The renovation of a century-old building and former American-Italian restaurant on the East Side could represent one of the first signals that a plan to revitalize the neighborhood is moving to the front burner.

Rich Gottbrath of the Austin-based real estate investment firm Value Creation Strategies, which bought the old Spaghetti Warehouse building at 1226 E. Houston St. in April, said the project is on track after having spoken with several lenders who are interested in providing the financing. 

Even better, Gottbrath said, “We got a call on Friday from a biotechnology company … from their broker. We don’t know who the company is yet, but they asked about leasing out the entire top floor here.”

The upper floor of the three-story former warehouse is a lofty utilitarian space that Gottbrath is planning to renovate for office use. It is littered with dusty chairs, broken tables and boxes of holiday decorations left behind when the restaurant closed abruptly in 2020. 

But sunlight streams in through dozens of tall windows with clear views of the skyline and of the former industrial complex at the center of an anticipated renaissance east of downtown San Antonio.

Rich Gottbrath, managing partner and chief investment officer at Value Creation Strategies.
Rich Gottbrath, managing partner and chief investment officer at Value Creation Strategies. Credit: Scott Ball / San Antonio Report

The chain restaurant owned by Los Angeles-based investment firm Frandeli occupied the two-story structure next to railroad tracks for 44 years before the pandemic precipitated its closure. A water-stained calendar on an office wall is hauntingly frozen at “March 2020.”

The building was put on the market the same year and much of the restaurant’s collection of Tiffany-style lamps and other antique furnishings was put up for auction.

Gottbrath acquired the 1907 brick building intending to complete a full historical restoration estimated at between $6 million and $7 million, he said. “The building itself has great cultural heritage to the city of San Antonio … [but] it needs a lot of love.”

The 29,000-square-foot building was originally constructed by a wholesale grocer business, the Hugo & Schmeltzer Co., which previously operated from the Alamo Long Barrack, which the company owned until 1904, Gottbrath said. He is calling the building The Hugo in honor of the first owners.

After it was bought in 1949 by Joseph Thiele Inc., dealers in household appliances and electrical supplies, an addition was constructed on the back of the building.

In 1975, the Lucchese Bootmaker Co. purchased the warehouse for its manufacturing operations, according to local reports. Boot-sizing numbers remain on the upper floor’s beams. Lucchese has since moved production to El Paso. 

On the main floor, remnants from the building’s last tenant remain, including the mirror-backed saloon bar advertising a March Madness margarita special, numerous stained-glass windows from an unknown church, ornate ceiling fans on a pulley system and a full-size replica of a red trolley car. 

Though the building’s basement is currently a dark and cobwebbed space, it is structurally sound, Gottbrath said, having been built to handle the weight of large machinery. With boarded-up lightwells at street level, Gottbrath sees potential here, as well. “This is actually going to be about 10,000 square feet of leasable space,” he said. 

It’s the kind of authentically historic building that, in Austin, developers like him can no longer find, Gottbrath said. They’ve been demolished or already developed.

“I think San Antonio’s architecture is in a period of salvage and preservation, but still progress, and trying to figure out how do you keep on doing cool things like the Pearl,” Gottbrath said.

“It’s one of the last kind of untouched warehouses of that generation,” he added, saying that fact alone makes it a “pretty cool” property. 

Stained glass panels are found throughout the former Spaghetti Warehouse.
Stained glass panels are found throughout the former Spaghetti Warehouse. Credit: Scott Ball / San Antonio Report

Its proximity to the high-tech bioscience incubator VelocityTX is what qualifies the building as an investment worth the restoration cost, Gottbrath said.

“We are pretty well aligned with Randy Harig [CEO, Texas Research and Technology Foundation] and his view for what the near East Side of San Antonio is going to look like over the next five or 10 years,” Gottbrath said. 

“We think [the building] has the potential to be part of that transformational story and we wanted to be part of that.”

The foundation that operates VelocityTX at 1305 E. Houston St. has goals for the East Side that transcend its footprint in the former Merchant’s Ice Complex. 

In April, the nonprofit purchased the historic G.J. Sutton property and set its sights on establishing a 70-acre innovation district that spans at least 120 acres of the near East Side. 

Rene Dominguez, president and chief operating officer of the Texas Research and Technology Foundation, said that plan is in full swing. 

“Since inception, our strategy has always been to direct and redevelop the properties that we own … and then create momentum around us with like-minded developers that believe in the vision of the innovation district and its potential in terms of economic outcomes,” Dominguez said.

Gottbrath is one of those developers who has embraced the vision, he said. 

By next fall, the 4-acre VelocityTX campus will be fully redeveloped and could be fully leased. Master planning for the Sutton property is underway. 

As for The Hugo, Gottbrath did not provide a timeline.

In the meantime, his company is in the final stages of renovating another Eastside property, the former Handy Andy headquarters and distribution center at 215 Coca Cola Place near the AT&T Center and Freeman Coliseum.

The Andy, as it’s now known, is being converted into industrial-style, live-work lofts with the residential units completed later this year. But Gottbrath also is working on turning a cavernous industrial space on the site into a small grocery store as a much-needed amenity for the community.

Shari Biediger has been covering business and development for the San Antonio Report since 2017. A graduate of St. Mary’s University, she has worked in the corporate and nonprofit worlds in San Antonio...