the old Amway Arena.
If market conditions are right, Ustler says construction will begin in 2013 with 100,000 square feet of office and education space and 200 apartments. Valencia State College and UCF will take about 80,000 square feet of the new space, and Ustler says he has the first tenant lined up, which he declined to name.
“It's not EA Sports and it's not Full Sail (Academy),” Ustler chuckles, referring to two popular rumors about possible tenants.
Once construction begins, Creative Village would add a boost to Orlando's improving economy. According to a report by Fishkind & Associates, Creative Village would create 6,500 construction jobs during the 15-year build-out. In addition, the project would add 8,200 jobs to the Central Florida Economy.
Developer's dream
To succeed Ustler will need all the pieces to come together, from a better real estate market to cooperation from government officials and corporate leaders.
In deciding to pursue Creative Village, Ustler says the tipping point was the chance to develop a large tract of land near downtown.
“Developers typically build parcel by parcel, and maybe they're lucky to put together a few parcels for a cohesive project,” Ustler says. “We've spent a $1 million in pursuit of capital to get to this stage. Given all the challenges we face today, would I still be willing to spend that money to tie up 68 acres in downtown for the next 15 years? Absolutely.
“It's every developer's dream.”
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