What the world’s richest man can tell us about Omaha – and, no, I’m not talking about Warren Buffett

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Aside from the occasional plague and peasant uprising, Europe during the early 1500’s was an exciting and prosperous place to be. New worlds were being discovered, art and technology flourished in the Renaissance, nations emerged from fiefdoms, and religion was undergoing a massive reformation.

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In spite of growing wealth in the 1500’s, peasants could still prove to be an unruly bunch.

The strongest financier during this period was a German by the name of Jacob Fugger (rhymes with cougar) who hailed from Augsburg, in present day Austria. He transformed his family’s textile business into a massive empire of banking, mining, and trade. Fugger was wealthier than the famous Medici clan who received much more historical attention. As a percentage of GDP, his wealth would dwarf Rockefeller, Gates and Buffett.

Fugger financed the Habsburg dynasty and the expansion of the Holy Roman Empire – an empire that ruled the core of Europe for four hundred years until World War I swept aside Austria-Hungary. He was a shrewd operative who financed the Vatican (indulgences aren’t free, you know), and obtained the ownership of entire villages when debtors defaulted on their loans.

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Fugger did not mince words with the Habsburgs. In one undocumented incident, he threw his gold cap at Maximilain and told him to “Fugg off”.

Greg Steinmetz’s book “The Richest Man Who Ever Lived” is the latest book to revive the legend of Jacob Fugger.     The book is a business biography, but it is also a geographical instruction manual.

The story of Jacob Fugger illuminates the importance of cities in the development of commerce. Augsburg, Rome, Venice, Antwerp, and Mombasa are the supporting cast of characters in the book. The evolution of these cities provides insights into our own urban areas. For me, the book provides a lens through which to look at he challenges faced by Omaha as it tries to surge past 1 million people and reach the second tier of US cities.

Fugger maintained his home in Augsburg, but he located important business centers in Venice and, later, Antwerp. He chose to locate in Venice early in his career because the Venetians were the leaders in big business at the turn of the century. Their fleets traded goods from all over the world and their management skills were second to none. Most importantly, the Venetians mastered the system of accounting. Double-entry book-keeping was a new science, and Fugger used his mastery of accounts to centralize his far-flung empire. Later, Antwerp became popular as shipments from the New World increased. It’s massive port and access to the European heartland drew Fugger.

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Charles V borrowed heavily from Fugger and took it on the chin.

This process of city and regional emergence is on display today as ConAgra considers moving its executives to Chicago. Omaha has a strong infrastructure in place to serve the agricultural industry, but Chicago has what it takes to reach consumers: It has a core group of companies like McDonalds, Kraft, Mondelez, ADM, and Ingredion all sharing resources. Chicago has thousands of well-educated people, young folks who can identify with a growing millenial target market, and dozens of advertising and marketing firms. Chicago, with its high cost of living and pension problems, trumps Omaha when it comes to innovation and sales. Like Silicon Valley, the costs of living are far outweighed by the opportunity to rapidly gain from networks of people. Omaha lacks the talent needed to reach rapidly-evolving consumer tastes.

Omaha also suffers from its peripheral location on the Great Plains.

One of the most fascinating stories in the Fugger biography is the rise of Portugal. Once a European backwater, the Portuguese decided to punch above their weight. They spotted their opportunity in pepper.

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The Portuguese galleon. A badass to be reckoned with. Shut up and dance with me.

Pepper was essential for the bland European diet. Spoiled meat was a frequent entree and it needed a little, ahem, flavor. At the time, the Venetians controlled the pepper trade from India. They had a direct route but it required an overland trans-shipment at Suez. The Portuguese made the bold move of sending ships around the Horn of Africa to the Indian Ocean. While the route was dangerous, it was much faster than the Venetians could manage.

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Augsburg. It’s no Frankfurt, but Pope Leo X said it was “pretty darn good.”

