JV Lays Out $20M Makeover Plan for CBD Buys

Spencer Garfield, managing director for the New York City-based Hudson Realty, tells GlobeSt.com that the private opportunity fund put up the majority equity stake in the 206 E. 9th St. office building while Bloomfield Hills, MI-based Pomeroy is going it alone on 800 Brazos, a 174,000-sf, 14-story building that's going to be retooled into 80 residential condos and up to four floors of office and street-level retail. In all, the Hudson-Pomeroy JV paid $24.4 million to the San Diego-based Shidler and its New York City-headquartered partner for a redevelopment opportunity just two blocks from the Capitol Building. When Shidler reported the deal had closed, a top exec erroneously said the buyer was a Charlotte, NC-based investment group.

Garfield says work on the $5-million renovation will begin immediately to take the office tower from a class B minus to an A-minus property. The 20-story makeover, including upgrades to the 736-space parking garage, will take about six months to complete, according to Garfield. But, he stresses, the upcoming work won't block would-be tenants from setting up shop. The Austin office of Dallas-based Stream Realty Partners LP already has deals in the pipeline, he says. The only tenants in the 21-year-old building, representing the largest contiguous open block in the CBD, are Comerica Bank, which occupies 300 sf and has a drive-through location in the garage, and MobilNet, a 200-sf tenant.

Garfield says Pomeroy's president and CEO Gerald F. Reinhart laid the deal on his desk. "We have tremendous faith in Pomeroy," Garfield adds. "We like this market a lot. We think we're buying it right." At $18 million for the investment, he says it's still well below replacement cost.

Garfield says Hudson Realty is scouting Austin and San Antonio for additional acquisitions and making plans to sell its lone holding in Houston, where it bought a 500,000-sf flex property two years ago. The hand-off is expected to take place within two months. Going forward, he says the plan is to buy office, industrial or retail.

According to Garfield, Pomeroy stepped in on the Shidler-Gordon acquisition after other contracts fell out. "The Pomeroys were able to make sense of 800 Brazos and nobody else could make it work," he says.

Pomeroy plans to spend at least $15 million for a full-body makeover to retool the former One Commodore Plaza into the mixed-use Brazos Place. The plan calls for replacing the glass curtain skin with operable doors and windows and balconies. If the construction schedule is met, residential units will start to deliver in first quarter 2007. The condos, ranging from 600 sf to 1,400 sf, will be tagged at roughly $200,000 to more than $400,000.

Christopher Enright Architects of Birmingham, MI, has crafted the redesigns. LM Holder III in Austin is the architect of record. Silverman Design, also from Birmingham, is the interior designer. Local firm Lago Builders Inc. and JS Vig Construction of Taylor, MI are the construction managers.