The Canopy by Hilton and the Witte building, on the 100 block of East Commerce Street, are due to open next month.
The Canopy by Hilton (left) and the Witte building, on the 100 block of East Commerce Street, are due to open next month. Photos by Ben Olivo | Heron

A stretch of East Commerce Street, which for years has been hidden behind construction fences, is set to come back to life next month with the opening of a 22-story hotel and four restaurants and bars overlooking the River Walk.

The Canopy by Hilton, a 195-room boutique hotel at the corner of Commerce and North St. Mary's streets, is expected to open in mid- to late-April, said its developer, Chris Hill, who owns the Esquire Tavern next door. The hotel’s management company has already moved in office furniture and is preparing to begin employee training, he said.

When plans for the hotel were revealed in 2016, Hill said he expected to complete it in 2018, but construction has been delayed by a number of factors including the discovery of unexpected utility lines underground and the difficulty of preserving historic structures on the site, he said.

GOOGLE | HERON

"We are barreling toward the finish line," he said. "It's been a difficult project for a number of reasons."

On the Canopy's river level, there will be a restaurant and bar named Domingo serving South Texas-inspired cuisine using local ingredients, he said. The building will also feature a bar named Otro on a third-floor terrace overlooking the River Walk, serving cocktails and light refreshments. The bar will feature a backdrop of flowing water, said Patrick Shearer, president of Hill's development company, Crockett Urban Ventures.

The hotel, restaurant and bar will be managed by White Lodging, a company based in Indiana, which manages numerous major hotels in Austin, including the downtown JW Marriott. In San Antonio, it manages the Marriott Plaza on South Alamo Street across from Hemisfair.

The hotel will remain under the ownership of an entity affiliated with Crockett Urban Ventures, paying a fee to Hilton to be a part of the brand, Hill said.

At the other end of the block, Hill has spent the last several years restoring the historic, three-story Witte building, which has long sat vacant despite its prominent position overlooking a corner of the River Walk.

The Canopy by Hilton is located at East Commerce and North St. Mary's streets is due for completion in April. Photo by Ben Olivo | Heron

On the building's river level, there will be a tiki bar named Hugman's Oasis, named after River Walk architect Robert H.H. Hugman. The street level will feature a Vietnamese restaurant named House of Má, operated by Eric Treviño and Louis Singh, the team that opened Singhs Vietnamese the St. Mary's Strip.

The restaurants are also set to open next month, Shearer said.

"Both of them rely heavily on outdoor seating, so I think they'll be good examples of offering people a safe, fun dining experience as we get through Covid," he said.

The second floor of the Witte will offer a private dining room overlooking the River Walk, available for small events, Shearer said. The third floor is being renovated into four micro-apartments, with about 450 square feet each, probably renting for around $1,300 a month, he said. Three of the apartments will have balconies and river views. The apartments will likely go on the market next month, after the building's elevator is completed.

Even after the opening of the Canopy and the Witte building, Commerce Street will not yet be free of construction. On the property in between the Esquire Tavern and the Witte, developer Keller Henderson is in the early stages of constructing a 17-story apartment building named Floodgate. In February 2020, his construction team began demolishing three commercial buildings which had been on the site.

The stretch of Commerce is in a prominent part of downtown. Along with its proximity to the River Walk, it is a couple blocks west of Hemisfair, the Henry B. Gonzalez Convention Center and the Shops at Rivercenter mall, and two blocks east of City Hall, Main Plaza, and the cluster of properties that Weston Urban is developing into high-class residential and office space.

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Shearer pointed out that after the opening of the Canopy and the Witte building, there will be five retail businesses open on that stretch of Commerce.

"I think it will add a lot of energy to the street," he said. "When Floodgate gets done, we look forward to having them activate their portion as well."

The opening of the Canopy follows a devastating year for the hospitality industry in which the Covid-19 pandemic sapped demand for tourism and caused most conventions to be cancelled. Nonetheless, Shearer said he is hopeful for the future of the downtown hotel market.

"We have seen leisure business come back to downtown in a strong way," he said. "There are lots of people who are looking for drive-able destinations where they can come for the weekend and do something different, and I think the outdoor areas of the River Walk and the family-friendly nature of downtown San Antonio work well for that."

Even as the vaccine is rolled out, the schedule of events at the Convention Center remains slim. The Canopy's target segment has always been leisure and business travelers, not convention-goers, Shearer said.

"I think it's going to take a while for the group business and conventions to come back, but we've already seen a strong rebound in the leisure travel segment," he said.

Related
» The Floodgate apartment tower closer to reality with razing of East Commerce buildings (Feb. 6, 2020)
» Tiki bar, Vietnamese restaurant set to open early 2021 inside Witte building (Dec. 16, 2020)
» Gas-powered tiki torches approved for upcoming River Walk bar (Feb. 23, 2019)
» Canopy by Hilton expected to reach max height in October (Sept. 22, 2019)
» Renderings show 17-level, octagonal Floodgate apartments towering over River Walk (Dec. 2, 2018)
» Tiki bar, Asian restaurant, apartments part of Witte building restoration (Nov. 18, 2018)

Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter

The Leeds building at 345 W. Commerce St. has been purchased by former Los Angeles developer Cory Stehr.
The Leeds building is located at 345 W. Commerce St. Photo by Ben Olivo | Heron

A developer who recently moved to San Antonio from Los Angeles has made his first downtown purchase: a historic two-story building that has long sat vacant a few doors down from the future path of the San Pedro Creek Culture Park.

After buying the Leeds building, 345 W. Commerce St., last month with a partner, Cory Stehr plans to spend $500,000 sprucing up its façade and renovating its interior, he said. The building will offer about 5,000 square feet of retail space on its ground floor, which he hopes to fill with a local restaurant. On the second floor there will be 4,800 square feet of flexible office space with month-to-month leases geared toward freelancers.

Stehr and his partner paid $900,000 for the building, its listing price, he said. The former owner was a local partnership that included members of the Gembler family. The city has declared the building a historic landmark.

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After spending nearly a decade working in the real estate industry in southern California, Stehr moved his family to San Antonio about six months ago. He likes the city's Tex-Mex culture, and wants to take part in the "resurrection" of its downtown.

One of the things he finds appealing about San Antonio is that it is unique among major cities in having a downtown where development costs are low enough that investors can afford to lease space to small businesses, he said.

"To me, San Antonio's downtown is bar none the most underrated, underutilized downtown," he said. "I can still make money putting in a tenant that doesn't have as good of credit, but I can grow with them, I can help their business grow. I can start with them when no one's willing to take them, as long as they have a good product, and I can help them turn their business into something else."

Stehr made his first purchase in the local market in July, when he bought a warehouse at 414 Vera Cruz, just west of downtown, which was formerly a factory for the Finck Cigar Company. The warehouse is now home to Element Kombucha and Tio Pelon's Salsita, a company which makes gourmet salsa. He also invests in real estate in Austin.

The Leeds building, which was constructed in 1929, is in the middle of the whirlwind of development occurring in west downtown. Next door, James Lifshutz is renovating the Kline’s building into a restaurant space. On the other side of the block, facing Houston Street, Texas Public Radio has moved into its new headquarters inside the Alameda Theater, which is being renovated. Across the street from the Leeds, Weston Urban plans to rehabilitate the former Continental Hotel into a mixed-use development. The future site of UTSA's new downtown campus is under construction two blocks to the south.

