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EXCLUSIVE REPORTS From the January 28, 2005 print edition First effort calls for mixed-use project over transit center Jennifer Dawson Houston Business Journal The Metropolitan Transit Authority's first venture into stimulating real estate development along light rail is geared toward putting a mixed-use project on an existing transit center. Todd Mason's initial mission as a recently appointed Metro vice president is to identify private developers who might be interested in constructing a high-rise project for possible retail, restaurant, condo or medical office tenants over the TMC Transit Center at Fannin and Pressler. The Texas Medical Center site doubles as a combination light rail stop and terminal where buses pick up and drop off passengers. Mason plans on sending a request for qualifications to hundreds of developers within the next two months. His goal is to find a list of prospects with the capability and experience to handle such a significant project on the 4.5-acre site. Metro gained full-time access to Mason's services by signing a five-year, $2 million contract with McDade Smith Gould Johnston Mason + Co. The real estate firm's name principal and chief financial officer occupies an office in Metro's new downtown headquarters, where his duties include promoting commercial development on or near Metro properties and handling all of Metro's real estate holdings. Mason's description of his job would apply more to a for-hire contractor than a full-time employee. "Metro has outsourced their real estate department to me," Mason says. "The primary goal is to take their transit centers and park-and-ride lots that have real estate value beyond a parking lot, and get them into the private sector for joint venture-type deals." Open for ideas The inaugural effort to put a mixed-use project on a Medical Center transit hub could determine the feasibility and direction of future Metro real estate development. While hundreds will receive requests for qualifications, Mason expects to be dealing with a select few. "What I hope is we can narrow it down to six or less truly qualified developers," he says. Metro would then conduct one-on-one negotiations to see what sort of deals could be structured with various developers. Mason hopes to make a final selection for the project by June. The TMC Transit Center project is wide open for development ideas at this point. Metro may do a ground lease or sell air rights to a developer, Mason says. Or the transit agency could enter into a joint venture with a developer on the project. One likely prospect is the Morgan Group Inc., a Houston-based apartment builder with experience in developing transit-related projects in California. Company CEO Michael Morgan says the Metro project sounds interesting, but unless incentives are offered it might be difficult to turn a profit. "The Med Center is a good market, but everything is rent-sensitive," Morgan explains. "Land prices have gotten so high that it's very hard to make apartment numbers work any more." Mason points out that Metro may be able to help make the numbers work because the transit authority has other revenue potential from the deal. In addition to receiving lease payments, the development would funnel money to Metro through increased ridership and an expanded tax base, Mason says. "I don't have to get nearly as high of a return on real estate as a traditional land owner," Mason says. "In many ways, it could save on what the cost of land is." Rising demand in one of the city's hottest sub-markets also could affect financial arrangements. Paul Layne of Trizec Properties says he is not familiar with Metro's plan, but suggests a high-rise project makes sense because the Med Center area has nowhere to go but up. "I think the idea of going vertical in the Texas Medical Center has proven to be a logical element of life because of the incredible density they have there," Layne says. "That's smart business." Fee sharing Commercial developer David Wolff came up with the idea of retaining private real estate professionals following his appointment as Metro board chairman in 2004. Wolff and Metro President Frank Wilson interviewed several firms before hiring McDade Smith, Mason says. "We'll make Metro a very business-friendly, forward-thinking entity," says Mason. "I think I can create value for them." For $400,000 a year, Metro gets Mason on a full-time basis, as well as McDade Smith broker Jeff Lindenberger and an administrative person. "We had to have the base fee if I was going to devote all of my time to the account," Mason says. "We worked out a compensation package that incentified me." As Metro properties are bought and sold, McDade Smith will attach regular brokerage fees to the transactions. Metro will receive 75 percent of the commission revenue until the agency's $400,000 investment is recovered in any given year. If brisk real estate activity pushes the amount past the $400,000 mark, the brokerage fee revenue will be split 50-50 between Metro and the real estate firm, Mason says. The transit authority also gains access to the experienced McDade Smith team as part of the contract. "Two heads are better than one. Fifteen heads are better than two," Mason says. Estimating income from development deals along rail lines may be difficult at this point, but Mason's status as Metro's real estate czar provides access to other revenue streams. A big share of the brokerage team's earnings could come in divesting Metro properties, an activity that has received little attention in the past. Metro owns some 1,500 sites around Houston, and it's Mason's job to help determine the worth of each one. Looking ahead Market demand and Metro's ownership of the property made the TMC Transit Center a logical place to test the real estate development waters. But existing design factors also attracted Mason. The center consists of a series of bus platforms and stairs that climb to a skybridge and link to the light rail stop on Fannin. The skybridge one day will connect to a University of Texas M.D. Anderson Cancer Center building scheduled for construction. Instead of building upon an existing base structure, a developer would have to design a project that could be constructed above the platforms and moored to the ground. "It's already designed to be able to build a high-rise on that site with the transit center below it," explains Mason. "They put the footings into the ground to be able to build a high-rise above the transit center." Mason envisions more than one tower being constructed, possibly a high-rise and a midrise. With the wheels set in motion, Mason already is looking at a second possible development site -- the 6.7-acre Wheeler-Blodgett station. Mason says he won't move forward until the Federal Transportation Administration makes a recommendation as to whether another rail line could eventually intersect and increase the site's value. Somewhere down the road, other development possibilities may include strip retail centers at various park-and-ride lots or multifamily developments on or near them, he says. Switching to his sales agent hat, Mason says one site that may soon be declared surplus Metro property could attract quite a bit of attention from buyers. The 12-acre tract occupied by an underutilized park-and-ride is located next to a Wal-Mart north of Interstate 10 and west of the Beltway. Mason's goals over the next five years are to maximize Metro's real estate holdings and capitalize on transit center land values. "It's an opportunity to do something really neat for the city of Houston," Mason says. "If we're successful, I think we can put some things on the map."

