EDGE, Sterick developers enter garage lease agreement
The Economic Development Growth Engine for Memphis and Shelby County (EDGE) is purchasing a 350-vehicle parking garage from Hotel Indigo.
On Wednesday, the EDGE board members voted in favor of purchasing the garage, located at 22 N. B.B. King Blvd., in conjunction with aiding the developers behind the historic Sterick Building.
In April, Memphis-based Constellation Properties acquired the 29-story Sterick Building. The 340,000-squarefoot building dates back to 1926 and has been vacant since 1986.
Stuart Harris of Constellation Properties said the intention of the Sterick project isn’t to redevelop one building, but rather have the Sterick serve as a focal point within the neighborhood and its respective Downtown district.
“The hotel doesn’t need 350 parking spaces,” he said.
With the B.B. King Boulevard garage agreement, EDGE will purchase the garage and HVAC systems for $4.2 million.
The Sterick will lease out the garage. Additionally, EDGE will reimburse Sterick North LLC (lease) $600,000 for renovations to the garage. Sterick North will have the opportunity to buy back the garage during its lease terms.
Harris said once construction financing is closed the intention is to buy the garage back from EDGE before the loan term ends in March 2028.
“When we go fund construction is when we take EDGE out,” Harris said.
The garage was originally built by Kemmons Wilson and Herbert Humphreys, Harris said. Wilson later built a Downtown Holiday Inn location over the garage. The garage used to connect directly to the Sterick, however, it still has an underground connecting passage. The parking is the main benefit with the passage being the secondary benefit, Harris said. The underground passage allows for easier construction and equipment movement including having to possibly avoid using a helicopter to hoist an HVAC system onto the Sterick building’s roof. The move would save Constellation Properties approximately $7 million in construction costs, according to Grinder Taber Grinder estimates.
The B.B. King Boulevard garage is currently owned by 22 North Third LLC, an affiliate of Georgia-based DSM Real Estate Partners. DSM Real Estate developed the Indigo Hotel. The 22 North Third LLC purchased the site in December 2016 for $5,925,000, according to the Shelby County Register of Deeds.
DMN Westinghouse expansion to add 40 jobs
Also on Wednesday, EDGE approved a 10-year Fast Track payment-in-lieuof-taxes (PILOT) for DMN Westinghouse.
The Netherlands-based company has its U.S. headquarters in West Memphis and is planning to expand operations in the Mid-south. The new 53,136square-foot facility at 1507 Two Place will replace the company’s existing warehouse. In June, EDGE previously a PILOT for DMN for a new facility at 2500 Channel Drive on Presidents Island. Wednesday’s approval is for an amendment to the original PILOT.
With the change in the location, the cost of investment has also increased; the development is expected to cost $18,032,612. The total cost includes a Community Reinvestment Credit worth $911,100. Approximately $7.8 million of that total, will be used toward property renovation for the Whitehaven site, according to the PILOT application.
The DMN Westinghouse expansion will add 40 new jobs, with an average wage worth $61,000, according to the PILOT application. The company will have a total of 89 jobs.
The property includes three acres and is listed as 1507-1549 Two Place. New York-based 1507 Two Place Trolley 1 LP purchased the site for $2,715,000 in November 2022, according to the Shelby County Register of Deeds.
According to the PILOT application, the property is currently generating $25,070 in city and county taxes. During the 10-year PILOT term it is estimated to create more than $60,000 annually in city and county taxes and approximately $154,324 after the PILOT term ends.
Neil Strebig is a journalist with The Commercial Appeal. He can be reached at neil.strebig@commercialappeal.com , 901-426-0679 or via X/twitter, @neilstrebig