One of the most exciting chapters in the book is the siege of Mombasa in present day Kenya. Only a few cannon blasts allowed the Portuguese to take over the trade hub. From there, it was a direct route to India. The galleons returned to Portugal loaded with pepper. They reaped a fortune from the trade. Fugger, as their investor, took his handsome share as well. Steinmetz argues that the loss of the pepper trade is what directly led to the demise of the Venetians.

The story illuminates the role of trading hubs and transportation centers to the growth of an economy. It seems fairly obvious, but it is remarkable that a city or region can grow exponentially without having a local industry. Singapore and Hong Kong are certainly modern examples of this phenomenon. Closer to home, Louisville and Memphis show how modern transport hubs have emerged in the jet travel era as the hosts of UPS and FedEx respectively.

“I’ve already bought my Cubs season tickets. Last one to leave Omaha, turn out the lights.”
– ConAgra Executive O. Redenbacher

Omaha may have lost it’s stockyards, but it remains an important commodities trader with firms like Scoular and Gavilon. Trucking is big here. But at the periphery, Omaha will probably never emerge as a transportation and market hub. Alas, it does not have a fleet of galleons to lay siege to The Loop.

Remaining a lower tier City is not all bad. Cost of living does matter when it comes to location selections. Nice people and good education systems do add value. By all accounts, Augsburg remains a pretty nice place to live even though the banking capital of Germany moved to Frankfurt centuries ago.

Factory 12: A Proposal for 12th & Cass

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Alchemy Development is one of two developers to submit proposals to the City of Omaha to redevelop a lot at 12th & Cass Streets in Downtown Omaha. The location is prominent for its proximity to the TD Ameritrade Stadium, Centurylink Center, and the burgeoning entertainment district on the north side of downtown. The project features 78 apartments and Alchemy Development is teaming up with the Old Mattress Factory bar and restaurant and Holland Basham Architects.HBA elevation

The Omaha World-Herald printed an article featuring the  two proposals for the site.

2 companies submit bids to develop prime downtown spot

POSTED: FRIDAY, SEPTEMBER 18, 2015 12:00 AM, UPDATED: 9:36 AM, FRI SEP 18, 2015.

By Cindy Gonzalez / World-Herald staff writer

Apartments with a view toward the home of the College World Series could be in store for a patch of city-owned land once embroiled in controversy.

Two local companies, Alchemy Development and Lanoha Development, have submitted proposals to develop the site at 12th and Cass Streets.

The last structure on the 33,600-square-foot area was a now-dismantled condo showroom and office for the failed WallStreet Tower project. The city had to turn to the courts to regain control of the Cass Street parcel after it sat idle for years as an out-of-town developer’s dream for the tower at 14th and Dodge Streets never got off the ground.

City officials recently put out a request for proposals to develop the 12th and Cass Streets site valued now at $910,000. The candidates are to be interviewed by a committee of various city department heads in early October. The top choice is to be approved by the mayor and City Council. City Attorney Paul Kratz said factors beyond price will be considered when choosing the winner.

Among the city’s objectives, according to public documents, is for the project to encourage a lively, pedestrian-oriented urban neighborhood that expands jobs and residential opportunities.

Both proposals offer residential living as a focus, but they look different and offer contrasting amenities.

Alchemy’s plan is primarily housing, calling for construction of a five-story, L-shaped structure with 78 apartments and indoor parking. A rooftop deck would be carved out of a top-floor space, offering a view of TD Ameritrade Park and the CenturyLink Center.

The $10.8 million project would seek $1.2 million in tax-increment financing and be called Factory 12 — a nod to the Old Mattress Factory restaurant across the street and to 12th Street, said Alchemy’s Bert Hancock. Owners of the Old Mattress Factory are signed on as co-developers. Also involved in Factory 12 are Holland Basham Architects and Dicon Construction.

