Imagine two years from now leasing an apartment in the heart of Hemisfair overlooking Yanaguana Gardens with a choice of new restaurants, cafes and other destinations in the park a minute’s walk away. That sounds like an expensive luxury development, but San Antonio’s AREA Real Estate, selected to develop the parcel, intends to reserve half of the planned 163 residential units for renters earning 80% or less of the city’s median income.
The 2014 median household income in San Antonio was $50,075.
“We don’t have a name yet, but we plan on a mix of studios and one and two-bedroom units, and we have a game plan for keeping the rents more affordable, a combination of smaller units and a commitment that 50% of the apartments will have income restrictions of 80% of area media income,” said David Adelman, the principal at AREA. “We are targeting a market at about $1,000 a month.”
AREA is known for its development of 1221 Broadway, its recent purchase of the historic Maverick building on East Houston Street and for bringing Tacoland back to life. It will break ground soon on a 305-unit multifamily project at 815 Avenue B.
A 2017 monthly rate of $1,000 a month would price the studio units well below what is available in most of the city’s new multifamily developments that have been built along the Broadway corridor and Museum Reach down through Southtown.
Hemisfair officials announced the $25 million deal Friday, more than one year after inviting proposals to bring residential living and public parking to the park, much of which has stood dormant for 50 years since HemisFair ’68, the world’s fair. The AREA plan calls for a 418-space parking garage that will be operated by Hemisfair. Residents will have access to 180 spaces behind a private gate, and the public will have access to the remaining 238 units.
“We plan on one parking space for every bedroom we build, but if we need fewer spaces we will move the gate and increase the public parking,” Adelman said. “This will bring badly needed public parking to Hemisfair as restaurants and other venues open there. As someone who has been going down there quite often for meetings on this project I can tell you that parking is desperately needed.”
The deal is still subject to City Council approval, and likely will be on the Jan. 14 agenda.
The selection of AREA represents the first Public-Private Partnership (P3) development at Hemisfair. Five different Texas-based entities responded to Hemisfair’s RFQ (request for qualifications) in September 2014. Hixon Properties and AREA, both of San Antonio, were short listed for consideration in February 2015.
“We shortened the list to Hixon Properties and AREA and the two were invited to submit proposals, but during the proposal period Hixon chose to remove itself from consideration,” said Hemisfair CEO Andrés Andujar. “That’s when we entered into serious negotiations with David Adelman that led to today’s announcement.”
The AREA residential and parking project will be located in the southwest quadrant of the park, between the John H. Wood Jr. U.S. Courthouse and Yanaguana Gardens.
By keeping half of the units at prices below market rate, AREA will qualify for tax breaks under a state legislative program designed to encourage construction of more affordable housing. Hemisfair also has adopted its own mixed-income residential policy to ensure that developments include workforce housing and market rate units to create a mix of tenant income levels.
Adelman said the eight-story structure will blend nicely with the downtown’s historical buildings and will include ground-level patios and balconies on higher floors.
“I would call our project a mid-rise, especially when you are right down the parkway from the Tower of Americas,” Adelman said. “We are in the range of buildings like the Maverick, the Casino Club building and other structures of that era. We studied those buildings to learn more about what traditional blocks looked like downtown.”
Adelman is seeking a restaurateur to open a casual venue in a 3,200 sq. ft. space on the building’s street level.
“We’ll do a restaurant space on the corner of Yanaguana Gardens and the street corner,” he said. “We’ll be in the market for a restaurateur who can provide light, casual fare, the kind of place you would go for a nice breakfast, a casual lunch, a place with a cafe feel for dinner.”
AREA will pay Hemisfair $155,000 a year to lease the land for 45 years with three, 10-year renewal options. Hemisfair will derive additional revenue from parking garage operations.
P3 developments are a central element of Hemisfair’s strategy to operate as a self-sustaining urban park. Once the park is fully redeveloped, Hemisfair expects tenant leases to cover 55% of its operating costs, with the other 45% coming from parking garage revenues, philanthropic gifts and private donations to the Hemisfair Conservancy, and public funds.
“We expect the AREA development at a cost of $25 million to be the smallest project we do at Hemisfair,” Andujar said Friday.
Adelman said construction is expected to start in late 2016.
“The outside date that we provided Hemisfair was Jan. 1, 2017, but we are going to do everything we can to start earlier in the fourth quarter 2016,” Adelman said. “With a 22-month construction schedule the idea is to finish before the city’s heavy (300th anniversary) celebrations begin in 2018.”
The reduced rate units are bound to attract interest well ahead of the completion dates, and Adelman said AREA would work to accommodate potential tenants.
“We’ll make it happen, we’ll put their name on the list,” he said.
Adelman already has heard from individuals interested in leasing the small studios and one and two-bedroom units that will become available in the historic Maverick Building, where renovations are expected to begin Jan. 2, 2016.
“We are hoping to complete the Maverick project by September, or even the middle of the summer,” Adelman said.
G.W. Mitchell Construction of San Antonio is serving as the general contractor on that project. The company built the Clear Channel corporate headquarters building at the Quarry, and more recently, the Paramour bar atop the Phipps Building at 102 9th St. on the Museum Reach.
Andujar said the search for a developer to undertake the $200 million mixed-use project in Hemisfair’s northwest quadrant, one that will border South Alamo and East Market Streets and the future six-acre Great Lawn, also is progressing.
“We are down to two proposals and hoping we will select a preferred developer by the first quarter of 2016,” Andujar said. “Then it will take one or two more quarters to negotiate a deal.”
That development is unlikely to be completed by the city’s 300th anniversary celebrations, scheduled to start May 1, 2018.
“These are exciting days to be in San Antonio,” Andujar said after Friday’s long-awaited announcement, adding with some humor, “These days my job is a walk in the park.”
Top Image: A watercolor rendering demonstrating the scale from the pedestrian vantage point. Images courtesy of Hemisfair.