Tipping Points & Lawsuits

After months of complaints, Enzo night club is being sued by the Monarch apartments.  This is not surprising, but the suit could be unfounded if Enzo has been operating in compliance with existing laws.  According the article, city police and fire officials believe they have been.  Behind the scenes, various advocacy groups are discussing the bigger question: are existing compatibility laws failing a mixed-use downtown?

Outside of the established entertainment districts of E 6th Street and the Warehouse District, there’s unrest brewing between downtown residents and night clubs.  These two groups evolved in the same playground over the past decade.  Now, both seem uncertain about the rules and who’s playing by them.

Can’t we all just get along?

One of my favorite books is Freakonomics – a book that challenges our core economic motivations.  I’m a perfect example of irrationality.  I am a downtown property owner.  I believe that scarcity creates value.  Using purely economic instinct, I should support the anti-height and anti-density sentiment we’re used to seeing from ANC, since the expected result would be less real estate for my properties to compete with.  However, I have qualitative interests that go beyond simple economics.  So, I do support height and density initiatives designed to create more housing in downtown.

In similar fashion, a club owner might want to limit the creation of new bars in downtown Austin in order to preserve their existing fiefdoms.  Why desire more competition, right?  I know many bar owners, but I’ve never once heard them say “there’s too many bars”.  It makes sense, as they don’t want to be blocked from opening future concepts/locations.

There’s also the argument for economies of agglomeration, which helps to explain why destination entertainment districts thrive.

Responding to exogenous forces

Remember when the City of Austin banned smoking inside bars?  If you do, you might recall the uproar from bar owners suggesting that would kill their business.  In the long run, bars adapted.  The response was to take business outdoors to rooftop decks and open air lounges.  This phenomenon paralleled the residential boom in downtown, and created new Outdoor Music Venue challenges for lawmakers (to be discussed in another article).  Look around.  Now, there are more bars than ever in downtown Austin.

Another reason for the surge of bar development: parking.  CBD bars don’t need onsite or adjacent parking.  By requirement of the law and/or lender, onsite parking isn’t as important to a bar’s success than it is for retail and restaurant uses.  So, it’s no surprise we’re see more bars.  They’re simply easier to build, finish out, and operate.  CBD zoning enables this.

Still tippin’

According to the Texas Bar Nightclub Alliance (TBNA) there are more alcohol retailers in downtown Austin’s 78701 zipcode than any other zip code in the United States!

I went to the TABC and pulled all of the permits in 78701, and found approximately 290 permits.

Big whoop, Jude.  What’s your point?

At what point are there so many night clubs that they collectively begin to erode the quality-of-life for residents and visitors of downtown?  I think the answer has to do with compatibility, more than raw numbers.

Have you seen the vision for Congress Ave?  It’s mixed-use. These pics from the holiday stroll should help you visualize it.  Downtown Austin is more than just bar-centric nightlife.  Night clubs outside of the established entertainment districts (E 6th & Warehouse) need to play nice with their neighbors.  And residents need to support the ones that do!

I support the Downtown Austin Plan’s recommendation for conditional use permits for new downtown Austin night clubs outside the entertainment districts.  It’s a softball pitch for stakeholders to foul out the bad players.

Jude, stop being lame.

Meh, get off my proverbial lawn.  Few new night clubs add to our city’s brand and goodwill.  IMO, we’re at the tipping point of problematic “bar creep” outside of the entertainment districts and into areas envisioned for more mixed-use.

Maybe I’m growing up, and through the course of business I see more families in downtown Austin than ever before.  I see, in aggregate, the billions of dollars homeowners have invested in their downtown residences.

Unlike E. 6th Street (aka. “dirty 6th”), W. 6th Street was not a major destination until there were 1,500+ high rise doors and $500,000,000 in residential multi-family/condo property tax base surrounded it.  Rainey Street wasn’t a destination until 1,000+ high rise doors and $250,000,000 in residential multi-family/condo property tax base surrounded it.

Entertainment “districts” are a piece of the Downtown Austin CBD pie.  Not the whole pie.

-Jude

About Jude Galligan

Jude Galligan, REALTOR, Principal of REATX Realty and publisher of Downtown Austin Blog (aka. "DAB"), spends his time matching remarkable people with remarkable properties in Austin’s urban core. A resident owner in downtown Austin, Jude serves on the Board of the Downtown Austin Alliance (DAA) and the City of Austin Downtown Commission. Contact Jude.

