The Use of Transformative Residential Development in Revitalizing Downtown Reno

Sheri Faircloth, Ph.D. - University of Nevada, Reno

Brian Kaiser - University of Nevada, Reno

Frederick A. Steinmann - University of Southern California

Introduction

In spite of declines in gross gaming receipts and tourism, coupled with uncertain economic times, the City of Reno, Nevada and the Reno Redevelopment Agency have fostered momentum in revitalizing and repositioning its downtown business district.  Both the City and the Agency have directly and indirectly supported retail and residential adaptive reuse and in-fill development throughout the city’s central urban core.  From 2000 to 2008, these projects have shifted from high-rise residential and retail developments to small-scale, high impact projects.  The population of the urban core has almost doubled and approximately thirty percent of the housing units have been constructed during this time period.  The road to change in Reno may suggest a path for other practitioners of urban revitalization to maintain similar momentum in revitalizing declining central business districts and city center urban cores.

This paper examines both contemporary practitioner and scholarly approaches to the use of residential development in the revitalization of aging inner city neighborhoods and central business districts, as well as the efforts of both the City of Reno and the Reno Redevelopment Agency to use a variety of transformative residential adaptive reuse and in-fill developments in the revitalization of the City’s own aging central business district.

The Importance of Residential Development in the Revitalization of Aging Inner City Neighborhoods and Central Business Districts

Both practitioners and scholars, specializing in urban revitalization, have long understood and held the idea that the successful revitalization of aging inner city neighborhoods and central business districts begins with the use of transformative adaptive reuse and in-fill residential development.

The “New Urbanism” movement, as an alternative development and planning paradigm to traditional suburban-type approaches, has greatly emphasized the importance of developing a strong and vibrant residential base as part of any local community’s effort to revitalize an aging inner city neighborhood or central business district.  In examining the “Commons Neighborhood” in Denver, Colorado, Stuetville, Langdon, et al. (2003) found that a combination of new residential high-rise development, adaptive reuse of existing warehouses for residential lofts, and traditional residential brownstone townhome development, have helped to create a new, vibrant pedestrian-scale community in what was once a largely vacant and abandoned, 60-acre former railway yard on the outskirts of downtown Denver.  Stuetville, Langdon, et al. (2003) also found that similar successful revitalization efforts in Milwaukee and San Francisco were successful largely because of the effort to include a mixture of residential adaptive reuse and in-fill development.

The success in attracting new employment opportunities, new entertainment venues, and new commercial-retail opportunities to the aging inner city central cores and central business districts of these communities is in no small part related to the commitment of each community to include a variety of adaptive reuse and in-fill residential development in their larger revitalization plans.  In examining the curious trend of new movie theaters being built largely in inner city neighborhoods and former central business districts, Langdon (2000) finds that “growing downtown populations” have largely sparked new inner city entertainment and commercial-retail development projects.  Langdon (2000) argues that, “Big cities such as Chicago have experienced a boom in downtown and near-downtown housing as young people and empty-nesters gravitate to city centers.  Demographic projections suggest the market for downtown living and urban attractions will grow during this decade.”  If Langdon’s (2000) prediction holds true, increased urban populations in inner city neighborhoods and former central business districts will lead to not only an increase in the demand for new urban housing options, but also an increase in the demand for other urban and inner city entertainment and commercial-retail services.

Although the principles and guidelines of “New Urbanism” and “Traditional Neighborhood Development” seem to be in-vogue among both practitioners and scholars of urban revitalization today, Ford (1984) argues that “Historically, city centers have been characterized by tremendous functional and socio-economic diversity.”  But, over the past few decades, beginning in the mid to late 1950’s, Ford (1984) finds that “the acceptance of the glass-box skyscraper, the fortress hotel, the enclosed shopping mall, and the massive convention center has led to the internalization of activity and city streets which are all but devoid of life.”  Ford (1984) criticizes the dominant, contemporary approach to building cities and argues for street-level and street-accessible approaches to urban revitalization.  The inclusion of street-accessible residential development, entertainment development, and commercial-retail development, through both new construction and adaptive reuse, can help restore the vibrant and lively activity of aging urban city neighborhoods and central business districts and again make these places an exciting physical place for people who choose to live, work, and play in the existing urban city central core.

Both Grogan (1999) and Salvesen (1999) found that a combination of new transformative residential development and creative residential adaptive reuse development can lead to the successful revitalization of older and deteriorating inner city neighborhoods and former central business districts.  Grogan (1999), in exploring new commercial-retail development in the inner cities and former central business districts of larger American cities like Boston, Chicago, and New York’s Harlem neighborhood, found that a variety of different retailers, like fast-food retailers and supermarkets, are beginning to build new stores in these inner cities and former central business districts largely because of their growing urban residential population.  Grogan (1999) argues that, “Despite lower household incomes, urban areas are highly concentrated, which translates into enormous buying power per square mile in urban communities.”