Jan. 23, 2005, 12:35AM The town downtown As city's center comes to life, newcomers

INDUSTRY WRAPUPS From the December 10, 2004 print edition Commercial Real Estate Beat Luxury hotel crowd checking out Galleria area Jennifer Dawson Houston Business Journal Houston Business Journal Word on the street has a new luxury hotel making reservations in the Galleria area. The buzz in the real estate community makes it sound like development is imminent, but the hotels themselves have nothing new to report. Sources says no development deals have been finalized, but from the amount and duration of due diligence being conducted, it looks like a high-end hotel in the Galleria area is a very distinct possibility. "There's definitely a lot of chatter going on," says Tucker Knight of Holliday Fenoglio Fowler, the commercial real estate financing firm. "There is really no true five-star hotel in this city," Knight says. "I am talking to two different groups, two different developers, about the potential of a five-star hotel coming to the Galleria area." Knight says he does not have clearance from the developers to release their names. High profile hotel names being thrown around by developers and industry sources are Ritz-Carlton, W Hotel, Four Seasons and Peninsula Hotel. The Four Season is the only one of the group that has currently has a Houston presence. The return of a Ritz-Carlton property has been mentioned the most in the latest round of hotel scuttlebutt. "Ritz would like very much to be in the Galleria," says John Keeling of PKF Consulting, which tracks the hotel industry. "They're trying to decide which developer and which site is actually going to happen. They don't want to hook up with someone who's not going to get the job done." Knight agrees that the Ritz-Carlton is being heavily pursued. "There are so many people chasing this Ritz-Carlton deal -- local developers and outside developers," he says. Vivian Deuschl, a vice president of public relations with the Ritz-Carlton Hotel Co., says the management company is continuously talking to developers about potential hotel sites. "On any given day, we're probably having discussions with developers on their projects in major cities all over the world," says Deuschl, noting that a project announcement would not be made without a signed agreement. "There are always rumors about us coming into markets," she adds. "We are always looking at the major cities in the United States where there is not a Ritz-Carlton, where we think the market is strong enough to support an ultra-luxury hotel." The Ritz-Carlton managed a site in the Galleria area until 1997 when a legal dispute with the property owner prompted the hotel management company to check out of the market. Starwood Hotels & Resorts later bought the hotel at 1919 Briar Oaks Lane and in 1999 changed the name from The Luxury Collection Hotel in Houston to The St. Regis Houston. In 2001, longtime plans for a Ritz-Carlton in the old Texaco building downtown fell through when the developer, leTriomphe Property Group, lost its equity partner in the $160 million project. W Hotel, another one of the Starwood stable, is also mentioned a lot in development talks, but no deal has been struck to bring that brand to town. "Houston would be an ideal city for a W, as we're looking at some of the most vibrant cities in the world," says Jane Glastein, public relations director of W Hotels Worldwide. "However, at this point, we can't confirm any plans to build a property there." PKF's Keeling says developers typically drop the W or Ritz-Carlton names into their plans, even though they don't have deals lined up with the hotel companies. "I think a W will get built in Houston. The question is where and when," Keeling says. He seems just as confident about a Ritz-Carlton, but says that development may be four to five years off. "I also think a Ritz-Carlton will be built in Houston, probably in the Galleria," says Keeling. He adds that a Galleria-area property would likely include for-sale condominiums in order to make the economics work. One of the more exotic hoteliers in the mix is the Peninsula Hotel, which has properties in Bangkok, Beijing and Manila, as well as New York City, Chicago and Beverly Hills. Kate Kelly, a Peninsula spokeswoman, says the company is not considering opening a Houston hotel at this time. Peninsula is more focused on developing properties in Tokyo, Shanghai and Europe, she says. The Four Seasons could also be considered a long shot, seeing how a location in Houston already exists. The downtown Four Seasons, owned by Maritz, Wolff Co., has 404 rooms, 58 apartments for lease and 49 condominiums for sale. Elizabeth Pizzinato, a spokeswoman with the Four Seasons corporate office, says a second Houston location is not in the firm's development pipeline. "I don't have word of anything like that happening," she says. "There's really nothing behind that right now, as far as I know." A handful of properties in the Galleria area are being considered as possible hotel sites, most of them along Post Oak Boulevard. The Pavilion retail center between Westheimer and San Felipe has been discussed as a potential site. Mishael Radom of Radler Enterprises Inc. who owns the property did not return phone calls. A Compass Bank site at 2200 Post Oak has also been considered. And a site near Richmond formerly occupied by Steak and Ale Restaurant seems to be in play. Lining up a prestigious hotel operator and securing a site are just a couple of pieces in the development puzzle. Keeling says the most difficult step will be obtaining financing. "Right now it's a very difficult financing environment for new hotels," Keeling says. "Five-star hotels are probably the most difficult thing you can build and try to finance. It could take years." jdawson@bizjournals.com

