Vermont Business Magazine As part of its $249 million makeover of Burlington’s Church Street mall, called the Burlington Town Center (BTC), mall owner Devonwood Investors, LLC today announced that it has entered into a preliminary agreement with The University of Vermont Medical Center to lease non-clinical office space for UVM Medical Center at the mall site in downtown Burlington. The expected occupancy is 2019. The lease would allow the UVM Medical Center to utilize the soon-to-be redeveloped site of the BTC to place downtown 350-400 administrative jobs currently located at sites used by UVM Medical Center in Burlington and outside of the city as leases expire.
UVM Medical Center selected the BTC site to house these services after a competitive bid process. The preliminary agreement now requires the parties to negotiate a full lease in the coming months and it will move forward only if the BTC redevelopment meets a number of project milestones, including City Council approval of a predevelopment agreement for the BTC site, Development Review Board approval, and other permitting requirements.
“We are happy to keep our close connection to Burlington and to strengthen its downtown with our highly skilled workforce,” said Dr John Brumsted, Chief Executive Officer of UVM Medical Center. “We expect the BTC site will provide cost-effective and efficient space for us in a newly-vibrant downtown location. We are very pleased to be right here in Burlington.”
The parties’ agreement contemplates an initial 10-year lease of new office space for UVM Medical Center staff, and includes options for renewal and for UVM Medical Center to purchase the space in the future. If approvals are obtained and the project moves forward as planned, UVM Medical Center will move into its new downtown space in January 2019, as required due to its expiring leases.
Don Sinex, a principal at Devonwood, hailed BTC’s selection by UVM Medical Center and expressed confidence his project will meet its needs.
“Redeveloping the BTC site so that it can serve the City’s needs for decades to come is very important,” said Sinex. “UVM Medical Center’s decision to locate its services in our new site and grow jobs for the City represents an important milestone for this project. The hospital is a critical community partner, and I am so pleased that it will serve as an anchor for this project.”
Mall Redevelopment Economic Impact
Sinex also announced today the completion of an Economic Impact Study by UVM Business School Professor of Real Estate and Finance Kevin Chiang, confirming the significant economic benefits of redeveloping the BTC site. The study estimates that the project will generate 941 construction jobs and over 1,200 direct and indirect permanent new jobs from its new retail, services, and commercial space.
The study also details the significantly enhanced city and state tax receipts that the new activity created by the project will generate. The study projects an additional $46 million paid due to city taxes and $186 million paid due to state taxes from that activity over a 30-year period, even without calculating any additional benefits from the increased housing the project will create or from any follow-on investments.
For purposes of this analysis, the construction phase is assumed to begin in 2017 and end in 2019.
Calendar year 2020 is expected to be the first full-operational year once construction concludes. Based on the construction industry output multiplier published by the BEA, Sinex estimates that the construction will create an additional $165.61 million sales for the Chittenden County. That is, the total sales due to the construction is expected to be $414.61 million for the regional economy.
Sales revenues that are expected for calendar year 2020.
For the calendar year of 2020, the first year’s full operation at BTC is expected to yield additional sales in the amount of $147.7 million. Based on the output multipliers published by the BEA and an estimated retail share of 0.45, Sinex estimates that these increased commerce activities will generate an additional $46.39 million sales for the other stakeholders in the regional economy.
In total, the redeveloped BTC is expected to introduce incremental sales for the regional economy in the amount of $194.09 million per year. After the construction is completed, the operations in 2020 are expected to directly generate $20.84 million wage gain. Based on BEA earnings multipliers, an additional $11.4 million wage gain will be created in 2020 because of indirect effects and induced effects. In total, the total wage gain in 2020 amounts to $32.24 million, and the increase in earnings is expected to recur over the redeveloped BTC’s usable life.
The redevelopment construction is expected to directly create approximately 547 new jobs during the construction phase. According to BEA employment multipliers, the secondary effects of the construction will generate an additional 394 jobs. In total, the BTC construction supports 941 jobs throughout the regional economy. The commercial component of the redeveloped BTC is expected to directly support 957 permanent jobs for the regional economy. According to BEA employment multipliers, the BTC employment will create 339 additional jobs throughout the Chittenden County.
