VOL. 7 | NO. 33 | Saturday, August 09, 2014
Springing to Life
By Amos Maki
When Ridgeland, Miss.-based development firm the Bryan Co. broke ground on The Horizon condominium tower in 2007, it was at the peak of the housing bubble and optimism from elected officials and Downtown boosters was equally high.
The 16-story tower overlooking the Mississippi River, trumpeted at the time as possibly the most luxurious, amenity-laden project to ever hit the area, was going to serve as the crowning achievement in Downtown’s remarkable residential resurgence.
But work ground to a halt in 2009 following a slowdown in which some suppliers, workers and subcontractors claimed they hadn't been paid for their work. One day crews were busy constructing the structure, and the next day it was a veritable ghost town.
Martin Edwards, president of Edwards Investments, was one of dozens of people who had put down earnest money to buy a unit at The Horizon. Edwards and his wife actually put down money for two 14th floor units they were going to convert into one unit offering stunning views of the Mississippi River and Memphis skyline
Edwards remembers all too well the day all work stopped on the building.
“They just literally walked out,” he said. “There were reports contractors still had tools in the building.”
As part of an investment group seeking to acquire the property, Edwards recently got to tour the still-unfinished tower at 717 Riverside Drive. What he saw shocked him, but in a good way.
He found a well-maintained building essentially frozen in time, like the Titanic sitting at the bottom of the Atlantic Ocean. Boxes of building materials were still neatly stacked on the floor. Cabinets were still hanging on walls in some of the unfinished units, and an installed fireplace was in the same place Edwards last saw it in 2009.
“I was astounded when I went through it in June,” Edwards said. “It was just like I walked out of it in 2009. It was like walking into déjà vu all over again. It was eerie. It was in very good shape, especially on the upper floors, where it looked like nothing had changed. Most of the upper levels were just phenomenal.
“It looked like it did in 2009, but work had just literally stopped. The structure of the building appears to be in great condition. The building was 80 to 85 percent complete and the garage was almost 100 percent complete.”
But hope remains strong that a new ownership group will take control of The Horizon and complete the project.
Offers on the property were due on Wednesday, July 16. Since then, the capital asset services team at Cushman & Wakefield/Commercial Advisors has been poring over the offers looking not just for the most qualified buyers but for plans that have the most chance for success.
“It’s been a variety of different users who submitted bids,” said Shane Soefker, head of the asset services team at Commercial Advisors. “We have narrowed it down to who the logical prospects are and we’re working with the bank.”
Soefker described the bidders as a mix of “local and national players” who have pockets deep enough to finish construction of the building and sell the units.
“Given the scope of this project, all the bidders we have talked to and are working with are very qualified,” Soefker said. “If we felt they weren’t qualified, we wouldn’t be in discussion with any of these groups.”
Contrary to some reports that the building was left open to the elements that caused a myriad of health and construction hazards, Soefker and Edwards both said the tower was in remarkably good shape since it was essentially abandoned five years ago.
“The banks have done a remarkable job taking care of this asset, protecting their interests,” Soefker said. “I think if you talked to anyone who has toured the building, they were impressed by how good of a condition the building is in.”
It remains unclear what exactly The Horizon will become. With apartment occupancy rates in Downtown Memphis almost at capacity, a rental tower would make sense. So too could a mixed-use project that features units for sale and a retirement community for baby boomers looking to downsize and live in an urban atmosphere.
“It’s been a variety of different users,” Soefker said. “They all have different concepts of what this should be, and we’re just not at the point to decide what it should be at this point.”
Getting the abandoned tower to the point of a sale was not easy. After completing most of the first phase of the project, the Bryan Co. in 2009 defaulted on a $58.6 million loan, and from that point on the 155-unit building largely sat lifeless – a towering, painful reminder of the economic downturn.
But a consortium of banks recently cleared up the legal quagmire surrounding The Horizon, allowing the asset to go back on the market.
“I hope they get things worked out,” Edwards said. “It is a fascinating building. I don’t know if it will be a condo project, but I don’t think so. I just don’t think the market is there. I think it would be a hell of an apartment community.”
(Memphis News File/Lance Murphey)
But The Horizon isn’t only “big empty” making a comeback, and there is hope that one of the city’s biggest eyesores – the towering Sterick Building at Madison Avenue and Third Street Downtown – could one day make a comeback, or at least see an improvement from its current condition.
Paul Morris, president of the Downtown Memphis Commission, is hoping to prevent what he calls “demolition by neglect” of the Sterick and several other Downtown properties.
Morris said he is in regular communication with the Sterick’s owner and the long-term lessee, AXA Equitable Life Insurance Co.
Recently, workers on a window-washing lift were hoisted about two-thirds of the way up the building doing some blight remediation work.
“They did that because we called them and asked them to do so and they did,” Morris said. “They’re taking interim steps to salvage the building and keep it from further deteriorating and they’re listening to our ideas about redevelopment.”
Down on Main Street, at the nexus of the South Main Historic Arts District and the Beale Street Entertainment District, Carlisle Corp. is busy renovating a historic building that had stood vacant for decades.
(Memphis News/Andrew J. Breig)
The Chisca Hotel, the largest hotel in Memphis at the time it opened in 1913, may have the most interesting history of the city’s most prominent “big empties.”
Throughout the 1950s and 1960s, the Chisca served as a key meeting place for civic organizations and was later the headquarters for the Church of God in Christ. But it’s most famous for its connection to music. On July 7, 1954, WHBQ’s Dewey Phillips played Elvis Presley’s first recording of “That’s All Right” – the first time the genre that became known worldwide as rock ‘n’ roll was broadcast over the airwaves.
While South Main became a booming residential neighborhood with a lively nightlife scene, and millions of visitors a year flocked to Beale Street or FedExForum, the Chisca remained the lone dark spot in an otherwise glowing part of Downtown.
But all of that is about to change.
The Carlisle Corp. recently closed on a key piece of financing and gave Montgomery Martin Contractors permission to begin the bulk of the redevelopment work, which is expected to take 12 to 14 months. Carlisle Corp. is now in the midst of a roughly $28 million historic renovation to transform the hotel, which had been a boarded-up eyesore surrounded for many years with a chain link fence since it was vacated in the 1980s, into 161 apartments with retail and restaurant space.
Chase Carlisle, director of real estate and development for Carlisle Corp., said the project was important to the family-owned business because it was putting a historic but blighted property back to use and filling what had essentially been a black hole between South Main and the Beale Street area.
“For us, this project is filling that void,” said Carlisle.
A little further east, a development team is undertaking the ambitious $180 million redevelopment of the city’s largest big empty – the mammoth Sears Crosstown property.
Sears Crosstown Building
(Memphis News/Andrew J. Breig)
The Crosstown team is seeking to redevelop the building, constructed in 1927, into a “vertical urban village” through arts, education and health care.
The building has been a painful, deteriorating eyesore for years. The Sears retail store closed in 1983, and the distribution center was shuttered a decade later, leaving the behemoth empty expect for the pigeons and vagrants who called it home from time to time.
But in 2007, Staley Cates, president and chief investment officer of Southeastern Asset Management Inc., and his wife, Elizabeth, bought the property and donated it to Crosstown LLC for redevelopment.
Morris, the Downtown Memphis Commission president, has noted a common theme in all the “big empty” redevelopment projects.
“It tells me the recipe for success starts with an owner who cares enough about the city to work with the government, investors and other stakeholders to not leave it a vacant, abandoned building,” Morris said.