A major downtown development in the works since 2015 for the northwest corner of Hemisfair is being reevaluated in the wake of the coronavirus pandemic’s economic impact.

The proposed mixed-use development that includes a boutique hotel and retail, residential, and office space on the corner of South Alamo and South Market streets hit a snag when the COVID-19 crisis started in early March, said a spokeswoman for the developer, Zachry Hospitality.

It originally was expected to be completed around the same time as Civic Park, in 2021, but “there are questions about the financial viability of a hotel at this time,” said Andres Andujar, CEO of the Hemisfair Park Area Redevelopment Corporation (HPARC).

However, Zachry remains committed to the project and is working with City and Hemisfair officials to make sure it’s successful, said Tara Snowden, vice president of public and government affairs at Zachry.

“Before the pandemic hit our community, we were working with our partner to evaluate all the available options,” Snowden said. “A project of this magnitude has many nuances that affect one another in some way. We want to be sure we get it right and sometimes that takes a bit longer than anticipated.”

As originally proposed, the joint project with national housing developer The NRP Group, included roughly 800,000 square feet of leasable area, including 380 residential units; 75,000 square feet of retail space; 70,000 square feet of office space; a boutique hotel with 200 rooms; and potentially about 800 public parking spaces. NRP is no longer involved in the project.

Preliminary rendering of Civic Park, looking north from the southeast corner.
A preliminary rendering shows Civic Park and the surrounding development at Hemisfair, looking north from the southeast corner. Credit: Courtesy / Zachry Hospitality and Hemisfair

“As with all businesses and agencies impacted by the pandemic, we (all partners) had to take a step back to evaluate the economics of the project to be sure we are developing and funding the project in the most prudent way for all parties,” Snowden said. “This does not mean that the project won’t happen or that it’s been shelved or that the development will be significantly different.”

According to design plans, the buildings would sit adjacent to Civic Park’s “great lawn,” near the Henry B. González Convention Center. Construction bids for the park will go out at the end of this year, Andujar said. That part of the project is two-thirds of the way funded.

A 2017 bond program contributed $21 million toward Civic Park, and ground lease revenues from Zachry would bring another $18.1 million, Andujar said.

Plans call for the park to be completed in 2023, two years later than the original plans set out by HPARC, and around the same time as the Zachry development.

But Andujar said the makeup of the development is being reevaluated in the context of how banks will consider financing debt for private development in the coming year.

“Clearly, the pandemic has had a substantial effect on hospitality and other general demands, like for retail space and office space, so everybody’s trying to assess their needs for those products – hospitality being the lead development factor in the northwest zone,” Andujar said.

Andujar is confident in the financial model of Hemisfair development going forward. The first phase of Hemisfair has been a kind of laboratory for the public-private model of redeveloping the entire site of the 1968 World’s Fair, Andujar said. “And it’s providing to be successful.” Plans include a third phase of development surrounding the Tower of Americas.

But activity at Hemisfair has been minimal in recent weeks as stay-home orders were put in place and tourism vanished. The number of visitors to the southwest zone of Hemisfair, where the Yanaguana Garden play areas draw families from all over and The ’68 apartments began leasing, has dropped from about 2,000 a day before the crisis to less than 100 in recent days.

Shari Biediger

Shari Biediger

Shari Biediger is the business beat reporter at the San Antonio Report.