The Evans School does indeed present some formidable obstacles. There is a space utilization problem built into the building’s core. It’s a school that was built even before the halcyon days of Mayor Speer’s City Beautiful campaign. David Dryden, the architect who designed the Evans School, designed a great many other schools in Denver. The Evans School and North High School are among the few remaining pieces of David’s school work.
In 1904, when the Evans School was built, Mr. Dryden was a pioneer. When the notion of fire egress was still novel he built a solid stone school with huge hallways and exceptionally wide stairwells. These halls and stairs are magnificent spaces but in the real estate trade such spaces are referred to as common areas.
As financial constructs, common areas are separated from a something I call “non-rev” by at most two degrees of financial freedom. The short math is you have to get revenue out of the common areas. If you don’t it is effectively a one third increase in rental rates. The price proposition is suboptimal.
I have some ideas on hallway revenue but I definitely haven’t cracked that nut.
- Style: Ordinary Bitter
- Liner rant: It is time for me to do some socio-mathematical venting.
The Evans School cost only $115,000 but that was 110 years ago. Safe to say it would cost substantially more to construct such a monument using today’s dollars. Please allow me to distort and over elaborate:
1) If you had put $115,000 into an account for yourself bearing a mere 3.5% interest when the Evans School was built, you would now have over $5,000,000.
2) If you told a hypothetical investor seeking after-tax yields consistent with long-term historical stock market returns that you would 110 years from now give them $115,000, they’d offer you something < $1.25.
3) If you offered $115,000 to an individual seeking the typical pre-tax returns generally associated with the material risks inherent in real estate development, they would in theory, offer you essentially nothing.
4) If put you $115,000 in an account for the benefit of the society with that same level of return, you would end up with over 5.25 X 10^15 units of public benefit, disregarding taxes and without accounting for any extraordinary social dividends. As measured in future pre-tax dollars of course.
- Liner note: I think this demonstrates the ambitions of society and equity don’t always view returns from the same perspective. Those two perspectives can be almost paradoxically contradictory. What about dividends? Well you show me the tally of all the social dividends The City Denver yielded from its investment in the Evans School – and I will show you the accounting.
- Beer Tangents: I’m looking for a thought spot.