Courtesy of GrayStreet Partners, Fulcrum Development and Shop Cos.
San Antonio Express News
MADISON ISZLER, STAFF WRITER
GrayStreet Partners is working with a different developer and scaling back its plans for Broadway East, its large mixed-use development across Broadway from Pearl that has been marked by setbacks and step backs amid a challenging post-pandemic development market.
The San Antonio firm is partnering with Fulcrum Development, another local firm that has built retail and office developments such as Alon Town Centre, Culebra Commons and the Market at Boerne Stage on the city’s North and West sides.
The height and density of the buildings fronting Broadway have been drastically reduced, and it’s unlikely that office space will be part of the project because of difficulty financing it, GrayStreet managing partner Kevin Covey said. Construction on retail and parking that make up first phase is expected to begin a year from now and wrap up in 2026, while the timeline for the rest of Broadway East is unclear.
“Phase one is happening,” Covey said.
Courtesy of GrayStreet Partners, Fulcrum Development and Shop Cos.
GrayStreet began buying land near Pearl for Broadway East in 2014 and eventually amassed over 20 acres on the east side of Broadway stretching past Austin Street.
The firm planned to partner with Midway, a Houston developer, to build housing, retail, offices, a hotel and outdoor plazas, and the project was to be built in phases through 2030. GrayStreet sold a sliver of the site to Encore Enterprises Inc., which built an apartment complex.
But in 2021, the firm put much of its land there up for sale — raising questions about whether Broadway East would come to fruition. GrayStreet’s ambitious plans for some of its other properties, such a W Hotel and office building at Broadway and Newell Avenue and a mixed-use development at the former Lone Star Brewery complex south of downtown, have yet to materialize.
Some of the firm’s investors were ready to move on from Broadway East and a deal with a pension fund fell through during the COVID-19 pandemic, Covey said.
Courtesy of GrayStreet Partners, Fulcrum Development and Shop Cos.
Fulcrum to the retail
Its attempts to sell drew two lawsuits, including one from its business partner. Midway alleged GrayStreet broke a contract that Midway said gave it the right of first refusal to develop Broadway East. At the same time, Denver-based McWhinney Real Estate Services Inc. alleged that it had a right of first refusal to buy the land. Both lawsuits were later dropped, and Fulcrum bought about 14.6 acres from GrayStreet in 2021.
With the first phase of Broadway East slated to feature 175,000 square feet of retail with parking, Covey said that Fulcrum — the developer behind the Gateway near the South Texas Medical Center — has a notable track record of developing multilevel retail.
“That’s a big component of this project, and a partner who’s done that was really important,” Covey said.
Those retail buildings fronting Broadway will be three stories or less. GrayStreet reduced the density and height of the designs in part because securing financing for the multifamily and office development it had envisioned is difficult right now, and the firm has acquired more land nearby, Covey said.
Creating a better pedestrian experience with “human scale design” is also a priority, he said.
Covey wants to attract national retailers, a difference from Pearl, where the stores are locally owned and managed. A leasing brochure features brands such as Gucci, Rolex, Louis Vuitton, Le Labo and Equinox, but Covey said the development will be geared more toward brands such as Kate Spade, Tecovas, Lululemon and Nike.
Courtesy of GrayStreet Partners, Fulcrum Development and Shop Cos.
Office, grocery unlikely
Covey expects half of Broadway East to be devoted to food and beverage outlets, including upscale and fast casual options. Residents in the Government Hill neighborhood want a grocery store, but Covey said that’s unlikely. Grocery is a low-margin industry and many companies must build larger stores to make a profit, though smaller operators may see potential at Broadway East, he said.
“We would love to have a grocer here,” Covey told the Government Hill Alliance neighborhood association during a recent meeting. “San Antonio is a town that’s dominated by H-E-B. I think the way that that business works, they have to have these really big stores, and I don’t think that we’re going to succeed with H-E-B. But we’ve certainly got this in front of Trader Joe’s and Sprouts and a couple of kind of smaller grocers that aren’t here in San Antonio.”
Future phases of Broadway East are expected to feature up to 1,000 apartments, a hotel and potentially townhouses or condominiums, but the timeline is unclear.
The development probably will not include office space, Covey said, because of financing difficulties and declining demand in the wake of the pandemic. That’s what has held up progress on a tower at Broadway and Newell — with a W Hotel and office space — that GrayStreet has been planning for years, he said.
Courtesy of GrayStreet Partners, Fulcrum Development and Shop Cos.
At the Government Hill Alliance meeting, residents asked what the developers plan to do with site of the closed Pig Stand diner, which GrayStreet bought in February. The firm is seeking to rezone the land to permit various uses but has not determined what will be built there, Covey told them.
Residents also said they are concerned about traffic clogging the area. GrayStreet and Fulcrum plan to build above-ground and underground parking, and they will dedicate another lane on Casa Blanca Street to help move cars through, but traffic “is still going to be a nightmare,” Covey told residents.
He criticized the Texas Transportation Commission’s abrupt decision last year to rescind an agreement that would have transferred control of a 2.2-mile section of Broadway to the city of San Antonio, which wanted to remake it as a more bicycle- and pedestrian-friendly corridor under a plan that voters approved in 2017.
The number of lanes were to be reduced, bicycle lanes added and sidewalks widened, but the commission, which oversees the Texas Department of Transportation, pushed back on cutting lanes. Mayor Ron Nirenberg and City Manager Erik Walsh said in August that they were waiting to see a design from TxDOT that would reflect the city’s goals for Broadway.