Bits and pieces of news about the much-ballyhooed CityCentre development in west Houston have been trickling out for nearly two years. But this week, followers of the project hit an information gusher.
Executives with Houston-based Midway Cos., which broke ground on the $500 million CityCentre venture last month, finally revealed details about the mixed-use project’s equity partner, other development partners and the scope of the ambitious undertaking on Feb. 15.
Located at the southeast corner of Interstate 10 and Beltway 8 at the site of the former Town & Country Mall, CityCentre will have 500,000 square feet of office space; 400,000 square feet of retail, restaurant and entertainment space; a 217-luxury hotel topped with 16 condominiums; 375 apartments; 250 urban lofts; 40 brownstones and a 140,000-square-foot fitness facility.
Most of the properties will be developed simultaneously, and are expected to be completed between the summer of 2008 and the end of that year.
An institutional investor represented by L&B Realty Advisors LLP of Dallas is footing a large part of the bill. The pension fund investor is providing $30 million in equity and has secured a $94 million construction loan for a total investment of $124 million.
The rest of the funding will come from Midway and other development partners.
CityCentre will be the home to several “firsts” for the Houston area.
Houston-based Valencia Group will build its first hotel in the Bayou City in a joint venture with Midway. The developer behind the Hotel Valencia Riverwalk in San Antonio was planning to launch a new concept in CityCentre called Hotel Elle, but the local property’s name has not yet been revealed. (See “Hotel first in Houston for local developer,” Nov. 18, 2005.)
Two successful restaurants — Eddie V’s and Z Tejas — will make their Houston debuts in CityCentre. Both already have popular locations in Austin.
Brio Tuscan Grille, a restaurant concept out of Columbus, Ohio, will open its first Houston location inside the project.
And Minnesota-based Lifetime Fitness bought 1.7 acres from Midway to build its first urban facility in the country. Midway worked with Lifetime’s CEO to design the new three-story, 140,000-square-foot fitness center concept.
In addition, Dallas-based Studio Movie Grill will build its first ground-up cinema-eatery location in Houston featuring first-run films and a full restaurant and bar menu. (See “CityCentre signs first round of high-profile retail tenants,” Nov. 10, 2006.)
“For us it really has been a concerted effort to develop something of the highest quality,” says Jonathan Brinsden, Midway’s executive vice president. “I think it will be a true regional destination.”
Other confirmed retailers already have a local presence, but will likely be welcome additions to the neighborhood, based on the public’s reaction when some of their names leaked out last summer.
Tenants will include RA Sushi, Papyrus, Sur La Table, Taco Milagro, Lucy, Sunglass Hut, Amegy Bank, Norris Conference Center, Potbelly Sandwich Works, Jamba Juice and Chipotle.
“Obviously the tenants themselves shape a project,” Brinsden says.
DEEP POCKETS
CityCentre, which has been on the drawing board since Midway purchased the 37-acre Town & Country Mall tract in May 2004, just this week revealed the name of its financial backer, which committed to the project a year ago.
David Gleeson, executive vice president of L&B Realty Advisors, says the investor that L&B represents wants to remain confidential, but with this being such a large deal, he concedes that the name will probably come out eventually.
“It’s one of the largest state employee pension funds in the country,” Gleeson says. “It’s not CalPERS or CalSTRS, but it’s one of those types of funds.”
Brinsden will not reveal the amount of money that Midway is investing in CityCentre.
“We’re putting in a portion of the equity,” Brinsden says. “It’s a typical co-investment with a pension fund.”
Gleeson says the L&B-fronted pension fund investor was attracted to the deal because of the unique site, the area’s demographics, a creative site plan and the way Midway executives incorporated concepts from other successful mixed-use projects.
Midway Chairman Brad Freels and other development team members visited 27 commercial projects across the country to determine what components to include in CityCentre.
“We think they’ve done an excellent job of that,” Gleeson says.
Other development partners in the project include Austin-based Simmons Vedder & Co., which is building an apartment complex on seven acres it owns within CityCentre; homebuilder MHI of Houston, which will construct the single-family brownstones; and Houston-based Chancellor Property Co., which will develop urban lofts starting at $700,000 apiece in a joint venture with Midway.
Three office buildings are planned — a 250,0000-square-foot structure and two 125,000-square-foot buildings. The two smaller buildings will go under construction soon, although no tenants have leased office space yet. Midway is negotiating with a company to take up to 175,000 square feet in the larger building, which will break ground once that deal is signed, Brinsden says.
Midway executives took their time in unveiling CityCentre, Brinsden says, because they wanted to make sure the project was ready to move forward when an announcement was made.
“I think we’ve taken the right approach,” says Brinsden. “We felt a great sense of stewardship when we acquired the property.”
jdawson@bizjournals.com • 713-960-5935
CityCentre Partners
Developer: Midway Cos.
Financial Partner: L&B Realty Advisors LLP
Construction Lenders: LaSalle Bank, leading a consortium including Amegy Bank, Compass Bank and Citibank
Retail Leasing Partner: Page Partners
Office Leasing Partner: Colvill Office Properties
Architects: Gensler, Peter Remedius and Kirksey