Map of the 300 block of West Commerce
1) The Leeds building, 345 W. Commerce St., was purchased in February by Cory Stehr and a partner. 2) The Kline's building, 337 W. Commerce St., owned by local developer James Lifshutz. 3) Commercial building at 331 W. Commerce St. owned by a New Mexico-based entity. 4) Two-story commercial building owned by an entity based in Aurora, Colorado. 5) The former Continental Hotel, 322 W. Commerce St., to be redeveloped by Weston Urban. 6) Texas Public Radio headquarters. 7) San Pedro Creek Culture Park current phase. Map by Heron | Google

And, of course, the rehabilitation of San Pedro Creek into a walking park similar to the River Walk will tie it all together. The creek runs about 80 yards east of the building, beside the Penner's department store.

"With that character, and with San Pedro Creek, it begs for someone to say, 'I'll put a cool concept there’," Stehr said of his building. "We might have to fill it with some tenants we're not thrilled to take in the short-term, just to carry it. But when the street builds up, I would look forward to seeing a great restaurant. I can see people taking their bikes right off of San Pedro Creek and saying 'Meet me for happy hour, meet me for dinner, meet me for lunch.' People walking around, people bustling."

The Leeds has sat vacant for years, its second-floor windows boarded-up. Stehr wants to replace its awning and remove some of the stucco on its exterior.

He plans to make further investments downtown. On Thursday morning, he said he was about to leave for an appointment to tour a building on the River Walk.

He rhapsodized about San Antonio's unique cultural character and the artistry on view in its historic architecture—and lamented that so many downtown buildings have become blighted.

"Downtown San Antonio has all this character, but it's gone," he said. "I see the potential here, being from L.A.—not to tout myself, and say I know better than the Texans. I just think that when it's your own, you get complacent. When you see the same thing, you don't appreciate its beauty. Someone who lives in Bali and lives on the beach might say, 'Eh, it's a body of blue water, what do you mean, man? It's not that special.' Someone who comes from a polluted beach might say, 'It's pretty special.'"

Related
» UTSA has started building its data science school, national security center on Dolorosa (Jan. 31, 2021)
» Continental Hotel sold to Weston Urban for mixed-use project (June 9, 2020)
» West Commerce likely to become San Antonio’s next nightlife destination (Jan. 18, 2020)

Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter

The Esperanza Peace and Justice Center plans to rehabilitate a cluster of seven little homes at its Rinconcito de Esperanza arts hub 816 S. Colorado St.
The envisioned Rinconcito de Esperanza arts hub at 816 S. Colorado St. Courtesy Esperanza Peace and Justice Center

The Esperanza Peace and Justice Center is preparing to rehabilitate a cluster of seven little homes, or "casitas," on the West Side in order to create community space and preserve a slice of the neighborhood from gentrification.

As part of the Rinconcito de Esperanza cultural hub it is building at 816 S. Colorado St., the center plans to use the casitas as a community health center, an internet access point and a studio for recording oral histories of the neighborhood, among other things, said Graciela Sanchez, the Esperanza’s director.

Dating from as early as the 1920s, the casitas represent a style of living that was once common on the West Side but which has largely disappeared as a result of urban redevelopment projects undertaken around the 1970s, Sanchez said. In the earlier decades of the 20th century, residents of the West Side often lived in casitas, also known as "shotgun homes," packed closely together with those of their relatives, with whom they formed communities of support, she said.

This shotgun house is located on the Rinconcito de Esperanza property on South Colorado Street, which is a historic district.
This shotgun house on South Colorado Street is located within Rinconcito de Esperanza, which is a historic district. Photo by Ben Olivo | Heron
The Esperanza Peace and Justice Center plans to rehabilitate a cluster of seven little homes at its Rinconcito de Esperanza arts hub 816 S. Colorado St.
COURTESY ESPERANZA PEACE AND JUSTICE CENTER

The wave of recent large-scale development, which is beginning to spill out of downtown, threatens what is left of that way of life, she said.

"The whole complex essentially resembles what the neighborhood would have looked like once upon a time, and is being preserved at a moment when the entire neighborhood is coming down, bit by bit," Sanchez said. "We were densely populated, and they de-densified it, and now we're trying to densify it again. So we just want to show people how it's still possible to build in that way."

The Rinconcito hub sits at the northeast corner of Guadalupe and South Colorado streets. The seven casitas are behind Casa de Cuentos, a historic home which Esperanza uses as a gathering space, and the former Ruben's Ice House, which the center plans to convert into the Museo del Westside, a museum dedicated to preserving the area's working-class history and culture. Last year, the city approved Esperanza's request to turn the 0.6-acre cluster of buildings into the West Side's first historic district.

The hub, about three quarters of a mile west of downtown, is face-to-face with San Antonio's urban boom: On vacant land across the street, the San Antonio Housing Authority (SAHA) is partnering with developer NRP Group to build a four-story, 88-unit apartment complex called Legacy at Alazán, which also abuts the Alazán Courts.

Until recently, SAHA and the Esperanza, among other housing advocacy groups, were embroiled in a bitter fight involving the Alazán Courts. Under previous leadership, SAHA planned to partner with NRP Group on the demolition of the public housing, and replace it with mixed-income apartments. In January, SAHA’s interim CEO, Ed Hinojosa Jr., announced a new direction: SAHA would still demolish and rebuild the courts, but as 100% public housing, and with the intent of adding to the stock.

In December, the Westside Tax Increment Reinvestment Zone (TIRZ) awarded $1.5 million to Esperanza to fix up the casitas and finish its work on the Ruben's building, including the addition of an adobe structure to serve as a museum gallery.

Ruben's Ice House to be Museo del Westside
The former Ruben's Ice House is being restored and converted into the Museo del Westside. Photo by Ben Olivo | Heron

When the work is done, the Museo will offer about 2,300 square feet of space. One of the first events will be a symposium commemorating the 1921 flood which caused many deaths in the area around Alazán Creek, done in partnership with the Westside Preservation Alliance and Trinity University, Sanchez said.

The open space between the casitas, the Casa de Cuentos and the Ruben's building will form a courtyard to be used for music performances, film screenings, dances and literary events, she said.

The project encompassing the Museo and the casitas is expected to cost a total $3.1 million, Sanchez said. Along with the TIRZ money, Esperanza expects to cover $500,000 or so of the cost from state historic tax credits, and is working on raising the rest by applying for grants and appealing to private donors and members of the West Side community, she said.

In a TIRZ, revenue gained from the rise in property taxes is collected and reinvested within the boundary.

The center is waiting for the city to award the permits needed to begin construction, which is expected to take two years, she said.

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In a prior project, Esperanza spent nearly $1.5 million installing a new roof to the Ruben's building and girding its interior with a metal structure. That project also included the construction of the MujerArtes Studio, a pottery studio used by women on the West Side, and the restoration of the 100-year-old house where Casa de Cuentos is now located.

