A group of investors plans to build a $400 million mixed-use development on both sides of the River Walk, anchored by the Dream Hotel which was announced last year for the western bank of the river between East Martin and Convent streets.
The development, known as Riverplace, would fill about 3.2 acres of land with a 20-story multifamily building, a 17-story condominium building and an office building of undetermined height, along with the 21-story Dream Hotel and retail components, said Chuck Brehm of Boerne-based Universal Services Group, one of the investors. The specifics could change depending on market demand after the Covid pandemic, he said. All of those buildings would include parking.
Universal Services Group has already secured a housing incentive package from the City of San Antonio for a residential phase on North Main Avenue.
If realized, Riverplace would be one of the largest private construction projects ever undertaken downtown, in league with what Weston Urban is doing a couple blocks south and the investments GrayStreet has made in the area around Houston Street.
It will likely be built in phases, with the Dream Hotel built first, Brehm said. The timescale for its completion will depend on when capital is raised, he said.
“We want it to be a destination for all of San Antonio, in addition to people from all over the world,” Brehm said. “If you look at the history of the Dream hotels, they have that kind of impact wherever they go, whether it’s Nashville, Dream Hollywood, New York. They’re very much a high-energy type of destination, and we think San Antonio is ready for that.”
Brehm—who co-developed the Arts Residences at Thompson San Antonio, a luxury condo and hotel tower on the River Walk—declined to specify the boundaries of the project, but parts of it will occupy land currently owned by one of the investors, Edmund Beck, including the full city block bounded by North Main, Savings, Soledad and Giraud streets.
Through an open records request, the Heron obtained an incentive agreement signed in December between Universal Services Group and the city for a $55 million, 216-unit multifamily development at 500 N. Main Ave., within that block.
According to the agreement, Universal Services Group will receive an incentive package worth $4.4 million, the bulk of which is a 75% rebate on city property taxes over 15 years. The developer will also pay 25% of its city property taxes toward the city’s affordable housing fund—Universal Services Group’s contribution is estimated to be $1.1 million over 15 years.
The Riverplace investment group is still working on raising financing, Brehm said. Along with Universal Services, the group includes Real International, an Austin firm that gets about 20% of its funds from overseas investors. In October, the firm bought a three-story office building at 454 Soledad St., on the River Walk, which will be part of Riverplace.
[ Related: Austin real estate firm purchases historic office building on downtown River Walk ]
“Pre-Covid, we were very confident” about raising financing, Brehm said. After the pandemic struck, “the capital was out there, but it went to the sidelines, trying to get a better handle on how long this Covid situation would be, what exactly would be the impact.”
“Just now, we’re seeing the capital markets stirring again,” he said. “They want to get their money out, they want to be in great locations with great product, so they’re starting to seriously come back into the markets… We think that’s going to accelerate.”
The investors plan to preserve historic buildings within the development’s footprint, including the building at 454 Soledad, which Real International purchased last year, Brehm said.
The project would be in a federal Opportunity Zone, which makes developers eligible for breaks on capital gains taxes. The investors plan to take “full advantage” of those benefits, Brehm said.
Riverplace would be only two blocks north of where Weston Urban plans to build a 32-story, $107 million apartment tower—downtown’s first residential high-rise. Construction is expected to begin later this year.
Weston Urban, backed by tech multimillionaire Graham Weston, has spent the last decade building up a tech-oriented urban district around the Geekdom incubator in west downtown. Brehm cited those technology jobs as a reason the Riverplace investors feel confident that downtown can support a project of such scale.
[ Related: Weston Urban’s 32-story apartment tower awarded final piece of $7.5M San Antonio subsidy ]
“I just think the growth of our city, and the quality of the growth, in technology and science—we’re seeing the job base here in San Antonio expanding, and the quality of the job market here moving up the scale,” he said.
The San Pedro Creek Culture Park, under construction a couple blocks to the west, has also bolstered their confidence, he said.
For years, developers have struggled to make the numbers work for large residential developments downtown. But the market has now matured to the point that such projects make financial sense, Brehm said.
“We want an outstanding project, but we also want it to be—and I hesitate to use the term ‘affordable,’ because that term might be misconstrued—but you’ve got to make it work for the people who work in the downtown area,” he said. “You want a broad base there. And we feel that that’s achievable in San Antonio now.”
[ Related: Dream Hotel Group of N.Y. plans 25-story development on River Walk ]
Richard Webner is a freelance journalist covering Austin and San Antonio, and a former San Antonio Express-News business reporter. Follow him at @RWebner on Twitter
Contact the Heron at hello@saheron.com | @sanantonioheron on Twitter | Facebook
RIP Bonds, the best bar in San Antonio.