In inner city neighborhoods and aging central business districts that have less dense urban populations or low household incomes, new transformative residential development and creative adaptive reuse residential development can significantly help increase both urban population densities and urban household incomes.  Salvesen (1999) found, in his study of downtown Durham, North Carolina, that enhancing urban population densities and urban household incomes through a combination of new transformative in-fill residential development and residential adaptive reuse development has created a new, vibrant urban community in an area that had deteriorated significantly over the course of several decades.  The historic preservation and conversion of vacated warehouses into residential apartments and lofts throughout downtown Durham has successfully attracted a wide-range of new entertainment and commercial-retail development.  Salvesen (1999) also found that the continued development of new residential uses, through both new construction and continued adaptive reuse efforts, has also attracted new office development throughout downtown Durham.

Before practitioners of urban revitalization pursue the redevelopment of their own aging and deteriorating inner city neighborhoods and central business districts, they must first consider the inclusion of both new transformative residential development and creative adaptive residential adaptive reuse development.  Without successfully including new residential development in a city’s initial effort to revitalize an aging and deteriorating urban central city core, it is unlikely that new entertainment development, new commercial-retail development, or new professional-office development, will occur.  Practitioners of urban revitalization should make residential development, through either new transformative in-fill residential development or creative adaptive residential reuse development, a priority for their larger revitalization goals.

Transformative Adaptive Reuse and In-Fill Residential Development in Downtown Reno

Since 2000-2001, downtown Reno has experienced a significant decline in its primary industry.  Historically, downtown Reno served as the “unofficial” center for tourism and commercial hotel-casino gaming in Northern Nevada.  Hotel-casino gaming served as Northern Nevada’s primary economic engine for much of the last half of the 20^th Century.  Local governments, county governments, and the state government relied heavily on the tax dollars generated from both commercial gaming as well as from sales tax revenues generated from tourists.  Local residents relied on hotel-casino properties like the Mapes Hotel and Harold’s Club as a primary source of local employment.  For much of the last half of the 20^th Century, hotel-casino gaming activity was largely centered in the downtown Reno area.

The Decline in Downtown Reno Tourism and Gaming

By the beginning of the 21^st Century, however, hotel-casino gaming in Northern Nevada began to decline.  The decline, sparked mostly by the spread of gaming in many states across the United States, impacted downtown Reno especially hard as new Northern Nevada hotel-casino properties were largely built either outside the immediate downtown Reno urban core in the City of Reno’s outlying neighborhoods or in other Northern Nevada communities, including Lake Tahoe, the City of Sparks, Carson City, and Douglas County.  Table 1 documents the steep decline in gross gaming receipts (wins) after 2000 [BK1] for the ten largest downtown Reno hotel-casino properties.

Table 1 – Gross Gaming Receipt Wins

Ten Largest Downtown Reno Hotel-Casino Properties

1997 to 2004

Year	Gross Gaming Receipts (Wins)	Annual Actual Change	Annual Percentage Change
1997	$526,553,200	-	-
1998	$531,688,612	$5,135,412	0.98%
1999	$560,774,386	$29,085,774	5.47%
2000	$582,815,939	$22,041,553	3.93%
2001	$533,941,355	-$48,874,584	-8.39%
2002	$492,849,155	-$41,092,200	-7.70%
2003	$479,378,410	-$13,470,745	-2.73%
2004	$474,809,320	-$4,569,090	-0.95%
1997-2004 Actual Change	-$51,743,880	-	-
1997-2004 Percentage Change	-9.83%	-	-

Source:  May 2005 “Cost-Benefit Analysis of the Reno Redevelopment Agency:  1983-2005” Reno Redevelopment Agency.

Between 1997 and 2004, gross gaming receipts (wins) among the ten largest downtown Reno hotel-casinos properties declined by approximately $51.7 million or 9.83%.  Although gross gaming receipts amongst these downtown Reno hotel-casino properties increased in each year between 1997 and 2000, gross gaming receipts declined in each reported year between 2001 and 2004.  The average year-to-year rate of decline from 2000 to 2004 was 4.99%.

The decline in gross gaming receipts over the last several years, coupled by a corresponding decline in both downtown Reno and Northern Nevada-wide tourism, has led to the closure of several downtown Reno hotels including the Comstock in 2000 (a loss of approximately 320 rooms), the Sundowner in 2003 (a loss of approximately 200 rooms), the Golden Phoenix in 2004 (a loss of approximately 604 rooms), and Fitzgerald’s in 2008 (a loss of approximately 360 rooms).

