Chris Daniels of KING-5 TV in Seattle has gotten hold of a report on possible renovations to Key Arena that was commissioned by the city council, and it says: Yes, Key Arena can be renovated. How much money you got?
AECOM studied multiple scenarios for the building, of varying costs, and concluded there are multiple potential options for repurposing the building, including as an adventure sports park, amusement park, aquarium, museum, or waterpark. It even suggests the building could be redeveloped into 400-500 units of housing. Those options, according the report, would cost north of $100 million. The city could also demolish the arena at a cost close to $7 million.
The AECOM report suggests the city could complete a gut remodel of the building to make it NBA and NHL compatible at a cost of $285 million.
Okay, then. It’s not entirely clear what “NBA and NHL compatible” means — Key is currently too short to comfortably fit a hockey rink, but the only thing wrong with it as an NBA arena is that the NBA wants more revenues that it can generate, and the sky’s the limit there in terms of demands. (The report is online, but it’s 169 pages and the Scribd search function doesn’t appear to be working properly — if anyone wants to read the whole damn thing to see what $285 million would buy, be my guest.) And while Seattle city councilmember Jean Godden noted on Friday that “$285 million [would be] a small amount compared to the cost of a new arena” (true!), it would also be a whole lot more than the cost of letting Chris Hansen build a new arena with mostly his own money, not to mention more than just not building a new arena at all.
I suppose one way to look at it would be that this would be an investment in keeping the Key Arena active and maintaining the surrounding neighborhood — except that, according to another study from earlier this year noted by Daniels, the surrounding neighborhood doesn’t seem to have been bothered much by the NBA’s departure:
The study [by economists Brad Humphreys and Adam Nowak] says condo prices have experienced “excess price appreciation” since the Sonics left, based on research involving 10,000 residential property transactions within one mile of Key Arena between 2000-2013. They write, “These results suggest that the presence of a team in a high profile sports league is not the most important factor driving observed property value increases documented in the existing literature.”
This isn’t a brand-new study — I mentioned it in my Vice Sports piece about the Bucks back in July — but still the point remains: Seattle could spend $285 million upgrading Key Arena to make NBA and NHL teams want to move there, maybe, depending on what the upgrades included and what kind of lease they were offered. Or it could not, and still have $285 million and still be Seattle. It’s nice to have all the options on the table, but unless the only question being asked here is “How can we get a basketball or hockey team to move to Seattle?”, this isn’t all that enticing an option.
Seattle’s tech boom is what is driving the admittedly at times inflated and insane prices that housing is going for. I doubt few, if anyone who is moving into these new developments, cares about having a professional sports team when you are pulling down huge salaries from Amazon and other tech companies.
I’m very curious to see how the Bucks arena affects it’s area. Not enough time has passed yet to see the full impact of the state’s pro-growth turn, so I think the new arena could be the beneficiary of coincidental growth.
I used to live four blocks west of Key Arena ten years ago, and all the Sonics did for the neighborhood from my standpoint was make parking impossible for 40-something evenings per year.
Yes, there’s been a bit of churn in restaurants etc. in the area but that’s true in many neighborhoods in Seattle, Sonics or no Sonics. And it’s not like it’s a ghost town now. Far from it.
It would be interesting to see what the housing proposal would look like though. The only sports venue converted into a residential property I know of is the old Aresenal stadium in London. Sure London is one of the most expensive cities in the world to build anything but I figure Seattle is pretty pricey in its own right. A mock up would be interesting.
Hush now Sean, nobody wants to hear you rationalize why the value of property within a mile of Key Arena (which includes South Lake Union/Amazon-ville and all those associated city investments and those Belltown areas that are planned to become viaduct-less thanks to a $2 billion tunnel) would have risen dis-proportionally over the past 13 years.
Aqib, it’s purely a concept now, although the report did cite some new buildings in the surrounding area.
Imagine a boxy looking apartment building of ——–
six-story structures could include the following:
Approximately 20,000 to 25,000 square feet on the ground floor;
Five stories of residential apartment units, with between 400 and 500 residential apartment units;
Parking for approximately 400 to 500 vehicles (less parking is likely possible).
An extra floor would increase the number of apartment units by between 40 and 50.
It is important to note that these estimates are highly preliminary and not the result of any detailed planning or architectural work, and are not based on any financial feasibility analysis.
I love apartment buildings that used to be something else. I loved living in a converted elevator factory. That being said I am pretty sure no one would want an apartment that doesn’t have a window facing outside. So all the apartments would be along the outer walls of the arena. Then what do you do with the massive interior space. In the London stadium it was an open garden/courtyard. You could have some amazing amenities in that space though.
“You could have some amazing amenities in that space though.”
Like a basketball court! ;)
Key Arena is making more money now than it did under the Sonics. So why exactly should they use public money to refurb it to try to lure in a NBA or NHL team?