As part of that project, Esperanza fixed up a casita behind Casa de Cuentos and filled it with historic furniture so that it could demonstrate what it would have felt like to be in such a home when the neighborhood was full of them. Rehabbing that structure required lifting it off the ground so that a new foundation could be installed, she said. The same procedure might be required for the other casitas.

When Esperanza bought the Casa de Cuentos building in 2001, the former owners offered to tear down that casita, Sanchez said.

"I had to say, 'Please, don't tear it down, we want to preserve it,'" she said. "And now it's one of the finest examples of a little casita that would have been home to thousands of people in this city, once upon a time."

Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter

The former CPS Energy building at 146 Navarro St. (left) was recently sold. Photo by Ben Olivo | Heron

CPS Energy has sold one of its surplus downtown properties, a 10-story office building and parking garage on the River Walk, to a commercial real estate firm from Los Angeles that specializes in buying assets quickly and with cash.

The city-owned utility sold the building, 146 Navarro St., on Feb. 5 to BH Properties for $22.3 million, according to county property records and information provided by CPS Energy spokeswoman Nora Castro. The Bexar Appraisal District assessed the property at $24.1 million last year.

The building is one of six downtown properties that CPS Energy decided to put up for sale in fall 2018 to help offset the $210 million price tag for the renovation of its new headquarters at 500 McCullough Ave. The utility moved into the new headquarters in November, CPS Energy spokeswoman Melissa Sorola said.

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The other properties for sale include the utility's former headquarters at 145 Navarro St., the surface lot next to the Mexican Consulate across the street, and the UFO-shaped Villita Assembly Building at 401 Villita St.

Last March, CPS Energy said it had selected a buyer for several of the properties, including the ones at 145 and 146 Navarro, which are connected by a skywalk, according to media reports. The utility's board of trustees gave CEO Paula Gold-Williams the go-ahead to begin negotiations.

The utility did not say at the time who the potential buyer was, but it must not have been BH Properties, because Andrew Van Tuyle, the company's senior managing director of investments, said in a phone interview that BH Properties only began talking with CPS in December.

CPS Energy declined on Thursday evening to provide more information on what happened with the negotiations which were reported on in March, after being sent questions Wednesday afternoon.

"It actually happened pretty quick," Van Tuyle said of the negotiations. The transaction was all-cash, he said.

BH Properties' technique of buying with cash has put it in a strong position during the pandemic, Van Tuyle said. The collapse of the hotel and office markets has made it extremely difficult to arrange financing for acquisitions and construction, a trend which has derailed local projects such as Zachry's plans for the northwest corner of Hemisfair.

"We set ourselves apart from a lot of other real estate groups because we don't have any outside investors," Van Tuyle said. "We buy all-cash and then sort of figure out our financing later… In this particular situation I think we closed like three and a half weeks from start to finish, which is really rare in the industry to do it that quick. It's unique in the marketplace to be able to do that."

CPS ENERGY SURPLUS PROPERTIES
» Main office building, 145 Navarro St.
» Navarro building and garage, 146 Navarro St. — SOLD
» Tower garage connected to main office, 211 Villita St. (portion owned by CPS Energy)
» Surface parking, adjacent to Mexican Consulate
» Villita Assembly Building, 401 Villita St.
» Northside Customer Service Center, 7000 San Pedro Ave.
» Former Jones Avenue Service Center, 326 W. Jones Ave.

There were multiple bidders for the 146 Navarro property, Castro said in an email.

"We will be able to disclose more information about each of the other surplus properties as their sales become final," she said.

Van Tuyle said that it is his understanding that the 145 Navarro building and the surface lot by the Mexican Consulate are under contract to other buyers.

All in all, CPS Energy is selling 10.5 acres of property. In 2016, the utility bought two 35-year-old towers at 500 McCullough with plans to reduce them to their steel structure and renovate them into a state-of-the-art new headquarters with 430,000 square feet of space by 2019.

The 146 Navarro building includes three stories of offices, with about 100,000 square feet of space, atop a parking garage with 605 spaces, Van Tuyle said. The property appealed to BH Properties because of its frontage on the River Walk, the beautiful views from its offices, and its abundance of parking, which is all-too-rare downtown. The company plans to open up the parking for daily use, he said.

"The vast majority of downtown San Antonio is, I would say, under-parked. You have a lot of hotels and office buildings that just don't have enough parking to be able to offer their tenants or visitors so they have to find parking other places," he said. "We can offer something to the market which really truly doesn't exist."

BH Properties plans to give the building a "facelift," including a paint job and updates to its lighting and common areas, he said. The building has long been occupied by CPS Energy since it was constructed in the late '60s.

The building is the only property that BH Properties currently owns in San Antonio, but the company plans to expand in the market, Van Tuyle said.

"San Antonio, we really like that market," Van Tuyle said. "We hope to do more soon in that market. We hope to build a nice little portfolio in San Antonio and Texas altogether over the next couple years."

Previously published
» CPS Energy chooses bidder for former HQ and other downtown properties (San Antonio Express-News, March 30, 2020)
» CPS Energy selling six downtown properties (San Antonio Heron, Sept. 25, 2018)

Heron Editor Ben Olivo can be reached at 210-421-3932 | ben@saheron.com | @rbolivo on Twitter

This rendering shows the lawn at Hemisfair's Civic Park. Courtesy Hemisfair

City Council members were by and large supportive of the Hemisfair redevelopment project, which has struggled for years with construction delays, during a presentation Wednesday about an upcoming search for a firm to build its newest and largest area, called Civic Park, on the corner of Market and South Alamo streets.

Zachry Corp., a local construction firm chosen through a bidding process in 2017, was supposed to finish work early this year on a $200 million development of offices, retail and a hotel around Civic Park, but it has yet to break ground.

The Hemisfair Park Area Redevelopment Corp., or HPARC, has decided to start work on Civic Park while it holds negotiations with Zachry and the city to change Zachry's construction proposal out of concern that it is no longer feasible after the pandemic upended the hotel and office markets.

"I share my colleagues' optimism," Mayor Ron Nirenberg said of Hemisfair. "We know, over the last 10 years, how many mountains have been moved to make the development of Hemisfair a reality, at least on paper… This project is much too important for us to not see through to fruition."

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District 9 Councilman John Courage was one of the few to express concern.

"I just feel like it's taken a long time, and we don't have much to show for it," he said. "The biggest part of this project was the economic generation that was supposed to come out of all the development around Civic Park, and it isn't there, and I'm wondering if it's going to come there, and if we're going to have spend more money later to finish the rest of the park."

Omar Gonzalez, HPARC's director of real estate, was quick to point out to Courage that Yanaguana Garden, a playground area that opened in 2015 on Hemisfair's southern side, has become the second most visited urban park in Texas.

But Courage’s criticism was aimed at the much larger vision for Hemisfair, which includes the mixed-use Zachry buildings, that has yet to be realized.

Zachry has not met the timelines that it had agreed upon for the development, Assistant City Manager Lori Houston said at the meeting. A spokesperson for the company declined to comment.

"There were timelines, and they will need to be adjusted," Houston said. "The pandemic changed a lot with this project. It changed the financing structure for this project... We are taking a step back to take a look at the demand: Is there demand for parking as much anymore, is there demand for housing and retail? All those things are being looked at."

