VOL. 124 | NO. 85 | Friday, May 1, 2009
One Commerce Square Faces Foreclosure
By Eric Smith
The real estate crisis has struck a blow to the Memphis skyline, hitting one of Downtown’s tallest and most iconic towers.
Trustees have filed a first-run foreclosure notice on One Commerce Square at 40 S. Main St. and will sell the 31-story building on the courthouse steps May 27. The notice appears in today’s print edition of The Daily News and also at The Daily News Online, www.memphisdailynews.com.
The owner of the building is One Commerce Square LLC – whose majority owner is Jacksonville, Fla.-based Southcoast Capital Group – which defaulted on a $24.5 million loan dated Dec. 20, 2002, through Archon Financial LP. The deed was assigned to Regency Savings Bank F.S.B. in 2003, and is now owned by Park National Bank following a merger with Regency.
Park National Bank on Monday appointed Douglas M. Alrutz and Richard C. Raines of Wyatt, Tarrant & Combs LLP as successor trustees in the matter.
Per newspaper policy, calls to the parties involved – property owner, manager or trustee – are prohibited until the notice is published.
One Commerce Square contains 507,568 square feet. It sits on the southeast corner of South Main Street and Monroe Avenue and was completed in 1972, according to the Shelby County Assessor of Property. Its 2009 appraisal is $16.6 million.
The property also includes the adjoining low-rise bank building at 125 Monroe Ave. and a neighboring parking garage at 61 S. Second St. The 76,220-square-foot bank building is appraised at $2.6 million, and the 218,448-square-foot parking garage is appraised at $4.1 million.
The building suffered a major blow when it lost its anchor tenant, SunTrust Banks Inc., which vacated 155,000 square feet in the building to move to 999 S. Shady Grove Road in East Memphis. The bank’s lease Downtown ended in January when it formally moved to its new location.
That transition ended an era for One Commerce Square as a banking landmark. SunTrust in 2004 bought National Commerce Financial Corp., the parent of longtime Memphis financial institution National Bank of Commerce. NBC’s headquarters were at One Commerce Square and for years the top of the building was adorned with the NBC logo. The building was then branded with SunTrust’s logo until the bank’s relocation and is now blank.
Decline in the neighborhood
Replacing such a large tenant has proven difficult in this climate. Pinnacle Airlines Corp. in 2007 flirted with moving its headquarters to the building, but those plans never materialized.
A proposed $31 million sale of the building to a California real estate investor fell apart in 2007, prompting a breach of contract lawsuit among the parties involved.
Downtown office space opened 2009 with a vacancy rate of 19.7 percent, according to the first quarter data compiled by CB Richard Ellis, making it the third-worst performing submarket in Shelby County behind the airport area (56.1 percent vacancy) and Midtown (20.8 percent).
One Commerce Square will be sold May 27 at noon on the steps of the Shelby County Courthouse.
Look for more on this in coming issues of The Daily News.