EXCLUSIVE REPORTS From the December 10, 2004 print edition Group pays $24.5 million for Arena complex with rowdy past Jennifer Dawson Houston Business Journal A local partnership has purchased the Arena Towers and Arena Theatre with plans to increase the occupancy rates by making significant capital improvements in the properties with a checkered history. Fred Schiller is general partner in the Arena Group, which bought the two office towers and circular theater from Miami-based Lennar Partners for roughly $24.5 million. The acquisition includes two 19-story buildings, each with approximately 390,000 square feet of space; a 2,850-seat live performance theater; and two nine-story parking garages with a total of 2,200 spaces. The properties are located on the Southwest Freeway at Fondren. The performance venue had been leased and operated for many years by H'Town Arena, which stopped leasing the facility days before the sale closed. Officials with the former theater operator could not be reached for comment. "We're currently in negotiations with several major national venue operators who are very interested in leasing it," Schiller says. The Class B office space in the two towers is approximately 70 percent occupied, with several large call centers as tenants. PM Realty Group has been replaced by Transwestern Commercial Services in leasing and management of the property. Leasing will be handled by Michele Ellis-Felder and Clint Bawcom. Coincidentally, Ellis-Felder used to lease the property roughly 12 years ago. She says finding tenants will be much easier now because construction on the Southwest Freeway has been completed and the buildings were renovated six years ago. "There's just a whole new feel and look to the property," she says. Towers of Powers The office buildings were developed in the early 1980s by Mel Powers. They were constructed next to the theater, which was originally built in 1965. Powers grabbed a lot of attention at the time by building a personal penthouse on top of one of the office towers. Later, when the project went into foreclosure, he tried to homestead the whole tower as a residence. "It was a pretty celebrated case," recalls Robert Williamson of Holliday Fenoglio Fowler, who with Jeff Hollinden represented Lennar Partners on the sale. "This is a very storied project. He (Powers) was a very flamboyant developer," Williamson says. New owner Schiller plans to spend an undisclosed but "significant" amount on further upgrading the appearance and functionality of the buildings. "I'm very bullish on this area of town," Schiller says. "It's undergoing some major revitalization right now. I think it's an unbeatable location." Lennar Partners had spent the last couple of years making improvements to the property as well, says Williamson of Holliday Fenoglio Fowler. "We had incredible interest for the buildings," says Williamson, of the recent marketing push. "There was tremendous upside available to the buyer." Tucker Knight of Holliday Fenoglio Fowler, who arranged financing for the buyer, says lenders also saw an upside even though the buildings did not have superior cash flow. Citigroup Global Markets Inc. arranged a loan for 80 percent of the cost, and the buyer got a very low interest rate, he says. "This building could be a home run for the current ownership," says Knight. jdawson@bizjournals.com • 713-960-5935

Dec. 4, 2004, 10:42PM Pitching a downtown dream Developers see loft-style offices, condos tied into flashy retailing, entertainment By NANCY SARNOFF Copyright 2004 Houston Chronicle Picture this: A luxury hotel, residential condominiums and loft-style offices, all connected by flashy urban retail, entertainment and culture. Now picture it in downtown Houston. An ambitious pair of developers wants to build the city's biggest mixed-use project yet on what is now three parking lots just off Main Street. Bill Denton, a developer from California, and Geoff Jones, a local developer, are behind this concept that seems almost too good to be true. Denton and Jones have signed a sales contract to buy the three blocks of downtown land bordered by Main, Polk, Dallas and Caroline. They're out there pitching their project to potential retailers and investors. But they won't talk to the media about it until they're further along in their plans. That's probably not a bad strategy. Houston has seen countless developers announce huge real estate projects that never seem to make it out of the ground. So are these guys for real? Denton's company, Entertainment Development Group, is based in Agoura Hills, Calif. It's certainly worth noting that he was behind a large retail project in Denver that many folks believed would never happen. Built in 1998, Denver Pavilions is now a hugely successful entertainment and retail complex with dozens of retail stores and restaurants, a nightclub and a 15-screen movie theater. The project is made up of four three-story buildings, linked by walkways and escalators, that cover two blocks on Denver's famous 16th Street Mall. Tenants include Virgin Megastore, Hard Rock Cafe, NikeTown, Barnes & Noble Superstore, Wolfgang Puck Grand Cafe, Maggiano's Little Italy and Lucky Strike Lanes, a hip bowling alley concept. According to the project's Web site, the $108 million development was financed in part by Rosche Finanz of Freiberg, Germany, and Hensel Phelps Construction Co. The closest things downtown Houston has to cutting-edge mixed-use real estate projects are Bayou Place in the Theater District and Houston Center near the George R. Brown Convention Center. But half of Bayou Place has sat vacant since it opened years ago. Just last week, owner Cordish Co. said it wants to build residential units there. And Houston Center is still facing identity issues despite recent repositioning efforts by the owner, Crescent. It's still way too early to predict the future of these three city blocks. Time and interest in downtown Houston will be the ultimate judge. http://www.chron.com/cs/CDA/printstory.mpl/business/2931451