The site of the future Civic Park at Hemisfair as it has stood in recent years. Photo by Ben Olivo | Heron

Zachry's project was far behind schedule even before the pandemic. In an interview last month, HPARC's leaders said that many factors led to the delays, including the holding of events related to San Antonio's tricentennial celebration and the NCAA Men's Final Four, and unforeseen problems in building a massive underground parking garage.

"I wish it was that easy to say, ‘Here's the one factor why it's delayed,' but the truth is, it's just really complicated," Gonzalez said last month. "You've got a number of different partners, a number of different types of commercial real estate development, different design teams that are coordinating, you have utilities, and how do you work with CPS (Energy) and SAWS, and how do you coordinate between a park and a (public-private partnership)."

The city's Public Works department plans to begin soliciting bids later this month to build the first phase of Civic Park, a nine-acre park with a lawn well-suited for concerts, an area of water fountains called The Shallows and other features that its planners hope will match the success of Yanaguana Garden.

The construction contract is expected to have a value of $28 million, said Razi Hosseini, director of Public Works. The city will negotiate a contract in the summer, and council will consider it in August, he said. The project is expected to be completed in April 2023.

The first phase of Civic Park will be funded with $21 million from the city's voter-approved 2017-2022 bond program and about $3.5 million of philanthropic donations, HPARC spokeswoman Thea Setterbo said in an email. The rest of the funding will come from "monetization of Hemisfair's ground leases," she said. Several retail businesses operate out of space they lease in historic buildings within the park.

This map shows phase 1 of Civic Park in green, and phase 2 in beige. Courtesy Hemisfair

Phase 1 is expected to include a large lawn, where Hemisfair and city officials envision San Antonio’s largest celebrations will be held.

Civic's Park Phase 2, which is expected to cost $20 million, will include a grand entryway on Market and South Alamo that leads visitors to the green space.

District 10 Councilman Clayton Perry raised questions about the cost of redeveloping Hemisfair, asking why so much was being spent on it compared to other parks in the city, many of which "don't even have water fountains," he said.

He said he hoped to see more of the funding for the second phase come from private sources.

"When are we going to see the end of this?" he asked. "Yes, it's downtown, but we've got a lot of other parks around this city that are very worthy… I'm just concerned that we're putting a lot of our eggs in one basket."

This promenade is one component of the envisioned Civic Park at Hemisfair. Courtesy Hemisfair

His concerns are not new: In 2016, when the city's 2017-2022 bond issue was being debated, representatives of some districts outside the urban core asked for some of the money being allotted to Hemisfair to be used instead for parks in their own neighborhoods.

Gonzalez said that Zachry's development probably would not look like the designs that the company released in 2018, the year after council chose it out of 11 bidders to construct the buildings around Civic Park. Those designs depicted a 14-story hotel, an eight-story office building, a food hall, and an apartment tower built in partnership with another developer, all sitting atop an 825-space underground parking garage.

Yet HPARC's leaders are insistent that whatever the company builds will bring the same amount of economic development to the area as was first envisioned.

"We did lose some time in getting started, but I think it's only been to our benefit," Gonzalez said at the Wednesday meeting. "Obviously opening a park in 2020 probably wouldn't have been for the best, but we think by the time we can get this plan underway and developed … hopefully we'll be beyond the pandemic and able to host large events."

Related
» Hemisfair’s Civic Park construction now scheduled to begin this fall (Jan. 16, 2021)
» Hemisfair’s civic park delayed because of 'unforeseen situations' (March 6, 2020)

Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter

The Aurora Apartments, 509 Howard St., may soon undergo a renovation.
The Aurora Apartments, 509 Howard St., may soon undergo a renovation. Photo by Ben Olivo | Heron

Local developer Mitch Meyer wants to build an apartment tower in which to move residents of the low-income Aurora Apartments building so that he can return it to its original use as a hotel.

Meyer is applying for $15 million in low-income housing tax credits from the Texas Department of Housing and Community Affairs to build the tower, named The Cosmopolitan, a block from the Aurora, in Tobin Hill. He said he's in talks with the U.S. Department of Housing and Urban Development for an agreement ensuring that all 105 Aurora residents would get apartments in the new building at the same rents as before.

Built in 1930 as a luxury hotel, the 10-story Aurora doesn't have a sprinkler system for its elderly residents. The city has required that all high-rises install sprinkler systems by 2028 after a fire claimed six lives at the Wedgwood senior living tower in Castle Hills in 2014.

"You ever have an old car that you love, but it keeps breaking down?" Meyer said of the Aurora. "These old buildings just get really expensive to operate… It's really hard to put a sprinkler system in when people live there. I mean, the building is solid concrete."

Along with the sprinklers, the building needs work done to its roof and its electrical and plumbing systems, as well as its heating and air conditioning, he said.

In 2017, there was a widely-reported bedbug and roach infestation at the building, and it still suffers maintenance problems. Meyer recently had to replace a water boiler after residents went three days without hot water, he said.

"These things happen in old buildings. That's why we want to build a new one," he said. "We inspect every week. We do not have bedbugs."

All residents of the Aurora are elderly and make below 30 percent of the area median income, Meyer said. Their rents are subsidized with HUD housing choice vouchers.

Meyer said that he fears he would have to let his contract with HUD expire if he doesn't get the tax credits. A spokesperson for HUD didn't respond to a request for comment.

"If we don't get the tax credits this year, then (the residents) run the risk of not having a place to live when the contract expires," he said.

The Cosmopolitan would be built on an empty lot Meyer owns at 311 W. Laurel St. It would have a rooftop terrace, a fitness area, a community garden and a dog park, he said.

Architecture firm Gomez Vazquez International has drawn up a design for the project, and Meyer has recruited Joeris General Contractors to build it. All in all, he expects it to cost around $23 million.

Meyer has submitted a pre-application to the TDHCA, said Michael Lyttle, its director of external affairs. The deadline for the full application is March 1. The TDHCA's governing board will award the tax credits in late July, Lyttle said.

City Council will vote Thursday on whether to support Meyer's application, along with ten others for separate low-income housing developments across the city.

Meyer has owned the Aurora since 2007. He said he had been "walking down the aisle" with a hotel company about transforming it into a location for their brand before the Covid pandemic upended the hospitality sector.

With the Covid vaccine now being administered, he's holding out hope that he can still turn the building into a hotel. If not, he thinks it might work as an apartment building, after renovations, though he noted that its floor space is limited, which would make it difficult to position as upscale residential space.

"It would be a boutique motel or something with an extended-stay piece," he said. "Something a bit more upscale."

ADD AMI CHART

link to TDHCA application

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Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter

This commercial building on Broadway across from the Pearl was to be part of GrayStreet Partners' Broadway East development.
A 1920s commercial building (right) stands on the 1700 block of Broadway that was to be part of GrayStreet Partners' Broadway East development across from the Pearl. Photo by Ben Olivo | Heron

It was GrayStreet Partners' biggest project yet. In 2017, the firm bought 14 acres of warehouses and bus yards from the San Antonio Independent School District on a coveted site across Broadway from the Pearl.

There, it would build a whole urban district from scratch, much as had been done at the Pearl: Broadway East, a collection of offices, apartments, restaurants and parks with a staggering price tag of $560 million.

