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Sagging economy slows at Disney
« Thread started on: Nov 13th, 2009, 4:35pm »
Sagging economy slows plans for ‘Flamingo Crossings’ at Disney
Featured, Jason Garcia, News — By Jason Garcia on November 6, 2009 at 5:02 pm
In this view from the Western Beltway, S.R. 429, landscaping continues at the entrance to Flamingo Crossings, on the western edge of Walt Disney World, along the S.R. 429. (Joe Burbank, Orlando Sentinel)
Just beyond the western entrance to Walt Disney World, construction crews are putting the finishing touches on a new network of roads complete with utility lines, street lamps and palm trees — but not a single building.
The empty streetscape is all that exists so far of “Flamingo Crossings,” a 450-acre lodging-and-shopping district that Disney World announced more than three years ago as a way to capture more spending from the legions of price-sensitive tourists who visit the resort’s theme parks every year but bypass its premium-priced hotels in favor of cheaper, off-property accommodations.
>> See pictures of construction at Flamingo Crossing
Disney has been actively marketing the property to developers of hotels, restaurants and shopping centers for two years. It has yet to close a sale.
The stalled project is a high-profile victim of the global recession and credit freeze, which has made financing for many commercial construction projects exceedingly hard to obtain. It is also emblematic of a broader construction slowdown at the giant resort: Records show that building-permit activity at Disney World has dropped 25 percent during the past year.
“There seems to be a lot of interest in the site. It’s just putting together financing today is difficult,” said Ray Maxwell, district administrator for the Reedy Creek Improvement District, the semi-autonomous government that oversees Disney’s vast property.
Disney says it remains committed to Flamingo Crossings, which it ultimately envisions as having between 4,000 and 5,000 hotel rooms and between 300,000 and 500,000 square feet of retail space, anchored by a village-like town center. Although the resort had hoped initial hotel construction would have begun by now, it has always expected the development would take eight to 10 years to complete.
“We still feel that’s on track in terms of time frame,” said Marilyn Waters, a spokeswoman for Walt Disney Parks and Resorts. “There are a lot of different factors that can affect the timing.”
Designed to compete with moderately priced lodging, dining and shopping options such as those found just off property in Osceola County or on International Drive, Flamingo Crossings is to be much different than a typical Disney development. Instead of large, elaborately themed hotels and eateries, it is to include low- and mid-rise hotels and motels, fast-food and casual-dining chains, and stores selling staples such as groceries, toiletries and basic clothing.
Disney said it expects that, in addition to tourists, many of its 60,000-plus employees will eat and shop in Flamingo Crossings.
Although the land is to remain within Reedy Creek and be subject to its more-stringent design standards, Disney intends to sell parcels of land to third-party builders to construct the businesses. Disney began shopping the property in November 2007 with promotional materials that displayed a flock of plastic pink flamingos positioned as if running and urged developers to “Beat the stampede!”
Vertical construction has languished, but site work is nearly complete. Maxwell said Reedy Creek has laid all the necessary utility lines for the project’s first phase and expects to complete the roadwork and landscaping by the end of the month.
The delay has not been a surprise to some people. Tom DeWolf, who chairs Reedy Creek’s board of supervisors, said he was skeptical of Flamingo Crossings when it was announced because there were already signs that the real-estate market was overheated.
“I could see things had reached a point where I just personally had the feeling that it’s going a little too far,” DeWolf said.
Disney says it continues to negotiate with potential developers. Waters said the project should get a lift when district workers complete a road-extension project that will connect the Flamingo Crossings site to an unrelated time-share development.
“I can tell you we continue to have significant interest from hotels, retailers and restaurants,” Waters said. “As the economy recovers, we’re in good position.”
Flamingo Crossings is not the only construction project that has slowed. Records at Reedy Creek show that building-permit activity dropped 25 percent during its 2008-09 fiscal year, which ended Sept. 30, compared with a year earlier.
The total construction value of projects permitted during the year plummeted 61 percent, from $409.4 million to $158.7 million.
Disney and Reedy Creek say the results aren’t purely the result of the poor economy, and that building activity fluctuates from year to year. Construction values, for example, have also been affected by falling prices for materials and labor. And the year-ago totals were boosted by three large time-share projects that Disney completed earlier this year.
Construction activity could rebound in the coming months. Disney will break ground this spring on an overhaul of the Fantasyland section of the Magic Kingdom, which the resort calls the biggest expansion in that theme park’s 38-year history.
Jason Garcia can be reached at firstname.lastname@example.org or 407-420-5414.
Tags: Disney World, News