http://images.chron.com/content/news/photos/04/12/05/devlopment.jpg PENDING PROJECTS At the end of the line Stubborn area to develop now looks primed with cheap land that's close to the Medical Center By NANCY SARNOFF Copyright 2004 Houston Chronicle DRIVE around the southern end of Metro's nearly year-old light rail line just outside the South Loop, and what emerges are overgrown tracts of land surrounded by a hodgepodge of warehouses, apartments, AstroWorld and even pumps from an old oil field. But observers say the area is on the cusp of a development explosion because of its cheap land and proximity to the ever-growing Texas Medical Center. "The area's been slow to develop," said Bob Parsley of realty firm Colliers International. "But we're beginning to see an overall acceptance in the marketplace for being south of 610." Indeed, home builders, industrial developers and land speculators are jockeying for still-vacant parcels just beyond the Metro terminus, fueling a land rush in this long-neglected area. Houston developer Frank Liu, who's building new homes nearby, owns about 60 acres surrounding Metro's Fannin South station, the last stop on the city's 7.5-mile light rail line connecting downtown with this area just south of Reliant Stadium. While he's not yet ready to tip his hand, Liu controls enough land in the area to create a sizable community where folks could live, work and shop. "The great thing about that piece of property is that it's so close to the rail stop and so close to the Medical Center," Liu, president of InTown Homes, said. "You just can't go wrong." These open spaces and still-low land prices are attracting developers whose options for development closer in are limited. "Land costs are just a fraction of what they are in the Medical Center," said David R. David of Warehouse Associates, a real estate firm building warehouses in the area and attracting more medical users than ever before. The company has leased space to a DNA lab, surgical center and a dialysis facility. In 2001, when the company built its first project there, medical firms didn't want to move south of the Loop, which was then seen as too far from the Medical Center. "We're seeing more demand for our sites," David said. "Today, I think we're a politically acceptable location for medical support." Jumping on bandwagon Other local developers have quickly caught on to the growing acceptance of this area, which, if it was noticed at all, was associated with a stretch of crime-ridden apartment buildings in the western corner. A group of investors has put together around 200 acres south of West Bellfort and east of South Main where it plans to develop a master-planned residential community. The project, which could spawn 1,000 homes, has been dubbed Buffalo Lakes. "We were attracted to the area primarily because of its proximity to the Medical Center and Reliant Center," said Joel Scott, who manages the partnership and is a principal in Terramark Communities, a Houston-based real estate development firm. Road work is tackling a long-standing obstacle to development. Buffalo Speedway, a major north-south thoroughfare that ends at West Bellfort, will likely be extended south to Holmes Road, improving access to Scott's project. Not waiting around Other developers haven't needed much convincing. A smattering of residential and commercial projects have been sprouting up among all the vacant land. Dozens of $200,000 townhomes line the streets near Link Valley, a neighborhood off Stella Link that used to be known by the nickname Death Valley. And Chancellor Properties recently completed Villas at Coronado, a 344-unit apartment complex on the Lakes at 610 just south of West Bellfort. The new project is around 80 percent occupied, according to O'Connor & Associates, a research firm. Apart from his planned development near the rail stop, Liu has started building townhomes in a project called Lake Pointe across from the apartment complex. The patio-home development built around a clubhouse, jogging trail and swimming pool will include 219 units when complete. Since the end of February, 77 units have been sold. The majority of buyers are professionals from the Medical Center, said Emily Wang, a sales consultant for Liu's company InTown Homes. "They're first-time buyers, mostly," she said. But it will be a while before development hits the area surrounding the end of the line. Liu is still formulating a plan for his acreage near the Fannin Street station. He said it will ultimately contain a combination of uses that will play off the light rail system. "Houston has always been a society of cars," said Tony Patronella, a real estate broker with Southwest Realty Advisors who has brokered many of the land deals in the area. "This will be the first time a subdivision is planned directly because of the light rail." http://www.chron.com/cs/CDA/printstory.mpl/front/2931497

http://images.chron.com/content/news/photos/04/12/03/a-george.jpg Dec. 3, 2004, 12:11AM Bush receives monumental honor A downtown statue celebrates the feats of the former president By ALLAN TURNER Copyright 2004 Houston Chronicle The air fairly quivered with praise as speakers at Thursday's dedication of downtown Houston's $1.7 million George Bush Monument strove to describe the former president's virtues. Statesman, war hero, humanitarian, inspired businessman

