Ex-rackspace HQ to be business park
Cleveland-based company spending up to $50M to purchase, redevelop 66-acre property
Rackspace Technology Inc.’s former Windcrest headquarters has a new owner. Industrial Commercial Properties LLC said Friday it has closed its purchase of the property, which it plans to turn into a business park with multiple tenants.
The Cleveland, Ohio-based company is spending from $40 million to $50 million to acquire and refurbish the 1.2 million-square-foot building on 66 acres and pursue industrial, manufacturing, office and retail tenants. It has a track record of redeveloping vacant or struggling malls and corporate campuses.
“The Windcrest International Business Park will be a healthy mutual fund for the city, county and Windcrest Economic Development Corp.,” Chris Semarjian, owner of Industrial Commercial Properties, said in a statement. “It will no longer rely upon the success and longevity of a single user. This property has the potential to become a booming economic hub for the region.”
Windcrest and Bexar County are providing a $4.85 million grant — $2 million from the city and $2.85 million
from the county — for the project. The Windcrest Economic Development Corp. will hold the title and lease it to its new owner, making it exempt from property taxes. That exemption is valued at between $5.65 million and $6.9 million over the span of Industrial Commercial Properties’ seven-year agreement with the city.
It requires the company to create from 300 to 1,200 jobs, a Windcrest spokesperson said. Renovations are expected to begin within 60 to 90 days and full occupancy reached in up to five years.
The amount of sales tax
revenue the project will generate will depend on the types of businesses it attracts. The spokesperson said the city’s “conservative estimate” is $200,000 after three years.
Windcrest also expects Rackspace to repay $9 million of the financial perks it received when it took over the building, which was built and opened in 1976 as the Windsor Park Mall. Under an agreement that was to run through 2037, the cloud computing company received $72 million in tax breaks and grants from the city and the
Texas Enterprise Fund in 2008 to convert the mall for its offices.
Rackspace announced last fall that it would leave the building, known among its employees as the Castle, amid the pandemic-era shift to more remote and hybrid work. The company is moving into about 90,000 square feet in a building near Stone Oak, a location it said will result in shorter commutes for its workers.
During discussions last fall about Industrial Commercial Properties’ proposed acquisition, Jennifer Newman, president of the economic development
corporation, said Windcrest’s risk would be diversified because multiple tenants rather than one would occupy the building.
Having a buyer lined up as Rackspace departed also meant the city could continue collecting sales tax and not have to worry about securing an empty building, she said. The agreement with the new owner is much shorter than the 30-year deal with Rackspace, reducing the amount of time before the property goes back on the tax rolls, Newman added.
“Windcrest International Business Park will provide a new front door for business and our community as a whole,” she said in a statement Friday.