There are plenty of real estate deals in the works in downtown San Antonio, but this one is a real power play.
CPS Energy, the quasi-governmental company that provides power to nearly 850,000 homes and businesses, is selling several buildings, including its headquarters next to the Tower Life Building and the historic Villita Assembly Building.
“This downtown market is going up,” said Bill Badger, capital construction manager for CPS. “We’re the largest landowner on the River Walk and we’re looking to get maximum value.”
The sale of the properties partially will pay for the electric and gas company’s new digs under construction on McCullough Avenue at Avenue B, which will cost about $210 million.
The current CPS headquarters at 145 Navarro St., neighboring parking garages and the assembly building have about 800 linear feet of San Antonio River Walk frontage, which could enhance the value for multi-use redevelopment.
Also up for grabs are a surface parking lot adjacent to the Mexican Consulate and the former service center on Jones Avenue by the San Antonio Museum of Art.
Outside of the downtown area, the CPS Energy Northside Customer Service Center at 7000 San Pedro Ave. also is part of the deal. It has 50,000 square feet of office space on more than 4 acres a few blocks south of North Star Mall.
Altogether, the properties have an appraised value of about $50 million, according to Bexar County Appraisal District records. CPS is exempt from property taxes.
There has been substantial development downtown with new office towers and repurposing of former office buildings. On the edges of the city’s center, one-time warehouses and other industrial buildings are becoming hot spots for entertainment, dining, retail and housing. The sellers say that could translate into a higher sales price.
Unless another tax-exempt entity buys any of the properties, the sales will put that value back onto the tax rolls to help fund the city, county and San Antonio Independent School District.
Details for bidding went out in late May and bid deadlines are in late July, according to CBRE, the real estate services company hired by CPS to market the properties.
“Downtown, there’s a lot of really exciting things happening,” said Gene Williams, first vice president for CBRE’s Advisory and Transactional Services unit.
“We will have a wide reach across the commercial space” with the variety of properties appealing to different buyers, Williams said. He is expecting bids from across the country along with international interest.
Williams said the service center on San Pedro has existing buildings that can be used, leading to a revitalization of the property. Its proximity to North Loop 410 and San Antonio International Airport also are strong selling points, he said.
As part of the process, the sellers will consider “the best types of offers and the best types of uses,” Williams said. That especially will be true of Villita Assembly Building, a site that has landmark protection because it served as San Antonio’s first power plant and is in one of the oldest parts of the city.
Vincent Michael, executive director of the San Antonio Conservation Society, said the organization did talk to CPS about possibly buying the Assembly Building, which it rents out as part of its annual A Night in Old San Antonio during Fiesta each April and for NIOSAitas (little NIOSAs for private groups).
“It is probably out of our price range,” Michael said, adding that he hopes it will still be available for NIOSA.
“Given that you’re unlikely to build a high-rise there, maybe it will be an events center and maybe they can fix it to address the river better” by fixing the terrace, Michael said. Even though it was designed by famed architect O’Neil Ford, Michael said it doesn’t interact that well with the river, something River Walk originator Robert Hugman had a hard time getting businesses to do in the early days.
“We hope (bidders) are going to pay attention to that River Walk frontage,” Williams said. “You can’t find that anymore.”
CPS Energy will start moving in the summer of 2020 into its new towers, which are updated, expanded and linked buildings that once served as offices for AT&T and petroleum refining company Valero Energy Corp. The move is slated for completion by November of next year.
John Benedict, CPS vice president of real estate development, said the new headquarters was needed to “help our people work more closely together.” About 800 are at the downtown campus and another 400 at several other sites.
The new building will be paid for with proceeds from the property sales and cash without a rate hike. Another perk, Benedict said, is a 60 percent saving on energy costs in the new building.
The campus also will help attract and retain new talent and enhance the chances of “creative collusions” with no cubicle walls, along with for quick sit-down meetings outside of formal conference space, Benedict said.
“There will be less ‘me space’ and more ‘we space,’” he added.
The new construction linking the two towers will become a natural place for informal meetings with a coffee bar.
Retail spaces at the ground floor of the new 1,400-space parking garage are part of the plan for CPS to interact with the community along with evening parking for the public.
“Parking garages are not cool and sexy,” Benedict said, but CPS executives realized the parking could help economic development in the area, including people visiting the neighboring Tobin Center for the Performing Arts.