Federal Reserve Bank Of Dallas Houston Branch At 1301 Texas Ave.

[MontroseNeighborhoodCafe]

Sept. 17, 2004, 11:20PM

Olajuwon to score big profit on old Federal Reserve sale

Bank building likely will be medical offices

By NANCY SARNOFF

Copyright 2004 Houston Chronicle

The transformation of the sleepy south end of downtown has taken another step forward with a deal to sell the Federal Reserve bank building to a developer.

ADVERTISEMENT

The seller is retired basketball star Hakeem Olajuwon, who will reportedly turn a big profit on the property purchased four years ago.

The buyer, Medistar Corp., is a Houston-based firm that builds hospitals and doctors' offices around the country. It will likely develop a medical office facility on the site, which is near Christus St. Joseph Hospital.

The Federal Reserve building sits in a part of downtown that hasn't seen as much new development action as the north side. But that is starting to change.

A new headquarters building and transit center for the Metropolitan Transit Authority at 1900 Main will be completed within a few months.

And a new Roman Catholic cathedral is expected to break ground early next year on a site adjacent to the federal building.

Even Christus St. Joseph Hospital has started a $130 million capital campaign for expansions to existing facilities, a new patient tower and a medical office building.

Olajuwon purchased the federal building and an adjacent parking lot in 2000, when he was transitioning a career on the courts to one in real estate.

At the time, he paid about $4.3 million for the property, which he leased back to the Fed. Medistar has contracted to buy the downtown building and parking lot for about $13 million.

While some type of medical facility is likely to replace the federal bank building, Medistar official Wayne Green said his company is considering other options after the company closes on the deal, which is expected by year end.

"We are in the process of conducting a feasibility study to determine the highest and best use of this property, which may or may not include medical," he said.

In any future development, additional floors likely will be added to the existing property.

Constructed around the 1950s, the bank building was designed to be expanded vertically, said David Cook of Cushman & Wakefield, who is brokering the sale to Medistar, along with Jeff Peden and Marshall Davidson.

Olajuwon bought the building, which is almost 100,000 square feet, with an agreement to lease it back to the Federal Reserve until the bank's new building was completed.

Next year the Federal Reserve Bank will relocate to an Allen Parkway facility that is three times the size of its downtown building.

In recent years, Olajuwon has acquired other properties ranging from a historic downtown building, which he turned into a religious mosque, to an abandoned shopping mall in Missouri City.

Olajuwon has done little with most of the properties he has purchased, opting to sell many of them for a hefty profit.

Last year, Medistar took possession of another site owned by Olajuwon near the Texas Medical Center. It is expected to have a medical-related use.

Plans for that parcel are under evaluation, Green said