Nov. 24, 2004, 6:21AM West Houston synagogues prepare for Hanukkah Congregation to break ground at its new site on Wilcrest By ANNETTE BAIRD Chronicle Correspondent RESOURCES

Nov. 24, 2004, 4:10AM Creative juices flow with Brays Bayou design Group planning to beautify banks with park, bridges By HEATHER SAUCIER Chronicle Correspondent RESOURCES Preliminary sketches for the proposed project show:

LOCAL NEWS MeatRack isn

Live surgical series new Internet reality show Memorial Hermann Hospital officials are using the Internet to display the skills of their doctors. And as an added benefit, video-streaming operations appear to be paying off in the way of increased interest from prospective patients. This week, the hospital system hosted a live Webcast of Dr. Hazim J. Safi, chairman of the department of cardiothoracic and vascular surgery for The University of Texas Medical School at Houston, performing thoracoabdominal aneurysm repair surgery. During the complex procedure, the patient "is almost literally cut in half," according to Memorial Hermann spokeswoman Jamie O'Roark. Dr. Steve Allen, medical director for Memorial Hermann, served as the online moderator during the program, which is the first of a series. He received e-mailed questions from viewers and relayed them to Safi during the surgery, who continues to answer e-mailed questions for one week following the procedure. Putting procedures live on the Internet provides continuing medical education for doctors and helps raise consumer awareness, says O'Roark. An element of on-line marketing is also evident. Before the surgery was even performed, the hospital received several e-mails from people "asking for more information or to make an appointment with the doctor," says O'Roark. Queries came from various states, including Louisiana, Connecticut, Iowa and North Carolina. "We're hoping this is an excellent way to get our message out further and beyond the Houston area," O'Roark says. - Mary Ann Azevedo

Nov. 11, 2004, 2:22AM Architect will put his mark on Museum District Taniguchi, noted for museums, will design Asia House By PATRICIA C. JOHNSON and CLIFFORD PUGH Copyright 2004 Houston Chronicle Yoshio Taniguchi, whose expansion of the Museum of Modern Art in New York is receiving widespread acclaim, will design a building in Houston's Museum District for Asia Society Texas. The $30 million project, to be called Asia House, will occupy the block bounded by Southmore, Austin, Caroline and Oakdale streets, near Holocaust Museum Houston. It will be Taniguchi's first building outside his native Japan. "We interviewed four firms, chose three and invited them to Houston to see the site," said project director Susannah Wong. "Mr. Taniguchi was very gracious, and the chemistry was good. He was intrigued by the transformational neighborhood, the mix of old, new, business, residential." The 67-year-old architect is known for his striking museums of modern art, including the Nagano Prefectural Shinano Art Museum, the Toyota Municipal Museum of Art in Toyota City and the Gallery of Horyuji Treasures at the Tokyo National Museum. He is working on an addition to the Kyoto National Museum. Subtle structures Taniguchi's signature is subtle, even self-effacing structures that don't overwhelm works of art. He reportedly received the MoMA commission after telling board members, "If you give me enough money, I'll design you a beautiful building. If you give me more, I'll make it disappear." The $425 million MoMA expansion will open Nov. 20. The exhibit Yoshio Taniguchi: Nine Museums will be on display there through Jan. 31. Plans for the Houston project call for a 28,000- to 30,000-square-foot museum with two galleries

Nov. 6, 2004, 11:06PM Lock on the competition Texas' powerhouse Port of Houston teams up with Panama to draw a piece of Asia's massive trade away from West Coast By BILL HENSEL JR. Copyright 2004 Houston Chronicle RESOURCES Container trade with Asia through the Port of Houston has shot up, and the Panama Canal is a route tapped to expand the business. Imports Share of total trade

Attack Here Along the fifty-mile Houston Ship Channel, there are more explosive materials, toxic Gases, and deadly petrochemicals than anywhere else in the country

Yikes! Executive editor S.C. Gwynne on security at the Houston Ship Channel. Interview by Kimberly Jeffries In this month

Texas History 101 While it can boast about the more than 6,300 ships that passed through its waters last year, the Port of Houston started out as a mere loading point for cotton on the way to the Port of Galveston. by Kimberly Jeffries The Houston Ship Channel is, no doubt, a fire-breathing force to be reckoned with. The leading U.S. port in foreign tonnage, and second only to the Port of South Louisiana in total tonnage, it