While the Alchemy project won’t offer retail space, its street level will feature big glass windows through which pedestrians can see fitness and community rooms. “It gives it some liveliness at the ground-floor level,” Hancock said.

Competitor Lanoha proposes a four-story complex with fewer apartments, 45, but with office and retail space as well.

The first floor would contain retail and office bays, a lobby and 50 parking stalls. The second level would be made up of offices and a covered terrace, and the third and fourth floors would contain apartments. Lanoha’s design by Alley Poyner Macchietto Architecture also features a third-floor deck and a community space.

Jason Lanoha of Lanoha Development declined to disclose the project’s price tag. He said his firm chose a mixed-use approach to add around-the-clock action that he said would move north downtown forward. “When office workers are leaving, residents are arriving back home,” Lanoha said.

Hancock said he and his partners were attracted to the growing area of north downtown, even with the challenges associated with the property’s proximity to the Interstate. “We love the idea of being a part of what is happening on the north side of downtown,” Hancock said, citing the nearby CenturyLink Center, TD Ameritrade Park, Creighton University, the Slowdown and future development planned for the Yard parking site. “All of that points toward a direction of making the north side much more exciting, not just for entertainment, but as a place to live,” he said.

Kratz declined to provide any detail on the two plans, calling such details potentially proprietary information and part of an ongoing real estate deal. He said that although the request for proposals process has long been a way that the city sells or develops property, the improved economy and commercial market has led to increased interest in downtown parcels.

Andrew Carnegie, the original hipster

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The well manicured facial hair gives it away. Andrew Carnegie wanted to be where the action was. At the young age of 35, and already fantastically wealthy, Carnegie moved to New York City from Pittsburgh in 1869. Interestingly, like a lot of today’s young post-collegiates, Carnegie lived with his mother (albeit in a suite of rooms in a luxury hotel).

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Young Carnegie disdained Instgram, but adored Alt-J and old Smiths tracks on vinyl. Much satisfaction was also provided by a good pipe from time to time.

As biographer David Nasaw writes,

Carnegie also wanted to devote his time to literature and culture… Having traveled to London and Paris and spent a great deal of time in New York and Philadelphia, Carnegie could no longer close his eyes to the reality that Pittsburgh was just too small, too provincial, too uncultured and uncultivated for him.

The key to Carnegie’s decision to leave his burgeoning steel operations behind in Pittsburgh in the capable hands of his lieutenants, went well beyond culture – New York was the epicenter of American capitalism. While steel required brawn, factories, iron ore and coal, the real juice for the expansion of the Carnegie empire needed to come from the bankers and brokers who loaned the money and provided the financing. They lived in New York, so Carnegie needed to be in New York. The opportunity to surround himself with culture was a perk that New York offered.

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The older Carnegie relieved his aching back with a bracing cold shower followed by a strenuous yoga routine,

Culture and capital are intoxicating mixtures that lead to fantastic economic growth. It’s the reason why young people continue to move to London, San Francisco, Hong Kong, and Tokyo in droves in spite of enormous real estate expenses.

Silicon Valley and New York may be economically painful places for young entrepreneurs to live in the short run, but the payoff is huge if frequent interaction with capital sources can be facilitated. Its also pretty damn fun to live in these cities.

Last week, Singapore revealed that it has ambitions to become the “Asian version of Silicon Valley”. While this phrase almost borders on cliche, it seems that Singapore may have a fighting chance. As Southeast Asia’s financial hub, the city-state is well positioned to offer young technology companies a place to find bankers and investors. Singapore invested $324 million in startups last year – ten times that of Hong Kong. The government matches private investment on a dollar-for-dollar basis.

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Singapore. A former British colony would have appealed to a young Carnegie. However, It’s frowning upon a wee dram of elixir might have been a deal-breaker.

Singapore, by many accounts is fairly boring (the government is famous for its enforcement of orderliness), but as more young people move in, the fun will follow.