Comments

  1. As a downtown resident, I totally agree with Jude.

    I wish there was a rule to restrict the noise levels at the clubs on 6th st also. I understand it is ‘entertainment district’, however some clubs like Klub Krucial go overboard and we can’t even sleep until 2am! That’s not the kind of downtown living that residents want.

  2. As a Monarch resident I know I am totally biased, but I am glad Jude is writing about the bigger picture.

    When we moved into the building the Enzo space was slated to be a wine bar. Clearly there is a big difference between that type of establishment and a late night bar/club. And when Enzo was being built out they claimed it was a “restaurant / lounge”. Well the restaurant part is a joke, and there is almost never anyone in the venue before 10pm.

    All of which says to me that the establishment is not a good fit for the location. I too am happy to have bars outside of East 6th, but if you look at what for example the 360 has done with its food/drink options, I think the difference is pretty clear. What they have works with the building and the location.

    Unfortunately, the Monarch now has a situation that that is neither and clearly the lawsuit is the result.

    • Yes, 360 nails it.

      360 has a great blend of venues (including bars), none-of-which seem to interfere with quality of life. They are the best example of a mixed-use high rise in downtown.

      However, I don’t think 360 residents can credibly complain [beyond the existing sound ordinance] about La Zona Rosa – since LZR was there first. Conversely, Monarch was leased up long before Enzo. You’re correct, it was originally going to be VIN Bistro.

  3. avatar Lance Hunter says:

    I don’t consider new bars opening outside of the normal zones a bad thing. In fact, I think it’s nice to have a place to go out and drink downtown that aren’t on E 6th (which can be a bit like a war zone on weekends) or the Warehouse district (where Jersey Shore is an aspiration, not a cautionary tale). The new places opening in the Rainey Street area, for example, are great low-key spots to meet and socialize with friends and have a few drinks.

    My friend who lived at the Monarch enjoyed hearing the music coming from The Tiniest Bar in Texas, occasionally leaving his patio door open so it would drift in as he went about his evening. When he finally moved out of the place it had a lot more to do with his dissatisfaction with the management than the bars nearby. When I purchased my condo, the ability to bike to shows happening at the Mohawk (or other Red River spots), to walk to the clubs where my friends liked to go party, and the general abundance of places to go out and be social had a much bigger influence on my decision than other downtown features (like say, the mediocre 2nd St shopping district).

    The apartment projects downtown (even moreso than the condos) should think twice before trying to push back against bars and clubs near them. Lame bars are going to close for the same reason lame bars close almost every week downtown, because the customers reject them. (And hey, they’ll leave behind an improved/renovated space for a restaurant, retailer, or other place to take over.) No need for The Monarch to force the issue with a lawsuit, especially when it could turn out that they’re killing off a spot that could later turn out to be a major motivation for future residents to lease there.

    • Lance, thanks for the comment. I think we’re on the same page… I too like many venues that exist outside the established entertainment districts. I’m not suggesting there isn’t room for them. Just an observation that there is a tipping point, and there should be a more nuanced balance of uses outside the entertainment districts

      You might not see that the TBNA is lobbying downtown stakeholders in an effort to increase volume levels, play later into the morning hours, at more venues in parts of downtown adjacent to heavy residential use. Rainey Street included.

      CBD is a double edged sword, so we’re figuring out how to live/work together. There would be no high rise living without CBD zoning, and no subsequent business to support the constituent residents.

  4. I loved Freakonomics too but consider this.

    ” I am a downtown property owner. I believe that scarcity creates value. Using purely economic instinct, I should support the anti-height and anti-density sentiment we’re used to seeing from ANC, since the expected result would be less real estate for my properties to compete with. However, I have qualitative interests that go beyond simple economics.”

    Yet you are also a realtor specializing in the downtown market, thus looking at just simple economics, you would probably easily conclude that more units for sale equals more business for you. This growth in your business offsets the possible loss of appreciation of your personal unit.

    • You bring up a good point. One that is not lost on me. I can just tell you that my beliefs about dense mixed-use neighborhoods are based on how I grew up. There are luxury waterfront Realtors that would argue vehemently against more supply. The supply/demand business case depends on your perspective.

      • I have the same viewpoint. It’s one reason I didn’t like Washington DC. because all the buildings are height restricted.

  5. From the article there were 19 noise complaints from the Monarch 9 from 1 unit being too loud and 10 from Enzos.

    It seems they should worry more about cleaning up their own house before looking around.

    Although I’ve got to feel for the person on a 5th floor condo that all of the sudden has to deal with late night street noise and music when before it was quiet.

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