The firm released splashy renderings, went through the arduous process of having the properties rezoned, applied for $8.9 million in public incentives, and met with residents of the adjacent neighborhood, Government Hill, to court their support, insisting in public meetings that it would be a long-term owner of the development.

Then GrayStreet changed its mind. Last month, it put the land back on the market.

Led by financial whiz Kevin Covey, who seemed capable of summoning limitless investment dollars for his downtown dreams, GrayStreet once seemed to have a bottomless appetite for construction projects. But the firm has lately been selling many of the properties that it assembled in its acquisition spree during the mid-2010s, which was fueled by taking on at least $172 million of bank debt and partnering with investors such as Andrew Sarofim of the billionaire Sarofim family of Houston, according to county property records and state corporate filings.

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Last year, it sold Travis Park Plaza, and the Vogue and Walgreens buildings, two parcels in the row of historic mid-rises it had bought on Houston Street in 2015. In fall 2019, it split its ownership of the Kress building—another of the Houston Street properties—with two Austin firms: Ovation Partners and McDonald Development Group. The Kress and neighboring Grant buildings were being modified into a modern shared office space for national brand WeWork, and into a food hall, respectively.

Reached by email, Covey said that the Covid pandemic had had a "dramatic effect" on GrayStreet's plans for Broadway East. The firm had been pursuing a partnership with a "large regional pension fund" which would have provided all the capital for its development, but the fund pulled out of the project, he said.

GrayStreet typically waits until it has completed a project to sell it, "but sometimes plans change," Covey said.

"I'm sorry that some of these didn't pan out, but I can assure you no one spent more time or money on this than we did and are very sorry to see it not happen under our watch," he said.

GreyStreet Partners recently sold the Vogue and Kress buildings on the 300 block of East Houston Street.
GreyStreet Partners recently relinquished ownership of the Vogue (from left), Grant and Kress buildings on the 300 block of East Houston Street. Photo by Ben Olivo | Heron

Many of the properties which GrayStreet has sold in recent years have indeed been completed. The Vogue building is 87.8% occupied, according to Yesenia Marili, vice president of marketing and research for real estate company Transwestern. In fall 2019, GrayStreet sold the building it had developed at 201 E. Grayson St., across from the Pearl, which is now home to high-end furniture store West Elm.

In the case of Travis Park Plaza, the firm made a profit when it sold the building in February 2020 to Entrada Partners of Los Angeles, Covey said. It had borrowed $34.7 million from two banks to buy and rehabilitate the property, county records show.

Last year, GrayStreet made a significant acquisition when it bought the Lone Star Brewery out of bankruptcy for $14.5 million. The brewery has long served as something of a trap for investors: Many have seen great potential in the 32-acre site, on the River Walk near Southtown, but no one has been able to develop it. At least four attempts have failed since the brewery shut down in 1996.

GrayStreet conceived of its plan for the brewery after Covid began to spread, so the pandemic is factored into the business plan, Covey said.

"We do continue to believe in the urban core as a market to invest in and help forward," he said. "We have been acquiring other projects and don't plan on stopping."

. . .

The former San Antonio Light building, 420 Broadway, is being renovated by GreyStreet Partners.
The former San Antonio Light building, 420 Broadway, is being renovated by GrayStreet Partners. Photo by Ben Olivo | Heron

Project delays

Many of GrayStreet's construction projects have lagged far behind schedule. The Light building, which was supposed to have been completed by the end of 2019, is still under construction. The firm ran into structural issues in the Print building, adjacent to the Light, causing a 16-month delay, Covey said.

The building's first tenant—the architecture firm Ford, Powell & Carson—will move in before the end of this month, Covey said. The San Antonio Express-News has signed a letter of intent to move in as it sells its longtime headquarters a block away. The Print building is scheduled to be finished in July, Covey said.

Rendering of the proposed W Hotel to be built by GrayStreet Partners. Rendering Courtesy of Gensler/GrayStreet Partners

Since 2018, GrayStreet has had plans to build a 20-story tower on lower Broadway with offices and a hotel operating under Marriott's W Hotel banner. The hotel was projected to open in January of next year, but it has not yet broken ground.

That project has been delayed because it took longer than expected to raise equity capital, Covey said.

"Unfortunately it pushed the project back enough that Covid eliminated the debt market for new office and hotel development," he said.

The project is on hold "until the debt markets come back," he said.

WeWork, a real estate startup, signed a lease to occupy 75,000 square feet in the Kress and the adjoining Grant building and was at one point scheduled to move in early last year. The company ran into turmoil after a failed initial public offering, leading to the ouster of its CEO. Ovation, the firm from Austin, is now trying to let WeWork out of the lease and recruit other tenants in its place, Covey said.

Renovation work on the Kress and Grant buildings is mostly completed, Covey said. The buildings have no tenants, said Ryan Harrison of Freestone Commercial Real Estate, who is leasing them.

. . .

A view of the Pearl from Austin Street in Government Hill.
A view of the Pearl from Austin Street in Government Hill. Photo by Ben Olivo | Heron

Broadway East

GrayStreet had its eye on Government Hill as early as 2015, when it started buying properties on the east side of Broadway. Across the street, the Pearl was booming. Its developer, Silver Ventures, was building the Cellars apartment tower, and would soon reveal plans for the Credit Human office tower on Broadway.

The properties didn't amount to much—a law office, a hunting supply store—until in 2017, when GrayStreet exploded their potential by buying the 14 acres from SAISD.

The purchase was a masterstroke: GrayStreet now had a rare opportunity to build an urban community from scratch, capitalizing on the growth of downtown and the Pearl. Everyone expected something ambitious, and the firm didn't disappoint, releasing renderings of high-rise buildings surrounding a public plaza. The community would include 1.6 million square feet of mixed-use space, development director Peter French said last fall.

Rendering shows Broadway East development by GrayStreet Partners (San Antonio) and Midtown (Houston).

Midway, a development firm from Houston, was partnering with GrayStreet on the project, and is still a partner on the Lone Star Brewery. Larry Sloan, Midway's executive vice president of investments and development, said it is "engaged in an extensive master planning effort" and remains interested in the site.

Another partner on the project was Andrew Sarofim, the son of Fayez Sarofim, nicknamed "The Sphinx," who has built a $1.4 billion fortune from lucrative investments in companies such as the energy pipeline firm Kinder Morgan, according to Forbes. Andrew Sarofim has also partnered with GrayStreet on the Light building, and has invested in some of the firm's other projects, he said in a brief phone call.

"We just did what we, or he, felt was best," Sarofim said about Covey. "The market has changed from when the concept first came to light, and I'm sure that whoever takes it on next will develop it for the community."

GrayStreet could have hung onto the Broadway East properties, Covey said, but it believed that the project would be built faster if it sold the site to a developer capable of starting work soon.

. . .

The resident of this house in Government Hill displays an anti-gentrification sign that read "Tax incentives (for developers) to gentrify us feels like a genocide" in the front yard.
The resident of this house in Government Hill displays an anti-gentrification sign in the front yard. Heron file photo

Effect on Government Hill

Standing between the Pearl, downtown and Fort Sam Houston, Government Hill is one of San Antonio's oldest neighborhoods, full of pre-war bungalows and Victorian mansions. Its residents say they treasure the neighborhood's diversity and its deep-rooted history. Though it's right across Interstate 35 from downtown, it has managed to preserve a quiet character, they say. Many of its homes have been in the same family for decades.