This makes life difficult for the third tier cities with a dearth of youth culture and a minimal amount of investment capital. While it seems paradoxical in the current age where anyone can do their work from just about anywhere that a young person would choose the most expensive places to live, the short term pain is worth the long term gain. Capital and culture win every time.

Omaha: What buildings would you tear down?

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Centre PompidouOver the weekend, the Financial Times ran a piece that gathered correspondents throughout the world and asked them to name a building they would like to see torn down. Usually the answer came in the form of buildings that wAsahi Buildingere designed hopelessly out of context with their surroundings. The answers ranged from the brutalist Soviet embassy in Havana which spoils the surrounding Spanish colonial treasures, to the garish Centre Pompidou in Paris, Rem Koolhaas’ “Pants” building in Beijing, the Asahi Brewing Company’s “golden turd” in Tokyo. The “Walkie Talkie” building in London, which recently had to undergo special facade treatments to reduce the glare that had caused dashboards to melt on cars below, also gets a mention.

It got me thinking. If I could wield a wrecking ball in Omaha, what would I demolish? My list would probably be short on buildings, but long on poorly planned infrastructure. Over the next few weeks, I’ll be putting together a top 10 list. Please send me your suggestions. I’d love to hear them. Here are a few items for today:

1. Central Park Mall – Gene Leahy Mall Gene Leahy Mall

Located from 10th to 14th Streets and bounded on the north by Douglas Street and the south by Farnam Street, the 9.6 acre public space was introduced to Omaha among a flurry of ill-conceived 1970’s-era revitalization projects around the country. It features a lagoon, symbolizing the City’s connection to the Missouri River, surrounded by a walking path and sitting areas. The problem with this mall is really obvious – it was built below street level. A huge mistake.

Rather than integrating an inviting public green space into the street grid, it attempts to be an oasis for City-dwellers to escape the bustle of surrounding streets. Unfortunately, placing the park below grade makes it an isolated and dark place that is the haven of homeless people and a threatening place to anyone seeking to avoid crime. Who really wants to visit the Mall at dusk when the drunk teens begin to take over the dark corners? Aside from the holiday lighting, there is nothing inviting about this dredged-up hole of earth.

The lagoon should be filled in. The park should be raised to street level and a nice public lawn should be installed for the use of the burgeoning downtown population in need of a space to kick the soccer ball, toss a football, and walk with children. It might add an amphitheater for performances. It would dramatically help to integrate the Holland Center with the Old Market.

Yes, renovations will be made to the Mall soon. But it will still be a depressing depression and a waste of a huge opportunity.

2. The Hilton – Red Lion – Doubletree Hotel at 16th and CapitolDoubleTree

This brutalist tower was Omaha’s signature hotel for many years. It’s top floor dining facility was once paneled with mirrors and mahogany-carved motifs of corn stalks. I think the odd steer could be found among the wooden foliage. I haven’t been up there in years, so it may have been remodeled.

The problem isn’t the hotel itself. Yes, its architecturally dated, but there’s nothing particularly wrong with a brutalist concrete structure here and there. They had their day and lets take them in the context of the designs of the early 1970’s. I can forgive the architects of this scratchy gray piece of pavement with windows. It was probably cool at the time.

What isn’t cool is how the site was planned and what it did to the neighborhood. The lobby side is raised above grade, so any hope of guests mingling with pedestrians is nil. That was the attraction of old urban hotels –  a gent could walk in off the street for a shoe shine and a haircut and admire the passers-by. Ladies could take an afternoon tea in the lounge. Livestock traders made deals over bourbon and cigars. But that’s impossible when the lobby is up a ramp on the second floor. I’m sure its effective at keeping the homeless away.

However, the front of the building pales in comparison to the atrocity on the north side. 16th Street was once a major north-south thoroughfare that passed through downtown. Instead, the hotel was dropped in the center of the street and cut off North Omaha from the rest of downtown. The Capitol Street side is devoid of any life – just gray concrete and service doors – as cars heading south on 16th Street have to hopelessly decide whether to shamble east or west. The area to the north was cut off from commerce, and it has taken 50 years for anything to occur in the wasteland it created.