As I recall, Highbury wasn’t so much converted into apartments as it was knocked down and replaced by (row) housing. One stand was a listed building and was ‘reconfigured’ into flats, but the rest of the site was demolished.
Ebbets field would be the other obvious example of a stadium knocked down and replaced by apartments. The only vestige of the old yard is a plaque on a stone(?) wall in the courtyard.
Ebbetts was entirely knocked down. Highbury was different: http://www.mirror.co.uk/sport/football/news/flat-arsenals-old-ground-highbury-6524825
I actually read Humphrey’s article and at no point does he reference the changes to the South Lake Union area due to Amazon and Vulcan’s redevelopment. The author seems to believe that using the repeat sales regression model seems to protect his research from that by saying these things:
“RSR models mitigate this model misspecification issue, and any resulting
omitted-variable bias, by comparing transaction prices for the same properties at different points
in time. Since the other factors like views of Puget Sound or the Space Needle, or water access,
or access to museums are assumed to not change over time, an analysis of repeat sales eliminates
any time invariant factors that affect residential property property values. These factors do not
change after mid-2008, when the SuperSonics left Seattle for Oklahoma City”
OR
“We estimate a repeat sales regression model that removes the effect of any unobserved property
and location attributes from the estimated effect of proximity to the arena. This is important, as
Seattle has a large number of waterfront properties with significant, unobserved quality, and Key
Arena is located near a number of cultural amenities and iconic structures including the Space
Needle.”
This is pretty clearly a situation of an author of a study that (because he lives in WV) doesn’t have a full understanding of what has and has not changed in that area and simply ignoring changes that have pretty clearly impacted all property values.
Here is an example: http://www.bizjournals.com/seattle/blog/2015/03/after-63-years-king-5-to-leave-south-lake-union.html
Thanks for cherry picking statements out of my paper. The identification scheme in the paper relies on both time and location. That means sales near Key Arena after the Sonics left in 2008. Our parameter estimates reflect factors that were systematically different for sales close to Key Arena over the entire period Q3 2008-2013. Not part of it, all of that period. So something that happened near the arena that affected property values in, say, 2011, would not be reflected in the estimates in the paper.
And thanks for your expert assessment of our repeat sales model, but we point out that repeat sales are designed to take care of time invariant characteristics only. Maybe you could parse your cherry-picked quote a little more carefully. Waterfront views and the cultural amenities near Key were there before 2008 and after. That’s the sort of factors the repeat sales approach addresses. We never claim that repeat sales would account for the effect of something that affected the local real estate market in 2011, or any time after the Sonics left. The temporal aspect of our identification scheme addresses those things.
Your link points to a story about something that happened in 2015. The data analyzed in the paper end in 2013. Do you find that to be a damaging criticism of the results?
We use a short event window in the paper to try and reduce the impact of these sort of confounding factors. Again, the temporal nature of the identification scheme means that an important confounding factor would have to have taken place near Key Arena in 2008 (and the paper contains a number of robustness checks in terms of the specific timing of the event window, +/- 6 months) and extend over the event window.
I’ve only been living in WV since 2013 BTW.
So your “article” about the study starts off with you saying that you haven’t even bothered to read it (“it’s too long!”). But that doesn’t stop you from raising questions/issues about it…all of which are answered…wait for it…in the study! How can you actually say – in the headline, no less – that the study doesn’t explain something, when you admittedly haven’t read the study? I’d think that an actual reporter would read the document before reporting on and questioning it.
No, I read enough of it to see that it doesn’t address the question of whether spending $285m on renovations is a good idea — it’s just a cost analysis, not a cost-benefit analysis. The part I couldn’t find was just how it defined “NBA and NHL compatible,” which is a bit of a side note.
And if you think that most news reporters go around reading entire studies before writing their articles, you are sadly misinformed about what most staff journalists have time for, let alone bloggers. At least I read the executive summary and skimmed the rest — with most daily journalists, you’re lucky if they have time to read the whole press release before calling the mayor for a canned comment.
I know that no one reads the full study, but daily journalists also typically don’t (or at least shouldn’t) dangle questions about the study that a full reading would easily answer. And you don’t have their deadlines. It wasn’t hard for me to find the financial implications to the city (its share of actual dollars from arena operations, not vague economic impacts) or what the $285M buys. Each subject has its own section.
That’s still just a financial projection, not a cost-benefit analysis. Or in plain English: It’s a prediction of what the arena’s balance sheet would look like, but doesn’t ask or answer the question of why a renovated arena is necessary.
Of course, the possible projects in the Sodo and Tukwila are still a possibility
“Key Arena is making more money now than it did under the Sonics. So why exactly should they use public money to refurb it to try to lure in a NBA or NHL team?”
Of course, it took Bennett’s blood money payoff to repay the renovation bonds on the Key to allow it to start making money again, but no one wants to acknowledge that while casting the Sonics in some sort of negative light.