There is a belief among some residents that developers are preying upon the neighborhood, with the city's help; they point to instances in which large numbers of townhomes were built on small lots between single-family homes. Property taxes are surging.

"The taxes are going to go up anyway, that's my whole point all the time," said Antonia Infante, who has lived there for 30 years. "They're giving incentives to all these developers, but they're not giving any incentives or any breaks in our taxes. It's really hard for people like me, and especially in our neighborhood, it's all broken down in pieces, because we don't have somebody representing and fighting for us."

Attitudes toward Broadway East vary across the neighborhood. Infante said she doubted she could have afforded to shop there, but many residents say they were excited to see it go up. They hoped the project would bring green space and high-quality retail to the neighborhood, maybe even a grocery store.

As of now, there's not much on the site. Many of the properties are parking lots, surrounded by chain-link fences.

"We were never, ever anti-development. We loved the idea, we just wanted it done responsibly," resident Cindy Tower said. "We want it thoughtful, we want it pleasant, we want it sustainable, we want to get families in there, not a bunch of people who are going to come or go."

Whoever buys the Broadway East properties will be required to follow through on GrayStreet's plan, Covey said. The firm has already rezoned the properties.

"There may (be) some modifications on uses," he said. "I live here and want to see this come to (life) the way we envisioned it and as such we know that the new owners will stick to the original plan for a large mixed-use environment with public spaces."

Last summer, GrayStreet sold a 3.4-acre plot to Dallas developer Encore Multifamily, which plans to build a 386-unit apartment complex as part of Broadway East. Encore is proceeding with the project, spokeswoman Amy Dunaway said in an email.

"Somebody's going to come in" and build Broadway East, Government Hill resident Todd Mernin said. "I believe that anybody who has a vision and common sense will see the things that GrayStreet was going to do and go forward with it."

. . .

The 1700 block of Broadway looking east.
The 1700 block of Broadway looking east is to be part of Broadway East. Photo by Ben Olivo | Heron

GrayStreet's financing

Covey, who holds a degree in economics from the University of Chicago, founded GrayStreet in 2011 and staffed it with experienced investors and financiers. One of the partners is his father, Paul Covey, who has worked as a developer since the early '70s. He has served as guarantor on some of GrayStreet's loans.

Covey's mother, Beatriz, comes from the wealthy Barrera Segovia family in Monterrey, Mexico, which has strong banking connections. Covey spent much of his childhood in Monterrey. He has said that many of the firm's investors are his family from Mexico, and friends he made at Saint Mary's Hall in San Antonio.

The Lone Star Brewery taken Feb. 6, 2021.
BEN OLIVO | HERON

Many of the loans which GrayStreet accepted during its mid-2010s acquisition spree matured in 2020, or are set to mature in 2021, according to records from the Bexar County Clerk. In other words, the final payments are due in those years.

In 2016, the firm accepted five loans from Inter National Bank, which has since merged with Vantage Bank Texas, worth a total of $23.2 million, maturing in October and November of this year, the records show.

Documents from the county clerk show that GrayStreet has taken at least $172 million in loans from banks since 2013. The documents don't always specify the amount borrowed, so GrayStreet's borrowed total is likely well above that.

One of the lenders is CCJ Capital High Quality CRE Asset Fund I, a partnership which shares the same address with GrayStreet and has Covey's brother, Eric, listed as a governing member.

The maturing loans haven't put a strain on the firm, Covey said, and its debt level has little to do with its decisions to sell its properties.

"I believe our current debt levels are quite low relative to the typical commercial real estate leverage ratio for many of our peers and has little to do with the decisions to sell any individual property," he said.

Previously published
» Dallas developer plans five-story apartment complex as first phase of GrayStreet's Broadway East community
» Massive $560M Broadway East development near Pearl set to begin next month
» Amid rapid change, Government Hill divided on how to absorb incoming development

Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter

This one-story building at 123 E. Travis St. was recently purchased by Weston Urban. Photo by Ben Olivo | Heron

Weston Urban has purchased an historic building on the River Walk that once housed the famous Navy Club nightclub in order to provide river access to the adjacent Milam Building, which it plans to refurbish.

The one-story building, 123 E. Travis St., sits on 0.19 acres of land beside the Milam and immediately south of the firm's Weston Centre office tower. It is a block east of where the firm plans to build a 32-story apartment tower, downtown's first residential high-rise.

"As we think about the future of the Milam, the fact that it can now enjoy direct access to the river, that was the driving force, clearly, behind the acquisition," said Randy Smith, Weston Urban's president. "What a beautiful stretch of the river right there—we think we can do something really special. But it's too early to know exactly what that will look like."

The firm still isn't sure what it will do with the 21-story Milam, which it purchased in 2016. Smith said the building wouldn't work as office space because of its low ceilings and other features that don't jive with modern office trends.

"We're still working on that," he said. "It has not been an easy one. I know that it has a bright future, but I would be being less than forthright if I told you I knew exactly what it was."

He declined to say how much the firm paid for the Travis Street building, which it purchased as two parcels from separate sellers on Jan. 14.

The parcels were purchased from the estate of Phillip Sfair, who had operated the Navy Club, county deed records show. Open from 1954 into the 1980s, the Navy Club was a "legendary" after-hours club which hosted Frank Sinatra and Glenn Miller, according to the San Antonio Express-News. Sfair died of a heart attack in 2011 at age 91.

With the purchase, Weston Urban now owns roughly 13.5 acres of property in west downtown, county property records show. Under a deal it reached with the city of San Antonio and Frost Bank in 2015—which resulted in its construction of the new Frost Tower in 2019—the firm is also set to acquire 8.8 acres from Frost and 1.9 acres from the city. Those properties will change hands after the city moves into the old Frost headquarters at 100 W. Houston St., which it is currently renovating at a cost of $141 million.

Weston Urban is also under contract with the city to buy the old Continental Hotel on West Commerce Street and an adjacent parking lot encompassing about 1.1 acres.

All in all, when the deals go through, the firm will own nearly 26 acres, making it downtown's largest private landowner by a long shot. (On the southern side of East Cesar E. Chavez Boulevard, just outside downtown's limits, H-E-B's corporate campus occupies nearly 30 acres).

Weston Urban is still tinkering with the design for the 32-story, 351-unit apartment tower on Soledad, which received initial approval from the city's Historic and Design Review Commission in December. Nothing like it has been built downtown—to date, the tallest residential building in the district is the 14-story Vistana. Yet Smith said he is confident in its success, even as the Covid-19 pandemic has roiled real estate markets.

"In the throes of Covid, there aren't many things about real estate that aren't challenging," Smith said. "We believe those challenges to be temporary in nature, and we think that there's a lot of opportunity lying in those challenges … Our strategy and optimism for downtown have not wavered in the least."

He added, "One thing we believe we have going for us is there's just nothing like it in San Antonio, and that can be seen as a challenge or that can be seen as an opportunity. And it is clearly the latter."

The tower "has no competition," he said. "As downtown continues to grow, and continues to thrive, and attracts great jobs, we intend to create that competition."