One can’t help but think that the planning location of the hotel was a deliberate barrier to North Omaha. After the turmoil of the late 1960’s, downtown Omaha probably wanted to forget the race riots and strife of the north side. A giant monolithic wall of concrete was an effective barrier, but it was a planning disaster.

At the risk of sounding like a complete cynic and crank, its only fair to salute some planning decisions that have gone the right way. Today, I congratulate the 10th Street Bridge in front of the Durham Western Heritage Museum.

Designers could have gone with a plain concrete span with traditional OPPD “snake-head10th Street Bridge” street lights. Instead, they opted for a monumental structure reminiscent of Omaha’s golden railroad age. Embossed concrete elements remind one of some of the finest WPA bridge projects of the New Deal Era (the old L Street Bridge over the Missouri River comes to mind) and the historic lighting is top notch. It allows for parking and impressive views of the City when heading north.

Some may complain that its elevation is a little too high and blocks the facades of the Old Market Lofts to a degree, and they would be right. But overall, this bridge is an excellent tribute to the City’s heritage.

 

OWH: Aksarben Village has another $82 million in development planned

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By Cindy Gonzalez / World-Herald staff writer

An additional $82 million in new construction projects headed to Aksarben Village — more office, retail, apartment and parking structures — will close up a couple of the biggest gaps left at the 70-acre midtown Omaha campus.

Not all of the tenants have been secured for those proposed properties, but developers say the village’s history suggests that won’t take long.

And except for a few hitches, such as the scrapping of a plan for owner-occupied town houses, the ongoing transformation of the old Thoroughbred racetrack grounds near 67th and Center Streets continues better than expected, said lead developer Jay Noddle of Noddle Cos.

So far, he said, the investment on projects built, under construction or planned at the village totals about $500 million. Original estimates a decade ago were about $150 million. That is just the village portion, not First Data Corp. or university-related buildings on the larger former Aksarben site.

City Planner Bridget Hadley said spinoff activity and property improvements in and around the village are what the city had hoped for: “Not only bringing forth more density, but a vibrant mixed use of work, play, entertainment and living options,” she said.

The latest changes, according to documents submitted to Omaha planners, total more than $82 million and seek $9.75 million in tax increment financing. The plans call for:

» An 80,000-square-foot office, retail and restaurant building on the corner of 67th Street and Mercy Road. A large corporate user reportedly has committed to occupying the top level of what would be a three- or four-story structure.

» A four-story retail and residential building fronting Frances Street that would have 10,000 square feet of retail and apartment lobby space on the ground floor; upper floors would contain 21 apartments.

» Another four-story building with 40 apartment lofts, facing west with a view of College of St. Mary softball fields and campus.

» As announced six weeks ago, a five-story building with Pacific Life Insurance Co. as anchor on the northeast corner of Mercy Road and Aksarben Drive. Restaurants, other retail shops and offices would occupy the rest.

» An 880-stall, four-story parking garage, replacing an existing surface parking lot and connecting by sky bridge to the Pacific Life building.

» About two blocks to the east, southwest of 64th Avenue and Frances Street, two apartment buildings. The largest would have four levels, 45 units and 31 parking stalls. A three-story eight-plex is designed in a “walk-up” style. Parking for both would be available in an existing garage servicing nearby businesses.

Construction on the Pacific Life building and connected parking garage are to begin soon, with opening of the office structure expected late next year, planning documents said. The other office and housing structures in the entertainment zone are to be done either next year or in 2016.

The other apartments are to be completed by fall 2016.

The TIF funding, a tool that allows property tax revenue from new construction to pay some redevelopment costs, is to be a topic at today’s City Planning Board meeting.