INDUSTRY WRAPUPS From the October 29, 2004 print edition Business & Government Beat Downtown district ponders plan to entice merchants with money Jenna Colley Houston Business Journal Tax abatements aimed at large corporations are no longer the only game in town for some city planners. Financial incentives aimed at smaller retailers have become the latest buzz in the Central Business District. Luring merchants to locate downtown is key to developing urban viability, claims the Houston Downtown Management District. The organization is dickering with other downtown advocacy groups over a plan that would offer financial incentives to retailers who agree to peddle their wares downtown. Although the management district has yet to officially approve the measure, it will be considered at next month's meeting. If passed, the grant program will be factored into the organization's budget and available for prospective retailers by Jan. 1, 2005. President Bob Eury says the district's incentives won't be directed toward bars, restaurants or clubs. Instead, the largesse will go to retailers who deal in "soft goods" such as apparel, books and art. The group hasn't talked to particular retailers yet, opting instead to kick off the program before shopping around the incentive. Both Washington, D.C., and Dallas have offered similar programs to lure merchants into the urban core area. Those arrangements will provide the framework for the Houston program. "Obviously there is not an endless reservoir of money," says Eury. "We are going to have to target the types of retailers we want to go after." Those retailers include street level vendors open on the weekends as well as during the week, he says. This wouldn't be the first time the management district has doled out cash incentives to retailers. In the mid-1990s the group offered similar grants ranging from $25,000 to $100,000. But when the money ran out, the program fizzled. Grants can't be the main driver behind a project. Eury says the group is looking for retailers that already have financing in place. While refusing to put a specific price tag on the planned grants, Eury says the cash wouldn't be given out lightly. "It's a grant program on a case-by-case basis," he says. "We will have very specific guidelines and criteria. We are not just handing out money."

I have done a lot of research on Houston's past. I found this article while researching.

Oct. 29, 2004, 11:27PM Next incarnation for aging eyesore Condominiums may take place of hotel rooms By NANCY SARNOFF Copyright 2004 Houston Chronicle A longtime downtown Houston eyesore, which was once the high-rise home to a transcendental meditation society, has been sold to an investment group that wants to turn it into condominiums. A partnership led by Don Nicholas of LandCo Properties purchased the 30-story Days Inn building on St. Joseph Parkway between Milam and Travis on the southern end of downtown. "An ugly duckling downtown will become a swan," said Nicholas, whose group is still studying what to do with the building. The property was built in the 1970s as a Holiday Inn and later converted to a Days Inn before it was taken over by a group led by Maharishi Mahesh Yogi, who gained worldwide fame in the 1960s when he became the spiritual adviser for the Beatles. Located on the south side of downtown, the property was never successful as a hotel because it sat too far away from downtown corporations, hotel analysts have said. Nicholas and his partners have experience redeveloping old buildings. The group converted a structure in Colorado Springs to CityWalk Downtown, a residential building. Units were priced from the low $100,000s to more than $300,000. Nicholas said the Days Inn property reminded him of a larger version of the Colorado project. "It doesn't have a beautiful view of the Rockies, but it still has beautiful views of the city side and park side," he said. Tepid sales of downtown condominiums haven't stopped developers that see Houston as an up-and-coming residential market. Last month, Silvestri Investments purchased an old brick warehouse just blocks from Minute Maid Park, where it is building out at least 50 condominiums. And Randall Davis is planning to convert his St. Germain apartments on Main Street into for-sale units. He's selling the apartments for $180,000 on average and offering 100 percent financing. "I think people would like the opportunity to buy a condo in downtown Houston," he said. "Especially if it's priced right." The Maharishi, the founder of transcendental meditation, bought the Days Inn property in the early 1990s for a reported $2 million. It was renamed Heaven on Earth Inn, and the Maharishi's brand of meditation was taught there. But the hotel fell into disrepair and became a dingy blemish on downtown's skyline. It has sat vacant since the late 1990s. Adam Brackman and Jeff Kaplan of Wulfe & Co. brokered the sale.

EXCLUSIVE REPORTS From the October 22, 2004 print edition Harwin retailers pushing for formation of business district Allison Wollam Houston Business Journal A number of the retailers and property owners along Harwin Drive are banding together to petition the city and state government to send more funding their way to attract new businesses and promote the area. Kenneth Li, a property owner in the Harwin area and owner of Century 21 Southwest, says there is currently a push to form an official international business district in the area. Li says Harwin would be the hub for the district because of the international flavor of the businesses that line the street. A group of retailers and property owners have already drafted a layout of the district lines and outlined the advantages that forming an official district would have on retailers, according to Li. "We're hoping that the city will grant tax incentives to businesses in the area as well as supply money to market and improve this dynamic area," he says. Houston City Councilmember Gordon Quan says the city is in the midst of organizing a town hall meeting to encourage communication between landowners and retailers in the area. He says the issue didn't have enough support during the last legislative session. But the idea for forming an international business district has since been reconfigured, and the city is moving forward to get the issue passed. Quan, who points out that Mayor Bill White supports the plan, says it will be reintroduced during the next legislative session. "We have a list of the top 20 to 30 property owners whom we're getting together to talk about this issue and move forward on it as soon as we can," says Quan. awollam@bizjournals.com