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The Continental Hotel property will cater toward students, faculty and staff from the mini-campus that the University of Texas at San Antonio plans to build nearby, along the course of the San Pedro Creek Culture Park, Smith said. Weston Urban plans to give the development an affordability component, he said.

Even as the pandemic rages on, Smith said he is "bullish" on the future of the office market. Some businesses, such as call centers, might transition to having their employees work from home, but fast-growing companies will always value office space because of the importance of forming trusting relationships with new employees, which can't easily be done via Zoom calls, he said. And there will always be companies aiming to form a culture among their employees, which requires common working space.

"We don't see it, and we don't feel it, that the pandemic has been brutal to the office market, especially not in cities like San Antonio," he said.

Heron Editor Ben Olivo can be reached at 210-421-3932 | ben@saheron.com | @rbolivo on Twitter

The site of the future Civic Park at Hemisfair. Photo by Ben Olivo | Heron

In 2017, the City of San Antonio chose Zachry Corp. out of 11 bidders to construct buildings on the northwest corner of Hemisfair, around a new public park named Civic Park. When Zachry unveiled its design a year later, for a hotel, an office tower and a food market, it said it hoped to finish construction in early 2021—or, right around now.

Yet the site, a grassy lot next to the Henry B. Gonzalez Convention Center, surrounded by chain-link fences, has remained undeveloped for the last four years.

That could soon change, as the nonprofit that manages Hemisfair prepares to begin construction of the first phase of Civic Park, a nine-acre park with an expansive lawn, a promenade, water fountains and other features that its planners hope will match the success of Yanaguana Garden on Hemisfair's southern side.

The nonprofit, the Hemisfair Park Area Redevelopment Corp., or HPARC, will soon solicit bids from contractors after briefing the City Council at an upcoming meeting, and hopes to start work in the fall, said Andres Andujar, its CEO.

There is little hope of Zachry breaking ground soon on the buildings that will enclose the park, though. The company, led by chairman and CEO David Zachry, is in talks with HPARC and the city to change its $200 million proposal, enshrined in a lease agreement approved by City Council in 2017, because it is unclear whether it is still feasible after the pandemic has wracked the real estate and financial markets, Andujar said. Zachry is now considering changing the mix of uses in the development, or scaling it back, he said.

"We will see that in the next few months," he said. "It's not necessarily the case that they will scale back. But if we reduce the retail footprint, is there another use that could go on the ground plain that activates the park in a similar way that we've envisioned? We'll see."

Zachry's proposed design, which it drew up in 2018 with local architecture firm Overland Partners, called for a 14-story hotel, an eight-story office building, a food hall, and an apartment tower built in partnership with another developer, all sitting atop an 825-space underground parking garage. It would have included 70,000 square feet of retail space and between 120,000 and 150,000 square feet of offices.

The latest setback has been the pandemic, which has undermined the retail, office and hotel industries, making it nearly impossible to raise financing for a hotel now, Andujar said. The impact on those industries has spread to other aspects of the development, he said: If a planned apartment tower was going to have retail on its ground floor, the whole tower might now be unfeasible if the retail portion will no longer work.

HPARC is open to changing the mix of uses in Zachry's development as long as it brings as many people to Civic Park and creates as much economic activity as the previous design, Andujar said.

"If office space becomes very challenging to finance, and to find tenants for, and we change that, let's say to residential … we don't think that's necessarily bad. In fact, it may be good," he said. "We are maintaining the flexibility, within the value of the original proposal."

He declined to call the discussions a "renegotiation." There might be an amendment to the 2017 agreement, but there likely will not be a new contract, he said.

"We have no question about the ability of Zachry to deliver on their promises," Andujar said. "We just need to work through what it means to adjust to the new realities of feasibilities, demands and financing."

Spokespersons for Zachry Corp. and the city declined to comment.

...

This promenade is one component of the envisioned Civic Park at Hemisfair. Courtesy Hemisfair

'The beauty of what's coming'

The advantage of starting construction on Civic Park is that it is something that HPARC can control after the pandemic has turned everything topsy-turvy, Andujar said. The first phase is fully-funded, with an estimated budget of $27 million. It's unclear when construction of the second phase will begin, he said; it depends on when HPARC can gather the funding.

"We're still working on that," he said. "What's critical is that we kick off phase 1 and we start to deliver on that public space. I think that's actually going to help on getting clarity for phase 2 funding and timing."

Civic Park has long been imagined as a wide-ranging park with courtyards, lawns, gardens and clusters of trees, open day and night and hosting public events large and small, from concerts to kickball games. The first phase will be accessible to pedestrians from the River Walk, the Convention Center, South Alamo Street and Yanaguana Garden, a children's park. Yanaguana was the first segment of Hemisfair to open, in 2015, and has proved popular with locals and tourists alike. Last year, it was a finalist in the Urban Land Institute's Open Space Awards.

"I don't know how to explain the beauty of what's coming," Andujar said of Civic Park. "The beauty of this will be on a level that will be on a world stage."

...

The Zachry family has been involved with Hemisfair since the beginning, with HemisFair '68, the World's Fair. David Zachry's grandfather, H.B. "Pat" Zachry, played a key role in raising support for the fair and built the Hilton Palacio del Rio to house its guests. David Zachry served on HPARC's board from its creation in 2009 until 2011.

David Zachry later lobbied state legislators to weaken limits on hotel construction at Hemisfair. At the time, there was opposition to the idea of putting hotels on the site, out of a concern that tourists would come to dominate the park.

In February 2017, City Council approved an agreement to lease 5.5 acres at Hemisfair's northwest corner to Zachry Hospitality, a Zachry Corp. subsidiary, for up to 97 years. The agreement spelled out that Zachry would pay HPARC about $1.5 million a year and a portion of the revenue from its retail establishments.

Zachry's development was already well behind schedule before Covid struck. The first speedbumps came in 2018, when parts of San Antonio's tricentennial celebration were held at Hemisfair, Andujar said. Events related to the NCAA Men's Final Four also caused delays, he said.

Then, as HPARC and Zachry went forward with the proposal, it became clear that the plan to create a large amount of underground public parking would be difficult to build and finance. 

The problem of how to build the necessary parking for Hemisfair has yet to be resolved, Andujar said. 

"We may need to abandon those ideas," he said. "I don't think it's going to be below-grade. Maybe a small piece of it could be basement-level, but what I've learned over the last couple of years is that below-grade parking, at this particular location, next to the river and the water table and various other impacts of digging holes in the Hemisfair area, that we're not going to go very far in the ground."

He emphasized that any above-ground parking will be built tastefully, with murals or walls of foliage to improve the aesthetics.

...

This rendering shows the lawn at Hemisfair's Civic Park. Courtesy Hemisfair

"It's just really complicated'

Beyond the problem of parking, one of the primary reasons for the project's delay is its complexity, said Omar Gonzalez, HPARC's director of real estate.

"Design evolves over time. The more you think about something, the more it changes," he said. "I wish it was that easy to say, ‘Here's the one factor why it's delayed,' but the truth is, it's just really complicated. You've got a number of different partners, a number of different types of commercial real estate development, different design teams that are coordinating, you have utilities, and how do you work with CPS (Energy) and SAWS, and how do you coordinate between a park and a (public-private partnership)."

