VOL. 121 | NO. 126 | Tuesday, June 20, 2006
Real Estate & Development
Old Union Planters Building Gets Major Facelift
By Andrew Ashby
With the Center City Commission (CCC) listing 1,065 condominiums in the Downtown market and with more on the way, a Dallas-based residential development company has decided to go in a different direction.
"We're doing something different from the loft," said Kip Platt, development partner and principal for EFO Residential Partners LP. "We're doing a high-rise apartment project on a neat historic building."
EFO Residential bought the former Union Planters Bank headquarters at 67 Madison Ave. for $4.5 million May 31. The company, a subsidiary of private investment firm EFO Holdings LP, plans to renovate the 257,476-square-foot, 12-story building into 157 upscale apartments.
It also will renovate the adjoining garage, which is attached to the Union Planters building through an underground tunnel. On June 8, EFO Residential borrowed $6.7 million from Keybank NA to buy the 224,586-square-foot, 10-story parking garage from AutoZone Parts Inc. and renovate the property.
The parking garage's renovation will include converting office space on the ground floor into more parking spaces, making the garage a 400-car parking facility.
'Most expensive rental'
The Union Planters building, which is on the Center City Commission's list of "Top 10 Center City Redevelopment Sites" was constructed in 1923 on a half-acre lot at the southeast corner of Madison Avenue and Front Street.
The entire renovation project will cost $36 million, which includes land acquisition and renovation.
"We're doing a high-rise apartment project on a neat historic building."
- Kip Platt
Development partner and principal for EFO Residential Partners LP
The Union Planters building will undergo $23 million worth of renovations, converting office space into one-, two- and three-bedroom units on floors two through 12. The ground floor will contain 29,000 square feet of commercial space, and the number of each type of apartment hasn't been determined yet, Platt said.
The average apartment will be 1,000 square feet and cost renters $1,250 a month. The apartment building also will have 13,000 square feet of general storage space for tenants, as well as a business center and health facility.
The apartments will feature hardwood floors, wireless Internet service and 9-foot ceilings. More than 70 percent of units will have river views.
"They'll almost be condos, but they'll be for rent," Platt said. "We're aiming to provide more amenities than anything else in town, so we'll probably be the (most expensive) rental in town."
PILOTing a fast machine
EFO Residential hasn't selected a general contractor for the project, which is scheduled to be completed by September or October 2007.
Platt, who was born and raised in Memphis, visited the market last year to look for affordable housing development opportunities.
EFO Residential focuses on using government assistance or incentives to mitigate or soften real estate development risks. The Center City Revenue Finance Corp.'s payment-in-lieu-of-taxes (PILOT) freeze program proved to be a good lure for the company.
In April, the company won a 15-year PILOT that will save it $4.7 million.
"We couldn't have done it without it," Platt said. "We don't go to these other places if we don't get some incentive to reduce the risk. It's still risky, but it's worth traveling for the risk. Otherwise we would stay at home (in Dallas)."
Potential tenants could include people who want to be Downtown but don't want to buy property, Platt said.
Union Planters building:
67 Madison Ave.
Built in 1923
257,476 square feet
157 upscale apartments
400-car parking garage
"We also want to cater to the people across the Mid-South who come to Memphis for the weekends, the Grizzlies games and Tigers games, who don't want to pay half a million dollars for a place, but wouldn't mind renting a place," he said.
'Icing on the cake'
The new building also could have the benefit of a law school across the street in three years.
The University of Memphis plans to move its Cecil C. Humphreys School of Law into the 140,000-square-foot post office and former U.S. Customs House that's just across Front Street from the Union Planters building. University officials are aiming to hold classes in the post office building by fall 2009 after it undergoes a $42 million renovation. The law school consists of more than 500 students, professors and other staff.
"We're probably going to be a little too high-priced for 80 percent of the students," Platt said. "But we would have done this deal whether the law school was there or not. The law school was just icing on the cake."
Andy Kitsinger, director of planning and development for the Center City Commission, said the apartment and parking garage could fill more than just housing needs for the students.
"Not only are they going to provide some potential housing for students and professors, but it's also going to supply a 400-car parking structure, which will help supply some of the parking for the law school as well," he said.
The building also could fill a need for apartments in the market, as about 15 percent of the apartment stock Downtown has been converted to condos in the past couple of years, Kitsinger said.
The Lofts at South Main at 505 Tennessee St. were converted into 115 condos in 2005; the Shrine Building at 66 Monroe Ave. changed its apartments into 75 condos in 2005; and the Paperworks building at 408 S. Front St. became 62 condos in 2001. The conversion at the Claridge House Condominiums at 109 N. Main St. brought 158 more condos into the market in 2005, and the River Tower at South Bluffs' conversion at 655 S. Riverside Drive added 153 units in 2005. EFO Residential's new project could help replace some of those lost apartments.
"It's filling a great need with the conversions that are occurring with apartments to condominiums," Kitsinger said. "We really need an additional apartment development Downtown."