Alchemy Development, which is planning the new apartments at 64th Avenue and Frances Street, already has developed 183 other units at Aksarben Village. The next group would resemble the existing Pinhook Flats buildings, said Alchemy owner Bert Hancock, but have a distinct name and feature red and bold color elements to complement the neighboring DLR Group.

“We want to have an impressive corner element so when you’re looking from the new arena it will really attract people’s attention,” Hancock said, referring to the $88 million sports arena that the University of Nebraska at Omaha is to open next year at 67th and Center Streets.

Earlier plans by Noddle Cos. had called for the Alchemy site to be 21 upscale “live and work” town houses, the first owner-occupied residences in the village. But Hancock said people who could afford the homes typically are older and don’t like all the stair-climbing.

“If everything had gone as planned, there would have been more town homes, but that market really evaporated in the recession,” Hancock said. “We adjusted course, added apartments and everybody is happy. It has added to the amount of people that live and work in the area.”

The other proposed apartments and office/retail structures are projects primarily of Magnum Development and McNeil Co., which previously partnered on Aksarben Cinema.

John Hughes of Magnum said that new chunk would, for the most part, finish off the 8-acre entertainment “Zone 5” bordered by Stinson Park, Aksarben Drive (parallel to the Keystone Trail), 67th Street and Frances Street. (Also in that zone is the theater and businesses including DJ’s Dugout and Aspen Athletic Club.)

Securing TIF funds is an important part of making the proposed parts fall into place, Hughes said. He said he is in negotiations with various tenants to fill the space.

The land remaining lies mostly in Zone 6, the vacant block where the $50 million Waitt Plaza is to rise. Announced six months ago, the eight-story office and retail building with a parking garage is scheduled to be completed at the northeast corner of 67th and Frances Streets by early 2016.

Plans for that block call for two other office/retail buildings. Noddle said marketing and tenant recruitment for all three has ramped up.

A few property patches “here and there” remain and could become homes to various users as the village further matures, said Noddle. “It’s those little eclectic pieces that get filled in and really round out the mix in the village.”

China Retail: Cleanup in aisle four.

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Half of the 32 million square meters (344 million square feet) of shopping centers under construction around the world are in China, according to CBRE Group Inc. About 21 million square meters of retail space is expected to be completed by next year, a 38 percent increase in supply, according to broker Cushman, which tracks 20 cities in China.

Source: Bloomberg

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Lübeck: A turning point in World War 2

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Anyone who has read Slaughterhouse Five learned about the Allied destruction of Dresden during World War Two. Most accounts of the attack recall it with regret at the massive destruction of innocent life and property in one of Europe’s most picturesque cities.

Looking back on decisions made during warfare, it’s always easier to claim that one attack was more heinous than another. In the heat of battle, when the very notion of freedom and justice is under threat in the face of a ruthless fascist regime, all bets seem to be off the table.

And yet, there were some moments in World War 2 that seemed to cross a line. The idea that there were “civilized” rules of war that somehow implied that attacking ordinary citizens was wrong, now seems quaint in the present era when dictators will go so far as to gas their own citizens.

The Palm Sunday 1942 bombing of the German port city of Lübeck was one of the moments of war that seemed to indicate a new threshold had been crossed.

Lübeck was considered to be an architectural treasure and was largely bereft of military targets. The Royal Air Force decided that they needed to begin a program of bombing civilian areas in an effort to diminish German morale. They had also recently developed incendiary bombs and wanted to deploy them in an older city that was sure to burn rapidly.

The bombing caused major destruction and civilian deaths, but did little to diminish German morale. As a retaliation, the Luftwaffe initiated a series of bombings against English cities known for their picturesque charm rather than for military importance. Bath, Exeter, Canterbury and York were bombed by the Nazi’s, but with limited success.

These raids were known as the Baedecker Blitz because the targets were selected from a 1937 Baedeker travel guide of Britain.