He added, "At the beginning, we just may not have fully understood that complication results in delay, so we may have been aggressive in a lot of our early schedules."

NRP Group, one of San Antonio's most active developers of multifamily housing, signed on at first to build a 380-unit apartment building as part of Zachry's big-picture project. But NRP's style of constructing mid-rise apartment buildings "got really tested" in a location that demanded more density, Andujar said.

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Debra Guerrero, NRP's senior vice president of strategic partnerships and government relations, agreed with his account. Zachry and HPARC envisioned the apartment building as a high-rise steel structure, and "rents to support that higher construction cost and operation are challenging to achieve," she said in a text message. 

NRP proposed a non-steel structure that would work financially, "but it did not meet Zachry or Hemisfair's vision for the overall development, so we stepped aside," she said.

Downtown developer David Adelman—who finished construction of The '68, Hemisfair's first apartment building, in 2019—said he is negotiating with Zachry to build the residential component. He is working with officials at Zachry to consider their options, he said.

Ever since the 1968 World's Fair ended, local leaders have had trouble figuring out what to do with Hemisfair, how to make it work. The current effort, begun in 2009 when City Council created HPARC, has benefited from the recent surge in development seen all over downtown. The Covid-19 pandemic has dampened that momentum, yet the Civic Park site remains one of the most desirable in downtown, next to the Convention Center and the River Walk and not far from the Alamo and the West Houston Street tech corridor.

"We don't know exactly how this will pan out, but what is unchanging is that we have one of the most fabulous corners in the United States for a development of this sort," Andujar said. "The ground value is not changing very much. It's just the feasibility of delivering, at this time, a certain mix. That's what we're trying to work through: What's the right mix?" 

The scope of the Civic Park project at Hemisfair. Courtesy Hemisfair

Previously published
Hemisfair's civic park delayed because of 'unforeseen situations' (March 6, 2020)

Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter

The view from the Soto office building on Broadway. Photo by Richard Webner | Heron contributor

Now that Hixon-Cavender has finished construction of the Soto office building, the local partnership looks to the next phase of the mini-neighborhood it is developing on a key stretch of Broadway linking downtown and the Pearl.

Next up is a food-and-beverage market that will occupy two historic buildings behind the Soto and will include a courtyard for outdoor seating, said John Beauchamp, the chief investment officer for Hixon Properties. He calls it the Make-Ready Market, but that's a tentative name.

The partnership probably won't break ground on the market until the Covid-19 pandemic lightens its grip on the economy, he said.

Two buildings will house a food-and-beverage market behind the Soto. Photo by Richard Webner | Heron contributor

"I don't want to go too deeply into the planning, but I will say that we spent over a year designing the concept we have in mind, touring the country for relevant projects," Beauchamp said. "So what we will ultimately offer is going to feel very new for San Antonio, and it will bring the best of what we've seen throughout the country."

The partnership, between Hixon and the Cavender family, owns about 8.5 acres of property stretching roughly between Sixth Street and 10th Street along Broadway and Avenue B. The Cavender family once operated auto dealerships there.

Beauchamp declined to share much about what else the partnership plans to build on the sites, but said it will be a mixture of office, retail and residential uses. The office space will likely be concentrated on Broadway and the residential on Avenue B, he said. He emphasized a need for restaurants to serve the area's residents and workers in nearby office buildings, including the newly-built CPS Energy headquarters, a block west from the Soto.

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"In near-downtown districts that we've seen around the country, once the apartment market is established, more and more people are comfortable living in the district, and that demand brings more density," he said.

The six-story, 140,000 square-foot Soto offers high-end office space with wood columns and ceilings and tall windows offering panoramic views of the downtown skyline.

As of yet, no tenants have moved in since the construction was completed at the end of September. Leasing has been slow because of the pandemic, Beauchamp said. He declined to say whether any tenants have signed leases.

"I would prefer leasing be faster, but I'm not concerned because of the quality of the building, the location on the Broadway corridor, and the relevance of this building to employers who want to recruit and retain top talent," he said. "I think our building is particularly well-suited to lease in the post-Covid world because of some of the features we have to offer."

Those features include an air distribution system that pumps air through vents in the floor, unlike a typical building in which the air comes from ceiling vents and mixes more with "dirty" air, Beauchamp said. The building also offers outdoor working space, including balconies on its second floor.

The Soto, 711 Broadway, was completed last September by Hixon Properties. Photo by Richard Webner | Heron contributor

The completion of the Soto adds a large supply of class A office space—an industry term meaning high-end space—to the downtown real estate market. That kind of space is seen as important for attracting major companies and those in the tech sector. For many years, hardly any class A office space was added downtown while new office towers proliferated on the North Side. But the supply of such space has recently been increasing downtown, especially since the completion of the Frost Tower in 2019.

Three blocks down Broadway from the Soto, GrayStreet Partners is renovating the historic Light Building into office space geared toward creative businesses, and has signed architecture firm Ford, Powell & Carson and the San Antonio Express-News as its first tenants. Three-quarters of a mile in the other direction, Credit Human has built a 12-story new headquarters and Pearl developer Silver Ventures is constructing an eight-story office building called the Oxbow.

The Soto is unique among offices in Texas for relying on a timber frame structure rather than one of steel, Beauchamp said. Along with offering a distinctive aesthetic, the timber frame makes the building more environmentally-friendly because it avoids the carbon emissions that come from the production of steel and concrete, he said. The trees that supplied the timber pulled carbon out of the air, essentially trapping the pollutant in the building.

To build the Soto that way, the partnership hired a subcontractor from Vancouver, Canada, named StructureCraft, that was familiar with the method.

"That was a risk for us," Beauchamp said. "Any time you take on a new system in development, it takes a lot of time, thought and effort to make sure you're doing it right."

There are two retail spaces on the ground floor of the Soto, one of them well-suited for a coffee shop and the other for a restaurant, he said. Another area on the ground floor could be used for either retail or offices.

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Hixon-Cavender's plans for Broadway join other major mixed-use projects in the area. Aside from the aforementioned CPS Energy headquarters, at McCullough Avenue and the San Antonio River, work continues on the massive Flats at River North on Broadway and Avenue E, a 283-unit apartment building by NRP Group of Cleveland and the San Antonio Housing Trust Public Facility Corp. The project includes restaurant spaces.

On Avenue B, across from the CPS Energy headquarters, Pabst Brewing Co. plans to convert a warehouse into a "culture park" complete with an indoor skate park, a bar, a rooftop movie theater, an art gallery, and retail space.

On the other side of Broadway, on the 600 block of North Alamo Street, funeral home owner Robert "Dick" Tips wants to build a mixed-use mid-rise of at least 12 stories, which would include 266 apartments and 196 condos, a rooftop restaurant and retail on the ground floor.

Portions of Broadway are currently closed to traffic, including a segment in front of the Soto, as the thoroughfare's reconstruction continues. The work is part of a $42 million capital project in the 2017-2022 bond program that's turning Broadway, from East Houston Street to Interstate 35, from a car-heavy street into one that's more pedestrian friendly. It's expected to be completed by December 2023.

Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter

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