Figure 1 – Former Downtown Reno Hotel-Casino Properties

Top Left:  former Comstock Hotel Casino; Top Right:  former Sundowner Hotel Casino; Bottom Left:  former Golden Phoenix and Casino; Bottom Right:  former Fitzgerald’s Casino & Hotel

In addition to the closing of the Comstock, Sundowner, Golden Phoenix, and Fitzgerald’s, the Club Cal-Neva closed its 91-room “Virginian” tower and the Gold Dust West recently demolished its 101-room motor lodge.  As a result of these closing, downtown Reno’s concentration of regional hotel rooms has declined significantly between 2005 and 2008.  According to the May 2005 “Downtown Retail Study:  Identifying Opportunities for Retail In-Fill Development in Downtown Reno”, there were approximately 7,368 hotel rooms amongst downtown Reno’s largest hotel-casino properties in 2005.  In 2008, there were approximately 6,572 hotel rooms, a net decline of 796 total available rooms or 10.80%.

New Opportunities for Adaptive Reuse Residential Development

Beginning with the closure of the former Comstock Hotel Casino in 2000, the City of Reno and the Reno Redevelopment Agency, in partnership with a variety of private residential developers, pursued an aggressive adaptive reuse strategy for the former hotel-casino properties.

Opened in 2004, the former Comstock Hotel Casino had been converted into the Residence at Riverwalk Towers at an estimated total construction cost of approximately $60.0 million.  The Residence at Riverwalk Towers successfully converted an estimated 320 hotel rooms to an estimated number of 125 upscale condominium units.  Since 2004, the City of Reno and the Reno Redevelopment Agency have supported and pursued, both directly and indirectly, residential development throughout the city’s central urban core as part of the effort to revitalize and reposition an aging and declining downtown district in Reno.

Figure 2 – Residence at Riverwalk Towers, the First Successful Adaptive Reuse of a Downtown Reno Hotel-Casino

The success of the Residence at Riverwalk Towers led to both the construction of new condominium and townhome developments throughout downtown Reno as well as the successful reuse of the former Sundowner Hotel and the Golden Phoenix Casinos.  In 2002-2003, the Reno Redevelopment Agency successfully partnered with BCN Development, a high-rise and residential developer, to build the Palladio, which opened in 2004.  The Palladio is a 92-unit luxury high-rise condominium located along the Truckee River in downtown Reno.  It was the first new construction of a high-rise condominium in downtown Reno since the opening of Arlington Towers and Park Tower Condominiums, nearly 20 years ago.  Prior to the agreement with BCN, the Reno Redevelopment Agency spent approximately $1.3 million in the acquisition and demolition of existing property and structures located along the Truckee River.  In 2002-2003, the Agency sold the property to BCN Development for approximately half of what the Agency spent to acquire and demolish existing structures on site.  BCN Development in-turn spent approximately $50 million to build the Palladio and successfully opened it in 2004.

Figure 3 – Palladio, the First New Residential High-Rise Construction in Downtown Reno Since the 1980’s

Encouraged by the success of both the Residence at Riverwalk Towers and the Palladio, and the ongoing efforts and commitments of the City of Reno and the Reno Redevelopment Agency to revitalize the downtown district, private developers continued to pursue adaptive reuses of former downtown Reno hotel-casino properties.  In 2003-2004, L3 Development began a renovation of the former Golden Phoenix Casino costing almost $350 million.  In late 2008, L3 Development successfully completed the renovation and opened the Montage, a nearly 380 residential unit mixture of condominiums, lofts, and townhomes.  Also in late 2008, private developers successfully renovated approximately half of the former Sundowner Hotel Casino, and opened about 100 condominium units in the new Belvedere Towers.

Figure 4 – Recent Residential Adaptive Reuses of Former Downtown Reno Hotel-Casino Properties

Left:  Belvedere Towers (formerly Sundowner); Right:  Montage (formerly Golden Phoenix and Casino)

The combination of adaptive reuse construction of former hotel-casino properties and new residential high-rise construction in downtown Reno has helped reposition the downtown area as more than just another central business district.  Downtown Reno is quickly becoming a residential neighborhood and has become a center for area tourism, entertainment, and recreation once again.  New museums, entertainment and tourism venues, and commercial-retail opportunities have opened throughout the downtown Reno area, helping to attract additional new residents, new tourists, and area residents back to the downtown district.

