The local group behind some of the city’s most iconic urban redevelopment projects in recent years is letting go of property it had been acquiring for Broadway East, its anticipated mixed-use development in the Government Hill neighborhood.
Commercial real estate sales agency JLL announced Wednesday that 14.7 acres of a site where GrayStreet Partners had planned a retail, office, and multifamily development similar to Austin’s The Domain is now on the market.
Situated directly across from the Pearl, the proposed project heralded another substantial new commercial and residential development in the booming lower Broadway corridor.
Broadway East had generated buzz as recently as September, when it said infrastructure work for the project was only weeks away.
GrayStreet managing partner Kevin Covey and its development director, Peter French, did not immediately respond to a request last week for more information.
Since 2014, the developer had been assembling tracts of land between Broadway and Austin Street, near Interstate 35 at U.S. Highway 281, for its Broadway East San Antonio development project. The largest parcel of the total 23 acres, bought from the San Antonio Independent School District, is 6.9 acres assessed for tax purposes at $6.7 million.
GrayStreet enlisted global architecture firm Gensler to render designs for the retail-first development. Plans showed a dynamic reuse of some existing storefronts, new expansive walkways, and multistory residential buildings.
“The response has been remarkable” from retailers interested in the project, French said almost a year ago. But breaking ground on the first phase of Broadway East had been delayed while GrayStreet consulted experts to come up with the right mix of use and design, he said.
Though French told members of the Midtown Tax Increment Reinvestment Zone board in September that infrastructure work to build streets, sidewalks, utilities, and drainage would begin in November 2020, construction has not started.
GrayStreet has had in the works several other major projects and transactions. The developer is nearing completion on a massive rehabilitation of the former San Antonio Light newspaper building on Broadway that began in 2018.
In May 2020, the developer acquired, through a bankruptcy proceeding, the long-vacant and dilapidated 32-acre Lone Star Brewery site south of downtown. Covey said at the time that GrayStreet envisioned a transformational mixed-use project reminiscent of the Pearl Brewery site, which was transformed over the course of more than a decade by developer Silver Ventures.
Late last year, GrayStreet sold the Vogue Building, a six-story 1930s office building at 600 Navarro St., to a local investment firm.
South of the Pearl, the future of GrayStreet’s planned W hotel at Broadway and Newell Avenue is uncertain. The opening of the hotel, a Marriott International luxury lifestyle brand, was expected in January 2022 when it was proposed.
Due to the coronavirus pandemic’s impact on the hospitality industry, according to a source who asked not to be named, “hotel financing completely changed – you need more than 50% equity on the deal. Nobody can pull that off.”
But that will change, he added, when the pandemic is under control, tourism picks up, and “in a couple of years we will be in the ‘Roaring ’20s.'” For now, GrayStreet appears to be simply disposing of assets for income.
When it comes to Broadway East, having a development concept in hand increases the property’s value, the source said, in a location that JLL promotes as ideal for a blend of uses, from hospitality to entertainment.
But its scale in uncertain economic times could be a challenge.
“We are seeking a developer or investor that recognizes the significance of this opportunity and has the financial resources and vision to capitalize on the full potential of the development site,” said Davis Adams, JLL’s managing partner.