8. After lengthy financing delays from a shaky real estate market, the group planning to renovate the old Oak Hall building at 555 S. Perkins Road Extended is finally ready to move forward.
Glen Bascom Jr., Glen Bascom Sr. and Chris Montesi – the trio who comprise the entity 555 Perkins LLC – have secured a $5.2 million construction loan with U.S. Bank NA to overhaul the 54,265-square-foot office building just south of the intersection at Poplar Avenue and Perkins Road Extended.
The renovation financing was orchestrated by Rick Wood, senior vice president for Financial Federal Savings Bank.
Construction on the 1966 property begins Monday, more than four months after the initial building permit was filed, although the partners’ interest in the property goes back much further. The group bought the ground lease of the building for $1.2 million from LaSalle Bank NA in December 2006, and Bascom Sr. had owned the land since the late 1980s.
Bascom Jr. has been champing at the bit to get the project under way, but he understood the hesitance of lenders, in these tight credit times, to front money for a building that’s only 15 percent preleased.
“I think a lot of big players are like that,” Bascom Jr. said. “Nobody wants to finance a spec building – either an apartment building, condo building or office building. They want to have tenants in place, and that was the hard part with us – we want to build it first and then get tenants.”
Looking for warm bodies
Getting tenants is the company’s goal over the next six months during redevelopment of the building, which will be renamed First Capital Center after the anchor tenant.
Germantown-based First Capital Bank will occupy 6,000 square feet on the ground floor with a branch that includes a drive-thru. The bank joins two existing tenants that are remaining in the four-story building, leaving about 45,000 square feet available for lease.
That task is being handled by Joe Steffner, president of the Memphis office of Grubb & Ellis Co. Steffner said he believes the renovated space of a well-known building along Poplar will make it a desirable locale for office users.
“When you compare the price with the amenities and the brand-new space in the building, it will be a relatively easy sell,” he said. “The Poplar corridor is where everyone has wanted to be. Over the past 15 years the market has grown and people have gone to the 385 corridor as kind of the second choice. Over the past several years, the tenants that either couldn’t find space on Poplar or didn’t want to be on Poplar for whatever reason have tended to come back to Poplar.”
Bascom Jr. agreed that the location along the high-density Poplar Avenue corridor should keep the First Capital Center insulated from what has been a generally soft market.
“Of all the deals that we have out there now, it’s a no-brainer,” Bascom Jr. said. “This one’s going to be successful. It’s a lot of money and time involved over the year or two, but it’s the one I feel most comfortable with of all the projects we’ve got going on.”
New and improved
Renaissance Group is architect and Montgomery Martin Contractors LLC is contractor for the project. Chris Ybos of Montgomery Martin said the expected completion date is about six months away.
Once the building is finished by the end of the year, it won’t look anything like the structure that formerly housed an Oak Hall clothing store. Upgrades include new HVAC, new roof, new shell, new windows, plus plenty of parking for tenants.
Steffner said pricing will be lower than other office space nearby because it’s an older building, but it will recapture the feel of a new product.
“It’s hard to take an older building and make it Class A, and yet they’re doing everything possible to make it A,” Steffner said. “It’s hard to argue with the amenities in the building, plus the bank on site. We think it will be an A-minus building with B prices. That will make it competitive.
“It’s exciting because it’s like having a brand-new building to lease on a speculative basis at below-market rates. We’ve never had an opportunity like this before. It will have a new name, but it’s a location everyone knows.”...