Developers are nearing a deal to buy the former Texaco building downtown for redevelopment into apartments, according to a broker working on the deal.
Michael Hassler, a real estate broker with CB Richard Ellis in Houston representing owner Kimberly-Clark Corp., recently told the board of the Downtown Redevelopment Authority that Dallas-based EFO Holdings was close to buying the 13-story building.
“Kimberly-Clark feels comfortable we have the right buyer and feel comfortable we will get the deal done,” Hassler said at a public board meeting.
Officials at EFO Holdings declined to comment. A spokeswoman for Dallas-based Kimberly-Clark said the company has talked to several potential buyers, but the vacant building, on Rusk between Fannin and San Jacinto, isn’t under contract yet.
Hassler was at the authority’s recent board meeting to notify it that EFO would likely apply for a grant to help pay for a renovation of the historic property. He didn’t say how much EFO would request.
The Downtown Redevelopment Authority operates a tax increment reinvestment zone that encompasses 60 downtown city blocks. Under a reinvestment zone, some of an area’s property taxes are set aside for reinvestment within the zone.
Some retail planned
EFO Holdings has preliminary plans for a residential building combined with some retail, Hassler said. About 240 units would fit in the historic structure and be part of the first phase of development, he said. The first phase is budgeted to cost about $70 million, he said.
Later phases of development could include more apartments built from the ground up and take the unit count to 360, he said. He estimated that construction could start during the first quarter of 2012.
The difficulty many potential homebuyers are having getting financing is driving demand for apartments throughout the city, said Greg Willett, vice president of research and analysis for MPF Research in Dallas.
“Plus, overall construction has dropped to such an usually low level, it’s a market that’s going to get stronger and stronger over the years,” he said.
Occupancy for apartments built since the 1990s is at 94 percent in the downtown market, which includes everything from downtown out to the 610 West Loop, he said.
Average rents climbed 3.8 percent to $1,179 during the first quarter of the year, compared with the same period last year, he said.
Plenty of renters
Adding to the optimism of apartment developers is that those who rent are renting longer, said Bruce McClenny, president of Apartment Data Services in Houston.
“There are more and more developers and investors looking more toward apartments right now because of that demand,” he said, adding that he’s tracking at least 25 possible deals for new apartments around Houston that are being discussed by those in the industry.
The 96-year-old building, with a distinctive columned archway out front, served as headquarters for Texaco, the company Joseph S. Cullinan founded in Beaumont in 1903 and moved to Houston in 1908.
The building was designed by New York architecture firm Warren & Wetmore, which also designed Grand Central Station in Manhattan.
Also known as the Texas Co. Building, it was vacated by Texaco in the 1980s.
The property has changed hands between various developers ever since.
In the late 1990s, the building was purchased by a development group led by the Juneau family of Baton Rouge, La., who planned to transform the building into a Ritz-Carlton hotel.
That plan never came to fruition, and a subsidiary of Kimberly-Clark, which transformed the old Humble Oil building on Main Street into a hotel and apartment tower, bought the building in 2002 for development into a Renaissance Hotel, a high-end Marriott brand .
It never happened as the subsidiary, Housing Horizons, decided to focus on other projects in Houston, Kimberly-Clark spokeswoman Stephanie Anderson Forest said.