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One day after officials announced the City will go forward in partnership with Weston Urban and Frost Bank on the biggest downtown real estate development deal in decades, a second major transaction involving multiple historic buildings on East Houston Street and Travis Park has been confirmed. The sale of seven East Houston Street buildings and a parking lot by Federal Realty Investment Trust of Maryland to San Antonio-based GrayStreet Partners was first disclosed in a story published by the Express-News. The deal under contract has been widely discussed for months, but confirmed only now.
Sources in the development community also are saying that GrayStreet has two other significant downtown properties under contract not owned by Federal Realty, but those rumors appear to unfounded or unconfirmed. Kevin Covey, GrayStreet’s managing partner, and Paul Covey, his father, did not return calls or respond to emails.
One of the additional properties is the now-vacant San Antonio Children’s Museum at 305 E. Houston that became available with the construction of the new The DoSeum on Broadway, set to open in June. The DoSeum Executive Director Vanessa Lacoss Hurd said GrayStreet is one of three entities interested in the building, but there have been no offers to date.
The Children’s Museum is the only remaining property in play on the north side of the 300 block of East Houston Street not under contract to GrayStreet, which will now own the properties on both sides of the museum.
The second property is the Travis Park Plaza building and parking garage at 711 Navarro St., a seven-story Class B office tower built in 1970, that has been for sale since late last year. It includes a six-story, 799-space parking garage, a major asset. The building’s name tenant is Jefferson Bank, which also has a motor bank on the property. The rest of the building includes law firms, foundations, the San Antonio Symphony and others.
One major tenant, the Strasberger & Price law firm, moved to the former ButterKrust Bakery building on Broadway north of the Pearl one year ago. The 1940s-era Deco building is now the corporate offices and test kitchens of C.H. Guenther & Sons, which owns Pioneer Flour Mills. Travis Park Plaza is on the county tax rolls at $10.5 million, but developers said it probably would sell for substantially more.
Real estate sources said the total value of the GrayStreet deal likely will exceed $100 million and that financing for the GrayStreet acquisition involves Houston billionaire Fayez Sarofim, 86, and his son, Christopher, 51. Fayez is part owner of the NFL’s Houston Texans, the founder of the investment firm Fayez Sarofim and Company, which is said to have more than $30 billion under investment. Fayez is a philanthropist and prominent supporter of the performing arts in Houston. He was born into one of Egypt’s wealthiest families, and was educated at UC-Berkeley and Harvard. Both father and son have been favorite gossip column targets in Houston where their respective marriage breakups and the ensuing financial and social aftershocks have made for salacious headlines.
Various commercial real estate brokers have been wooing institutional capital sources outside of San Antonio to invest in downtown properties, reasoning that rising prices in Dallas, Houston and Austin have made San Antonio a more attractive target. With the City’s new Vacant Building Ordinance that went into effect on Jan. 1, developers and brokers also expect more vacant and underutilized properties coming on to the market, as well as some of the downtown’s many undeveloped parcels.
The two announced deals have energized the urban core development community, long frustrated at the lack of big projects and outside interest in downtown San Antonio, which has lagged among all major Texas cities in central business district redevelopment. Suddenly, the market is heating up, amid rumors of more to come.
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*Featured/top image: The Vogue at 301-303 East Houston Street. Photo by Scott Ball.