Big dreams outline future plans for downtown Houston Developers are planning more sidewalks and family-friendly attractions to help bring more residents to downtown Houston. By Jessica Willey ABC13 Eyewitness News (10/18/04 - HOUSTON)

EXCLUSIVE REPORTS From the October 15, 2004 print edition Upscale retail centers charge into Harwin shopping arena Allison Wollam Houston Business Journal The long stretch of clustered strip malls along Harwin Drive is going uptown with the addition of some new high-end retail developments. The street known for its knock-off designer purses, jewelry and clothing is experiencing a flurry of activity as developers look to improve the image of the "bargain mile." Central Harwin Group Ltd. is leading the wave with plans to open the $10 million, 100,000-square-foot Harwin Central Mart by Nov. 1. And Charming Charlie's, a retailer of fine jewelry and accessories, will unveil the 80,000-square-foot Haute Harwin Fashion Center just in time for the Christmas shopping season. Both developments will cater to more discriminating shoppers, offering high-end goods at bargain prices. Haute Harwin will be anchored by Charming Charlie's, which owns the center at 6959 Harwin. Houston-based Charming Charlie's will occupy about 12,500 square feet of the development. Charlie Chanaratsopon, executive vice president of Charming Charlie's, says the company will lease the remaining space to 11 retailers and three restaurants. Murphy's Deli has already signed on to open on the site, as well as a fashion clothing and bridal store. "We're hoping to give Harwin Street a face-lift with bringing a Highland Village-type shopping center to this area," says Chanaratsopon. The retailers in Haute Harwin will offer the discount prices that have long-defined the area, but will also offer a higher standard of customer service and a more pleasant shopping experience, according to Chanaratsopon. Charming Charlie's plans to open five other locations across the city but chose Harwin as the first location because of the popularity of the area with discount shoppers. "People drive here from far away to get good deals, and we're going to give them the good deals they expect plus an upscale shopping environment," Chanaratsopon says. Although the swanky center is designed to cater to more upscale shoppers, Chanaratsopon says rental rates will be about $1.50 per square foot per month, which he says is competitive with other retail centers built in the area over the last two years. The average rental rate for the area, according to O'Connor & Associates, is about 89 cents per square foot per month. Meanwhile, Andrew Chung, CEO of Central Harwin Group, says Harwin Central Mart is approximately 50 percent leased and will include about 50 retailers when completely full. Chung says he expects occupancy to be split evenly between retailers and wholesalers, some of which have leased space to display their products in a showroom. Included in the retail offerings will be perfume, jewelry, clothing, wedding dresses and upscale restaurants. Harwin Central Mart will address safety and parking issues along the strip by offering 400 parking spaces, a 24-hour security guard and high-tech surveillance cameras. The center will also offer tenants high-speed Internet access for their business needs, says Chung. Retail broker Jason Baker, a principal with Wulfe & Co., says the Harwin area is ripe for more retail competitors. "There has been so little new development along Harwin recently that these new centers do add an upscale touch to the area," he says.

EXCLUSIVE REPORTS From the October 15, 2004 print edition Fox Sports Grill takes to the field with Houston venue Allison Wollam Houston Business Journal Houston is about to secure a front-row seat in the national sports arena. Fox Sports Grill is planning to enter the Texas market early next month with the opening of an upscale sports bar in Houston's Galleria mall. The venue will be only the fifth of its kind in the country. Fox Sports Grill was founded in 2001 by Fox Sports and B&B Restaurant Ventures. The first Fox Sports Grill opened in Scottsdale, Ariz., in November 2002. Other locations include Irvine, Calif.; Seattle; and Nyack, N.Y. An Atlanta location is scheduled to open this fall. The local Fox Sports Grill will open one year after rumors surfaced that competitor ESPN Zone was looking for space to launch a similar concept in Houston. Last fall, retail sources said ESPN Zone was considering touching down in Houston. But the sports-themed restaurant has yet to make an appearance in the Bayou City. (See "ESPN Zone kicks around plan to enter Houston retail scene," Oct. 24, 2003.) ESPN Zone spokesman John Pierce said this week that the company does not currently have plans to establish a Houston presence. "Houston is a great sports town, but we're not growing our concept right now," Pierce says. Fox Sports does, however, see scoring potential in the Bayou City. The company's 15,000-square-foot restaurant and bar will be located next to Saks Fifth Avenue and will feature an outdoor deck with fire pit, atrium patio seating inside the Galleria, a cigar humidor, multiple plasma screens and sports packages for all major sporting events. "We are elevating the traditional sports bar to a new level," says Bill Freeman, president and CEO of Fox Sports Grill. He says the concept is unique because it places an emphasis on food and entertainment and is able to hold live entertainment productions, thanks to the deep pockets Fox Sports. For example, the Fox Sports Grill in Seattle presents a live television show hosted by former Houston Oilers quarterback Warren Moon. Freeman says Fox Sports chose to locate a grill in Houston because the area is not fully served when it comes to offering a combination of destination dining and high-energy entertainment venues. The fact that the Galleria hosts a large number of business travelers and pedestrian traffic gives Fox Sports Grill an opportunity to win over a wide range of new customers, says Freeman, who counts Champps Americana, P.F. Changs and The Cheesecake Factory among the grill's head-to-head competitors. "We're actually competing against any entertainment event or any restaurant for the same discretionary dollars," he says. Another competitor, Shucker's Sports Bar, will be located in hitting distance of Fox Sports Grill's new facility in the Galleria. Officials with Shucker's, which also operates in the Galleria, declined to comment on Fox Sports Grill's impending arrival. Scoring points Freeman says Fox Sports Grill targets the "socially active" crowd who dine out regularly. He says 25- to 35-year-olds typically make up the eatery's late-night crowd, while 35- to 50-year-olds are the mainstream customer base. Chris Tripoli, president of A La Carte Foodservice Consulting, says Houston has yet to experience the "reinvention" of sports bars that take food more seriously and offer an overall elevated experience. "The sports bars in Houston have slowly all gotten too similar with televisions, snack food and beer," he says. "The new wave of sports bars keep the sports feel but also offer a good restaurant with more enhanced decor." Indeed, Freeman says Fox Sports Grill will have its own executive chef, and the menu will feature items such as Maryland lump crab cakes, steaks, ribs and bite-size burgers. Tripoli believes Fox Sports Grill has a good chance of making it in the competitive Houston restaurant industry because of its "celebrity" name connection and prime location within the Galleria.