Despite a Decline, Downtown Reno Residential Construction Continues

The success of residential adaptive reuse and high-rise construction in downtown Reno over the past few years have managed to encourage new residential development in and around the downtown Reno area.  However, instead of pursuing new residential adaptive reuse or new residential high-rise development in downtown Reno, developers are now finding new niche markets for smaller-scaled residential in-fill projects.  This activity of pursuing small-scale urban living residential projects both in and around downtown Reno is occurring despite a significant decline in both the regional and national real-estate market.

Ranging in estimated construction costs of $5 million to $20 million, developers have focused on low-rise condominium projects and new townhome projects as a way of maintaining the residential development momentum in downtown Reno that started at the beginning of this decade.  The first completed small-scale townhome project in the downtown area market was 8 on Center.  Designed by award wining architect Jack Hawkins, 8 on Center is a niche townhome project located just south of Reno’s central urban core.  The 8 on Center project, completed in 2006 and sold out as of 2008, offers residents a unique live-work experience with ground-floor work space and residential living spaces in the above two floors, with units ranging from 1,640 square feet to 1,824 square feet.

Figure 5 – 8 on Center, New Live-Work Space Comes to Downtown Reno

275 Hill Street is an adaptive reuse project of a vacant commercial-office building just south of the Truckee River in downtown Reno.  Upon expected completion in early 2009, the 275 Hill Street mixed-use project will offer twenty-two condominiums on the above street level second story, with commercial retail and office space on the first floor.  State Street Retail Center is a similar mixture of condominium and commercial space.  It is a small new construction project that has a projected completion date in early to mid-2009.  The State Street Retail Center will offer eleven condominium units for sale on the above street-level second story, with commercial retail and office space on the first floor.  Both projects, being built during a time of economic uncertainty and general decline in the regional and national real estate market, demonstrate how successful revitalization of a declining city center urban core can continue through small-scale, high impact adaptive reuse and new construction residential development.

Figure 6 – Small Scale, High Impact Residential Development Continues in Downtown Reno

Top Left:  Current Construction of “275 Hill Street”; Top Right:  Completed Rendering of “275 Hill Street”; Bottom Left:  Current Construction of “State Street Retail Center”; Bottom Right:  Completed Rendering of “State Street Retail Center

In addition to new small-scale, high-impact transformative condominium construction, several new townhome projects have been started throughout the downtown Reno area.  One such project, Townhomes on Holcomb, has an expected completion date around mid- 2009.  Located just on the edge of downtown Reno, Townhomes on Holcomb, when completed, will feature two-story townhomes with each townhome providing approximately 1,481 square feet.  Some of the amenities will include porcelain tile baths, stainless steel appliances and granite-slab kitchen counters, high vaulted ceilings, private and secure one-car garages, and security gating along shared common space.

These small-scale, high-impact residential in-fill projects, and other similar projects, suggest that downtown Reno has been able to successfully adapt to changing regional and national real-estate market conditions. The successful absorption of additional space remains to be seen but the flexibility of developers in uncertain economics times is apparent as the projects have shifted from high-rise residential projects to smaller-scale town-home and condominium projects.
Figure 7 – Townhomes on Holcomb, New Townhome Development in Downtown Reno

Conclusion – Has New Residential In-fill and Adaptive Reuse Development Been Successful for Downtown Reno?

As downtown Reno continues to evolve into a more diversified, residential urban environment, downtown Reno’s core demographics have changed dramatically over the last several years.  The population of downtown Reno has nearly doubled since 2000 to include over 4,000 residents, and approximately 30% of available residential housing units in downtown Reno have been constructed in the last eight years.  Condominium and townhome units now account for approximately 14% of all residential units in downtown Reno, a near 9% jump since 2000, and that share will continue to increase as more of the planned transformative residential projects are completed.  With this marked shift in the type of housing being developed in downtown Reno, an equally dramatic shift in the type of people who call downtown Reno home has also occurred.

The household characteristics of Reno’s urban core are quite different than those of Washoe County as a whole.  One-person households make up over 65% of households in the downtown Reno area, compared to just 26% county-wide.  Moreover, 49% of all households in downtown Reno are comprised of single-male households, versus 13% in Washoe County, and the median age of downtown residents has increased slightly since 2000 to 47 years old.  By comparison, the median age of all Washoe County residents is just 36 years old.

Since 2000, there has been a 4% increase in the number of family households in downtown Reno.  Despite the increase in the number of family households living in downtown Reno, more than 82% of family households in downtown Reno do not have any children 17 years or younger living within the household.  In contrast, in Washoe County, only 58% of households have a similar composition.  Single professionals, young professional couples, and empty nesters have increasingly come to dominant [BK2] the downtown Reno residential population.

