San Antonio Express-News (Sunday)
GrayStreet letting go of most of planned mixed-use site near Pearl
GrayStreet Partners is selling a big chunk of the land where it has said it plans to develop a massive mixed-use community.
The San Antonio firm has been buying land near the Pearl since 2014, including properties previously owned by the San Antonio Independent School District, Bexar Appraisal District records indicate.
Last fall, a GrayStreet executive said the firm was working with Houston-based Midway on turning about 20 acres across Broadway into a 1.6-million-square-foot community with multifamily housing, retail and hospitality space, offices and outdoor plazas.
“This is a total transformation of the area,” GrayStreet director of development Peter French told the city’s Midtown Tax Increment Reinvestment Zone board in September.
The $560.8 million development, dubbed Broadway East, would be completed in phases through 2030. Work on an apartment complex that’s part of the first phase is expected to start next month.
GrayStreet recently put 14.7 acres of the site up for sale, including parcels stretching from Broadway past North Hackberry Street and between Casa Blanca and Carson streets. JLL Capital Markets is representing the firm
and began marketing the property in mid-December; offers are due Feb. 4.
“We are seeking a developer or investor that recognizes the significance of this opportunity and has the financial resources and vision to capitalize on the full potential of the development site,” Davis Adams, managing director at JLL, said in a statement.
GrayStreet’s French declined to comment for this article. Midway signed a letter of intent with the firm last year to develop the community.
“We have invested a great deal of time and resources figuring out this unique property and are currently engaged in an extensive master planning effort,” a representative
from Midway said. “We remain interested in the property.”
The first phase of Broadway East includes apartments built by Encore Enterprises Inc., which developed the Encore SoFlo complex downtown.
The Dallas firm bought roughly 4.1 acres between Carson, Austin, Grayson and North Alamo streets, and expects to start construction on a five-story, 386-unit complex in February, said spokeswoman Amy Dunaway. Encore acquired most of the land from GrayStreet.
The development’s first stage also includes infrastructure upgrades, French told the TIRZ board last fall.
The firms are seeking $8.9
million for those improvements, and a total of $20.5 million in reimbursement funds and a Chapter 380 economic development agreement. The TIRZ reimburses developers for public improvements. The reimbursements are paid from property tax revenue.
“There’s been a significant amount of disinvestment in this area over the preceding decades, so we have literally crumbling sidewalks when they exist,” French said. “It has to be improved top to bottom.”
The firm predicted tax revenue — including property, sales and hotel occupancy taxes — from 2020 through 2030 will total $163 million.
French also told the TIRZ board that rent increases on a percentage of apartments at Broadway East would be capped based on the Consumer Price Index. He said some smaller units in the $1,200 to $1,400 range would be built, and that the developers would set up a fund to support affordable housing and community activities.
Across from the cluster of Broadway East properties it is selling, GrayStreet plans to develop a 20-story building with a W Hotel and offices.
The 195-room hotel is in the final planning stage, according to a report by data firm STR, which tracks the hospitality industry. Projects in that phase are confirmed and under contract, and hotel construction is expected to begin in the next 12 months, STR spokeswoman Haley Luther said.
Less than 2 miles down Broadway, renovations to the former San Antonio Light newspaper building are ongoing. The firm bought the building from Hearst Corp. in 2016 and is turning it into office space for tenants, including the San Antonio Express-News.
Further south, GrayStreet bought the dilapidated former Lone Star Brewery complex last year with plans to eventually turn the roughly 32-acre site into a mixed-use development. It is also working on that project with Midway.
GrayStreet recently sold the historic Vogue building downtown, which was among nine properties on Houston Street it acquired in 2015 in one of the biggest deals in years in San Antonio’s urban core.