OPINION From the October 15, 2004 print edition Commentary Waning convention business worsens hotel glut Bruce H. Walker Special to Houston Business Journal Downtown Houston's not hot, at least for hotels. The city is oversupplied and will not correct itself for years. The situation was entirely predictable. By ignoring economic realities and relying on faulty research, Houston city leaders have jeopardized viable hotels. A surge of downtown hotel openings caused occupancy levels to plummet from 79 percent in 2000 to 47 percent today, well below the break-even mark and causing a storm of concern amongst hoteliers. There are more hotel rooms than occupants to fill them. Houston's hotel market is an example that shouldn't be taken lightly by other cities. The number of hotel rooms doubled following a recession that started in early 2001, with room counts going from 2,200 to 4,700 today -- a 114 percent increase. This uncontrolled supply growth is to blame for today's depression. In the second quarter of 2004, room-nights sold volume is only 26 percent higher than that of four years ago, before 2,500 new rooms were added. The addition of 2,500 new rooms was caused in large part by the City of Houston, which built the 1,200-room Hilton Americas-Houston next to the George R. Brown Convention Center with public funds, and offered tax abatements to attract the other 1,258 new rooms. The city entered the hotel business to attract more and bigger conventions. The rationale for Houston putting on its capitalist hat was that a new "headquarters" hotel adjacent to the existing convention center would make the city better able to compete for conventions. The evidence shows otherwise. First, national demand for convention space is about half of what it was through the 1990s. Convention attendance has been deeply depressed for the past four years, with few signs of a recovery in sight. Trade Show Week reported an average 111 million convention/trade show attendees per year for the six years 1995 through 2000. This was followed in 2001 through 2004 with attendance averaging 56 million per year, a 50 percent decline. There are a number of reasons for this, and the economy is only one of them. Others include a fundamental change in how business does business. Improving teleconferencing and other trends in technology and supply chain management all contribute to lower demand for conventions. We all know how Home Depot and Lowes have replaced most convention-going, neighborhood hardware proprietors. Second, local governments all over the country keep adding convention space, worsening the over-supply. Since 1990, some 80 cities have significantly expanded their convention center space and added convention hotels. Third, the evidence so far is that adding another convention hotel does not increase the demand for convention space locally. In the second quarter, the Hilton Americas generated $59 REVPAR (Revenue Per Available Room per day). This is a poor showing and will likely result in a return on capital of only 3 percent. Since municipal borrowing rates are twice this expected rate of return, the project will probably not cover its bond payments, resulting in a cash drain for Houston. Consequently, Houston hotel occupancy tax receipts will probably have to be used to cover the cash shortfall, resulting in little or no marketing funds left to promote Houston! We also examined the downtown market excluding the Hilton Americas. So far, the entire market gain in room-nights sold has gone to the new public Hilton rather than to privately owned hotels. Tax incentives contributed to the explosion in new hotel supply, as well as the consultant-driven hype that major new convention volume was "on the way." To date, we know of no significant increase in the rates of booked convention business for the future. What is in store for downtown Houston? With only a 47 percent occupancy rate to be expected through the first half of 2005, red ink will prevail. Look for hotel closures or conversions to residential usage. Many cities have the notion that "if you build it they will come." In an age of continued growth, cities need to consider the overall impact that development will have within the city. Private operators knew this hotel was a probable failure and so would not develop it. For the City of Houston, what should have been a straightforward analysis has turned into a costly mistake. Bruce H. Walker is president of Source Strategies Inc., Texas' largest hotel consultancy, producing 75 Texas hotel feasibility studies annually.