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Huge news on the Louisville commercial real estate front today! The new design for a mixed-use tower downtown has been unveiled  to the Louisville commercial real estate market. Have a read!

Louisville can fill space plaza offers, officials say. Mixed use may help bold design succeed.

Though gasp-inducing in scope, the 61-story Museum Plaza slated for Louisville’s waterfront should have little trouble filling its 1.2 million square feet of space, say city officials and business leaders who follow the downtown economy.

No component in the ensemble of offices, condos, lofts, stores, a museum and a hotel is large enough to overwhelm its market, they said. And the project officially unveiled yesterday has emerged just as prime downtown office space is nearing capacity.

“The ability to do mixed-use (projects) hedges a lot of your bets,” said Phil Scherer, president of Commercial Kentucky, a Louisville commercial real estate firm. “I don’t think anybody would go out there and build a huge hotel today, nor would they build a huge office building, nor a huge condominium development.”

Led by developers Steve Wilson, Laura Lee Brown, Steve Poe and Craig Greenberg, Museum Plaza will be centered on Seventh Street between West Main Street and River Road, with components stretching along the Ohio River between the Muhammad Ali Center and Ninth Street.

The radical design, shown yesterday to an invitation-only crowd at Actors Theatre of Louisville, was done by Joshua Prince-Ramus of the Office for Metropolitan Architecture’s New York operation.

“If we didn’t have any controversy and we didn’t have any debate, I think we would be very nervous that it wasn’t something exceptional,” Ramus said of the design.

With construction scheduled to begin next year and be completed in 2010, the $380 million Museum Plaza would be Kentucky’s tallest building and one of the tallest in the Midwest at 703 feet.

The project will include 300,000 square feet of office space — less than half the capacity of downtown’s 634,000- square-foot Aegon Center.

The 300-room hotel would add to the 3,900 rooms downtown. It would open about the same time as a hotel with the proposed riverfront arena — if that is approved — enhancing the city’s ability to attract larger business events, city officials said.

The 150 lofts and 85 luxury condos planned for Museum Plaza fall “within our target in terms of residential development,” said Barry Alberts, executive director of the Downtown Development Corp., a public-private agency that oversees redevelopment. Alberts said downtown can absorb 400 to 450 new residential units a year.

“We are encouraging as many projects as possible to have a mix of uses, particularly residential on the upper floors — and this has a lot of upper floors,” Alberts said.

A 50,000-square-foot museum and a 1,100-car parking garage also are in the plans.

“We are not going to flood the marketplace,” said Poe, a co-developer whose previous projects include the 615-room Louisville Marriott Downtown and 140-suite Residence Inn. Scherer said downtown has only a 10 percent vacancy rate in the “Class A” category of office space — offering the most desirable locations and amenities. More importantly, he said, there are few, if any, large pockets of contiguous Class A space remaining.

Thus Museum Plaza should be in a strong position to land a high-profile corporate tenant because, Scherer said, the project will not have any immediate competition.

“I don’t really expect there is going to be a lot of discussion about yet another office building,” he said, “because you don’t want to push that vacancy too far out ahead of the demand.”

Bruce Traughber, Louisville metro government’s community-development chief, said Museum Plaza will be delivering the new office space “right on time, if not late,” to meet rising demand.

Nor does he see any issue with the project’s other components.

“Our goal all along has been to seed first the housing market and then to hope that the private market takes over,” Traughber said of Museum Plaza’s residential units.

Though two relatively large hotels may be coming in at about the same time if the arena project is approved, “they’re a pretty good distance apart, anchoring both ends of Main Street,” Traughber said. “It’s not unreasonable to think there’s enough capacity for those.”

Jim Wood, president and chief executive of the Louisville Convention & Visitors Bureau, said Museum Plaza’s hotel rooms will not only fill up, but the project should fuel demand for even more capacity.

“It will be a catalyst for other projects, for other people moving here and for companies relocating to Louisville,” Wood said. “The 300-room hotel will certainly be an upscale hotel … which we don’t have in this landscape in Louisville.”

Businesses surrounding Museum Plaza also are poised to benefit from this new Louisville commercial real estate.

Saul Garcia, whose Los Aztecas Mexican restaurant at Sixth and Main streets became a favorite of workers building the nearby Muhammad Ali Center, said he is looking forward to having Museum Plaza’s construction crews, tourists and condo residents as new customers.

“All of that activity will help us increase our business,” Garcia said.

The project calls for a relatively modest 30,000 square feet of retail space. Although about 35 percent of downtown’s 1.38 million square feet of Louisville commercial real estate retail space is vacant, Scherer doesn’t see the additional capacity as an issue.

“The difficulty in tracking retail downtown is that there is a lot of ground-floor space that is sort of retail wannabe space,” Scherer said. “It’s not properly located, or it’s not contemporary space. It’s just going to take time for those buildings and those spaces to be redeveloped, or converted to alternative uses.”

Todd Blue, president and chief executive of Cobalt Ventures, a Louisville commercial real estate firm, agrees that Museum Plaza should create additional demand for downtown real estate as it puts Louisville more on the map.

Blue’s biggest concern is that action must follow the announcement. Anything less could cost the project momentum and blunt the initial excitement and interest, said Blue, whose company develops “urban-inspired” Louisville real estate.

“That would hurt the project — and the downtown,” he said. “I couldn’t be more excited by what this can do for the downtown. We’re losing ground to other cities. We need to show ourselves and show the country that we are bold.

“The key is just do it.”