VOL. 128 | NO. 232 | Wednesday, November 27, 2013
State Lease Bolsters One Commerce Square
By Amos Maki
F. Scott Fitzgerald once said there were no second acts in American lives.
(Daily News File/Lance Murphey)
But One Commerce Square, the towering Downtown office building at Union Avenue and Main Street, is preparing for its third act.
The state of Tennessee has finalized a lease to occupy 104,673 square feet of space on the second through 10th floors at the 29-story skyscraper. The state signed the multiyear lease after deciding to vacate the Donnelley J. Hill State Office Building at Civic Center Plaza.
Once the state moves in around June 1, occupancy at One Commerce Square will increase by almost 30 percent.
The state lease was a major relief to the building’s ownership group and to Downtown boosters, who were left reeling after Pinnacle Airlines abandoned 170,000 square feet of space there as it relocated its headquarters to Minnesota.
“This is a great addition to One Commerce Square and we are encouraged by the continued interest and leasing activity in this landmark building,” said Phil Dagastino Jr., senior vice president of Cushman & Wakefield/Commercial Advisors.
Dagastino and Bentley Pembroke represented One Commerce Square in the deal.
The skyscraper has weathered financial and ownership storms over the years.
One Commerce Square was a shell of its former self in 2007 when SunTrust Bank vacated 170,000 square feet there for a new location in East Memphis. US Bank took over the building after its former owners went into default in 2009.
One Commerce Square’s new owners, Memphis Commerce Square Partners LLC, acquired the property in December 2010 for $7.6 million, and Pinnacle’s arrival with around 600 employees appeared to have the building on the right track for a major second act.
However, that all fell apart with Pinnacle’s bankruptcy and subsequent relocation to Minnesota.
The new ownership group, which has pumped $10 million into overhauling the building, was led by Karl Schledwitz and Gail Schledwitz, Terry Lynch, Gary Prosterman and Worthington Hyde Partners, the real estate investment firm of AutoZone Inc. founder J.R. “Pitt” Hyde III.
Bob Worthington, a principal with the building’s local ownership group, said the state’s signing and other recent developments point to the team’s effort to return One Commerce Square as a star in the local real estate firmament.
“Our commitment in restoring the iconic One Commerce Square building to a position of pride and prominence in the Downtown Memphis business community has never changed or wavered, and we view this news as a significant advancement towards this continued process,” Worthington said.
Improvements in the lobby include a new Independent Bank branch, improved seating areas, and updated lighting and finishes. Upgrades also were made to elevator cabs, and a new control system was installed to improve speed and response times. Lighting and signage throughout the building, including the garage, were enhanced.
Dagastino and Pembroke are currently marketing a 3,888-square-foot space at One Commerce Square for a deli or retail opportunities.
Even though Pinnacle left, the improvements remained and helped make One Commerce Square more marketable.
And since the state is leasing such a large amount of space, the building’s real estate brokers at Cushman & Wakefield/ Commercial Advisors can now target small- and medium-sized firms to help fill the remaining vacant space.
Recently, a small but growing medical-equipment maker, Restore Medical Solutions, selected One Commerce Square for its corporate headquarters. Restore Medical Solutions will relocate from its current office space at 62 N. Main St. in January, occupying around 4,250 square feet in One Commerce Square.
North Memphis CDC also signed a lease to occupy 3,388 square feet in the building.