This new type of resident in downtown Reno has brought much higher incomes to the downtown Reno area.  The median household income of downtown Reno residents jumped 20% since 2000, and per capita income grew 34% over the same 2000 to 2008 period.  There have been subtle shifts in the types of jobs held by downtown residents which may help explain some of the difference.  People employed in white collar and sales positions increased by 1% since 2000; blue collar and service workers declined by the same margin.  While these shifts are subtle, downtown Reno is becoming more affluent and vibrant with each new transformative residential project that succeeds.

The increase in the number of residents living throughout the downtown Reno area, combined with higher median household incomes, suggest that other forms of in-fill development will soon follow.  As already demonstrated, residential development is critical to successful commercial-retail development.  In order to support a growing commercial-retail base in downtown Reno, a larger and more affluent residential population base will be needed in order to off-set continued declines in downtown Reno tourism.

Both the City of Reno and the Reno Redevelopment Agency are eager to maintain the momentum both the City and Agency have managed to create in revitalizing and repositioning downtown Reno.  The shift from high-rise residential/retail development to the use of small-scale, high impact residential in-fill projects throughout downtown Reno suggest a path for other practitioners of urban revitalization to maintain similar momentum in revitalizing other declining central business districts and city center urban cores in communities located throughout the country.

References

1. City of Reno:  Reno Redevelopment Agency.  2005.  A Cost-Benefit Analysis of the Reno Redevelopment Agency:  1983-2005.  Reno, NV:  City of Reno, Reno Redevelopment Agency.

1. City of Reno:  Reno Redevelopment Agency.  2006.  Downtown Retail Study:  Identifying Opportunities for Retail In-Fill Development in Downtown Reno.  Reno, NV:  City of Reno, Reno Redevelopment Agency.

1. Ford, L.R.  1984.  Preserving Diversity:  The Importance of Street-Level Doors. California Geographical Society, XXIV:  1-20.

1. Grogan, B.C.  1999.  The Last Frontier.  Urban Land, July:  42-45.

1. Langdon, P.  2000.  Flix Nix Stix: The Megaplex Goes Downtown. Planning, August:  10-13.

1. Salvesen, D.  1999.  A Catalyst for Redevelopment. Urban Land, November/December:  76-81.

1. Stuetville, R., and P. Langdon, et. al.  2003.  New Urbanism: Comprehensive Report and Best Practices Guide, 3^rd Edition.   Ithaca, NY:  New Urban News.

About the Authors

Dr. Sheri Faircloth is currently Chair of the Managerial Sciences Department and an Associate Professor of Finance at the University of Nevada, Reno.  She holds a Ph.D. in Finance from the University of Texas at Arlington.  She has published in finance journals such as Journal of Financial Markets, Journal of Real Estate Finance and Economics, Journal of Real Estate Literature, Applied Economics, Journal of the Academy of Marketing Science, and Journal of the Academy of Finance.  Her research interests include real estate finance and investments, corporate finance, and corporate governance.

Mr. Brian Kaiser is a native Nevadan who attended the University of Nevada, Reno, where he received a Bachelor’s degree in Geography and a Master’s degree in Business Administration.  Brian currently works for the University of Nevada, Reno at the University’s Center for Regional Studies and uses geographic information systems (GIS) software to manipulate a variety of data relevant to new and expanding businesses and to present it in ways useful to the business and public policy community of Northern Nevada.  As part of his work with the University’s Center for Regional Studies, Mr. Kaiser also assists with the analysis of local market conditions and prepares monthly home sales reports for the entire Northern Nevada area.  Mr. Kaiser is now at the forefront in analyzing changing market conditions.  As of 1996, Brian has been producing quarterly economic indictor reports for Washoe County.  These reports include analyses of the local labor market, tourism activity, and construction activity.

Mr. Frederick Steinmann has worked for both the Reno Redevelopment Agency and the Nevada Small Business Development Center, and is currently the principal owner/manager of his own economic development consulting firm.  Frederick currently holds a BS and MS in Economics from the University of Nevada, Reno and is also currently a student at the University of Southern California, studying for a Doctorate in Policy, Planning, and Development.  Mr. Steinmann expects to graduate with his Doctorate from USC’s School of Policy, Planning, and Development in the Spring of 2010.  In 2008, Frederick received the William A. Carlson Fellowship from the California Redevelopment Association.  Mr. Steinmann has also published in several practitioner-oriented journals, including the California Redevelopment Association’s monthly publication, Redevelopment:  Building Better Communities.

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