Well the first downtown OFFICE development in quite some time, has been announced.
San Antonio Business Journal
Downtown building being eyed for office-condo make-over
Tricia Lynn Silva
San Antonio native Hans Lindberg has a plan to take what is now a tired downtown office building and turn it into the first commercial condominium development for downtown San Antonio.
Lindberg is the managing partner behind 425 Soledad Ltd., the investment group that recently purchased the office property at 425 Soledad from New York-based financial services firm Morgan Stanley. Lindberg's plan: To open up the building to office users who want to own their space.
This office-condominium concept has already been rolled out in other parts of the city. But Lindberg is the first to bring this concept to downtown San Antonio, notes David Ballard, who is the vice president of the San Antonio office of Stream Realty Partners LP.
Stream, which is headquartered in Dallas, is handling office sales and property management for the Soledad project.
The 65,800-square-foot building is currently 30 percent occupied, Ballard adds.
A lawyer and certified public accountant (CPA) by trade, Lindberg has performed the due diligence for several real estate transactions. Asked why he opted for a downtown property for his first real estate investment, Lindberg says that things simply fell in place.
Although Lindberg declined to divulge a specific amount, he says that the partnership will be spending several million dollars to rehab the building -- starting with plans to completely gut the inside of the property. The demolition work is scheduled to begin soon.
"The first thing we are going to do is clean house," says Lindberg, who says that over the years the building has become an outdated eyesore.
Updates to the building will include a new HVAC system -- and a sprinkler system, something that isn't even incorporated in the building at this point. The lobby will be decked out with marble floors and several water features.
Says Ballard: "It's going to have high-end, Class-A-type finishes."
The building will also be brought up to standards set out by the American with Disabilities Act, he adds.
Take it home
The downtown office market is also in need of a boost, so fresh ideas like an office-condo project seem a good fit, Lindberg says. According to the most recent office-leasing report from local firm REOC Partners Ltd., the downtown office market had a vacancy rate of 21.4 percent as of March 31.
"I know it is a big risk," Lindberg says. "But at the end of the day, I believe it will be a good risk to take."
"This building has been off of the radar screen for a long time," adds Ballard. "We saw an opportunity and took advantage of it."
The building consists of eight stories, plus a basement. The floorplates measure 8,609 square feet -- which has made the project ideal for tenants wanting to own an entire story. To date, three floors have been purchased and negotiations are pending on another three, Ballard says.
Broadway Bank, which occupies the first floor of the building, will stay on as a tenant, he adds.
"It's all happening very fast; we've been encouraged by the response," says Lindberg, who adds that he expects that the project will be completely sold off by the time it is re-introduced to the market next spring.
Meanwhile, factors such as low interest rates and the opportunity for a company to acquire its own space help to fuel the desire for office condos, Ballard says.
"It's the idea of being able to control your own destiny, to control your facilities costs and to have a return investment," adds Michael E. Reyna, who is the president of locally based TC Austin Properties. The firm, in partnership with Laredo-based Alfra Development, is developing an office-condo community in North San Antonio called The Park.
"The way many business owners look at it (is that) 'I invest in my company, I might as well invest in the real estate, too,' " Reyna says.
In the past, companies looking to be downtown had only a few choices, Reyna explains. They could either lease their space or buy a larger office building.
"I feel confident that this is a concept (office-condos) that people will grasp easily," says Lindberg, who adds that he liked the idea of taking a tired building and creating something new for the downtown office market. "It's time to take this building home."
And I will swallow my pride.