CPS Energy officials announced plans Monday to move its headquarters to the former AT&T buildings in downtown San Antonio by the end of 2019. The public utility’s board approved an offer to purchase the property and it expects the sale will be final by Friday.
It’s been more than five years since talks began within the utility about finding a new location or renovating its existing two-tower campus at 145 Navarro St. for its growing workforce. McCullough Avenue Associates Limited Partnership is listed as the building’s current owner. Partners in the firm could not be reached for comment on Monday.
The board members, including Mayor Ivy Taylor who has an ex officio seat, found that renovating the small office towers was more economically feasible than constructing a brand-new building or renovating another. When it was announced that CPS Energy was looking for a new home, former President and CEO Doyle Beneby firmly committed to keeping the headquarters downtown to be part of the urban core’s revitalization.
“We’ve done a lot of due diligence on a lot of options and determined that this site offers the best value for the ratepayers – and the most options and flexibility to provide a quality place for our CPS Energy employees,” Taylor said after the board meeting.
The now-vacant 5.3-acre property on McCullough and Avenue B is comprised of three buildings – two towers and a connector building – that add up to about 430,000 sq. ft. and has been the headquarters of Valero Energy Corp. and offices for AT&T, said CPS Energy board Chairman Ed Kelley. The new space will provide a substantial increase from the less than 300,000 sq. ft. it has now between its two buildings on Navarro.
CPS Energy’s current garage has 725 parking spots, the new headquarters includes about 500 spots, more than half of which are leased. Kelley said they may need to look into the option of building a garage.
“We want to make sure this does not drive a rate increase,” Kelley said, and the cost will likely be offset by the sale of the Navarro buildings.
“This building has tremendous amount of attributes to it: Great river frontage, right in the heart of the community,” Kelley said, standing in the current board room off of Navarro. “When the word gets out that we are contemplating a move, this building is going to become very, very popular. There’s going to be, in my opinion … an awful lot of interest from people wanting to buy it, convert it, do whatever.”
The terms of the deal are still confidential, he said after the meeting, including the building’s price tag. Bexar County Appraisal District valued the towers at $35.3 million this year.
CPS Energy purchased the 1920s, 196,473-sq. ft main office building on the corner of Navarro and Villita streets in 1954. Its large parking garage across the street also has about 98,000 sq. ft. of office space.
Operations and maintenance costs of the utility’s current location are increasing, Kelley said. “We’re having to do an awful lot of replacements and things of that nature. … We gotta do something. We can’t continue to just push the desks together.”
The utility would essentially move one mile north from one San Antonio River-front property to another. The Navarro buildings overlook the bustling downtown River Walk while the buildings on McCullough mark where the River Walk becomes the less-commercial Museum Reach. As it stands today, the former AT&T buildings have little to no connectivity to the river, save for street-level entrances to the pedestrian paths.
That’s something that would likely change if CPS Energy moved in, Kelley said. When those buildings were constructed in 1979 and 1981 “the river was an absolute mess.” After the multi-million dollar restoration project, it’s an amenity to any new tenant.
That being said the board wants to be relatively frugal when it comes to aesthetics and Kelley declined to go into detail on what specific renovations will be needed. “We’re going to be very cost effective.”
Three design and construction teams were selected as finalists for the new headquarters in September.
(Read More: CPS Energy Moves Ahead with New HQ Plan)
CPS Energy staff and a team of consultants from Chicago-based commercial real estate consulting firm DTZ looking into the costs and benefits of constructing a new tower somewhere else in the urban core and renovating a couple different potential sites, but found that the McCullough property made the most sense financially.
Kelley also updated the board Monday on the utility’s almost year-long search for a new CEO.
“We’re starting to narrow the field there, we’re starting to get some traction,” he said. “Stay tuned – I think things will start happening on that front.”
The board will meet for a special board meeting tomorrow at 4 p.m. to discuss the candidates. Kelley declined to reveal any further details about who is being considered or if any announcement will be made tomorrow.
Editor’s Note: This story has been updated throughout.
Top image: The buildings and parking lot on the corner of McCullough and Avenue B were formally owned by AT&T. Image Courtesy of Google Maps.