The redevelopment includes a variety of amenities that will further add to the City of Burlington:
The redevelopment will add large anchor stores, branded and local restaurants, a cinema complex, residential housing, office space, and public amenities including newly restored St. Paul Street, a pedestrian corridor at Pine Street that may be used for a winter farmers’ market, an observation deck open to the public overlooking Lake Champlain, more public parking, bike lockers, and more.
• The redevelopment construction direct spending is estimated to be $249 million. The construction will create an additional $165.61 million sales/output for the regional economy. The total output due to the construction is thus $414.61 million.
• After the BTC redevelopment is completed, additional annual sales of $147.70 million is expected for the BTC operations. These increased commerce activities will generate an additional $46.39 million sales/output for the other stakeholders in the regional economy. In total, the redeveloped BTC is expected to introduce incremental output for the regional economy in the amount of $194.09 million per year from commercial activity. This figure does not include any additional economic activity generated from the residential component of the project.
• The construction is expected to directly create approximately 547 new jobs during the construction phase. The secondary effects of the construction will generate an additional 394 jobs. In total, the BTC construction will support 941 jobs throughout the regional economy.
• The redeveloped BTC is expected to directly support approximately 957 additional permanent jobs from on-going operations. The secondary effects are expected to create 339 additional jobs throughout the regional economy. In total, 1,296 new jobs will be supported because of the BTC redevelopment.
• The present value over 30 years of direct tax revenues from the redeveloped BTC to the City is estimated to be $46.82 million, whereas the present value of direct state tax is estimated to be $186.10 million. These figures represent the additional amount expected to be paid by the owner and users of the project and do not take into account any municipal financing arrangements that may apply to the project.
Burlington Town Center Mall Redevelopment
The BTC is located at 49 Church Street in Burlington. The property has a gross leasable area of 217,160 square feet that is primarily allocated to retail business.
The previous owner, General Growth Properties, had difficulties to improve occupancy of the retail space. The current owner believes that the underperformance is largely due to the poor infrastructure of the BTC and the lack of foot traffic within the mall.
Devonwood Investors, LLC, founded in 1997, serves as a private investment firm and provides real estate advisory services. In 2009, the company launched the Devonwood Investment Property Fund I.
This private closed-end fund was created for the investment of capital into undervalued real estate property in the office, hotel, and retail sectors. The company provides strategic market knowledge, creative and direct transaction sourcing, and operational and financial management for investors, partners, and clients. The BTC was purchased by Devonwood in December of 2013.
The proposed redevelopment of the BTC is comprehensive and slated to benefit the City and the State in a fundamental way. The current plan being discussed with the City includes the following aspects:
• Adding several local and popular brand restaurants to the BTC along Cherry Street and Bank Street
• Adding a cinema complex with six to eight screens
• Adding a new large retail department store tenant to the BTC or alternatively three to four mini-anchor retail stores
• Adding 274 residential housing units suitable for a variety of tenants across the income spectrum and meeting Burlington’s inclusionary zoning requirements
• Adding new office space that houses institutional tenants
• Adding a new multi-level garage structure on Cherry Street that will be integrated into the new building being developed on Cherry Street
• Adding additional retail space that will focus on entertainment and services to satisfy the growing Church Street demand (e.g., retail services for tenants, live entertainment venues, etc.)
• Adding public amenities including a newly restored St. Paul Street, a pedestrian or perhaps vehicular corridor at Pine Street that may be used for a winter farmers’ market or similar community events, improved public streetscape on Bank and Cherry Streets, an observation deck open to the public overlooking Lake Champlain, more public parking, bike lockers, and more
• Enhancing the BTC’s frontage on Church Street and adding additional retail space on Church Street.
The proposed redevelopment plan, which is expected to take approximately three years to complete, has an estimated construction spending of $249 million.