1.2M SF Railway Exchange Under Contract, Mixed-Use Redevelopment Planned

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Railway Exchange_windows 2

According to multiple nextSTL sources, Hudson Holdings, a property development and real estate management group in Delay Beach, FL, has the vacant 1.2M sf Railway Exchange building in downtown St. Louis under contract. The historic building occupies an entire city block bordered by 6th, 7th, Locust, and Olive Streets.

Reached for comment, Hudson Partner Avi Greenbaum told nextSTL the group had been looking at the St. Louis market for some time and expressed confidence that the downtown market would support the mixed used plan being considered. Recent development announcements are said to not impact plan for the Railway Exchange.

“We like to build best-in-class assets, not just a decent project,” Greenbaum stated. “The type of product we’re building is different than what whatever else is building.”

Asked about factors supporting the redevelopment plan, Greenbaum stated, “None of these deals would be possible without historic tax credits. We’re very grateful to the state of Missouri and St. Louis leaders for supporting the program.” He also stated his belief that the departure of the NFL Rams will be an overall positive for the downtown hospitality market and that the team’s presence had been a negative influence on downtown convention business.

Hudson Holdings specializes in redeveloping large mixed-use historic buildings near the urban core. As stated on the company website, “With an emphasis on downtown historic adaptive re-use, Hudson infuses its vision and flare to energize older, transformational assets.”

The Railway Exchange certainly fits that profile. While such expansive and historic properties have proven to be among the most difficult to redevelop, Hudson has undertaken similar projects in Midwest markets such as Louisville, Cincinnati, and Cleveland.

Railway Exchange building

While the firm has completed several historic redevelopments, one stands as particularly analogous. Hudson purchased the 1M+ sf Huntington Building in downtown Cleveland for $22M last year and have planned a $280M renovation. The 21-story building was completed in 1924.

The project plan for that massive building includes 550 apartments, 400K sf of office space, 300 high-end hotel room, 200K sf of retail, banquet and conference space and the reopening of the building’s soaring barrel vaulted lobby. The Huntington Building project was green-lighted after receiving $25M in tax credits the state of Ohio made available for “catalytic” historic-preservation projects.

If redevelopment plans proceed, the Railway Exchange would be the fourth historic building on a three-block stretch of Olive Street in downtown St. Louis to be given a new life. The 538K sf Arcade Building reopened this year, and Restoration St. Louis is planning the redevelopment of Louis Sillivan’s 705 Olive building as has the adjacent Chemical building under contract.

Developer Brian Hayden is converting a large part of the Mid-Century Laclede Gas building into 111 apartments. It occupies a corner facing the Arcade and Chemical buildings. Hayden is also redeveloping the Alvern building at 10th and Locust Streets into apartments, and further west the 500K sf Jefferson Arms is under contract.

Huntington Building - Cleveland aerial{the Huntington Building in downtown Cleveland}

Huntington Building - Cleveland{interior lobby of the Huntington Building – image via Hudson Holdings}

Full construction activity is scheduled to be underway following the conclusion of the Republican National Convention this year. If all goes according to plan, the vast majority of the project should be completed in 2018. Speaking to Cleveland.com regarding the Huntington Building, Greenbaum stated, “We think that Cleveland as a city is starting to boom. We are here for the long term.”

At its completion in 1914, the 21-story Railway Exchange building was not just the largest building in the city, by far, but also the tallest. The building was home to Famous-Barr Co., the flagship name of the May Department Stores Company. Founded in Leadville, CO in 1877, May would move its headquarters to St. Louis in 1905. In 1911, the Famous Clothing Store, a May company, and The William Barr Dry Goods Company were merged to create Famous-Barr name.

In 2005 Federated Department stores announced it would acquire Famous-Barr and convert existing stores to the Macy’s label. Federated became Macy’s Group, Inc. with headquarters in Cincinnati. By 2008, Macy’s bond rating was just a step above junk status. Thousands of job cuts have followed, including more than 7,000 in 2009. In September of last year, Macy’s announced the closure of 40 additional stores. In January of this year, the company announced it would close its Bridgeton, MO call center, eliminating 750 St. Louis area jobs.

Railway Exchange building{the Railway Exchange looming over 705 Olive, which is being redeveloped}

Railway Exchange buildingRailway Exchange building aerial

Bruce Development of St. Louis bought the Railway Exchange building from Macy’s in 2010 for $18.5M. The plan was to downsize the department story from seven to three stories, and lease up the building with offices and perhaps additional retail, a $112M project in all.

The City of St. Louis approved more than $27M in Tax Increment Financing (TIF). The city also offered $17M in New Markets Tax Credits, and historic tax credits were to be utilized as well. According to an article in the Post-Dispatch, much of that money was never spent, though the balance ledger is unclear.

Despite headwinds for department stores, and large downtown stores specifically, the redevelopment plan for the building focused on retaining Macy’s. In January 2013, Macy’s announced it would also close stores in downtown Minneapolis and Houston.

Bonds in the amount of $4.6M were issued for the renovation and downsizing of the department store. They were to be repaid with revenue from a combination of sales tax and payroll tax. Estimates for each fell short, and while the city did not back the bonds, by 2012 revenue failed to cover interest payments on the bonds.

At the time of the Macy’s closing, the developer stated that there was no reason the renovation of the building couldn’t continue. Since then, T-Rex Technology Incubator moved out of the building and into 911 Washington Avenue. No visible work has taken place since. The Vanishing St. Louis site has video and images of Macy’s last days in the building.

Railway Exchange Building - ULI TAP{graphic depicting ideas for varied uses at the Railway Exchange – ULI TAP}

In 2015, the local chapter of the Urban Land Institute (ULI) conducted a Technical Assistance Panel (TAP) to imaging a new future for the building (presentation embedded below). In short, the TAP found that renovation costs were likely to exceed $250M, require significant subsidy, and necessitate a wide mix of uses. Uses imagined included retail, apartments, condominiums, boutique and extended stay hotels, traditional office and contemporary co-working spaces, fitness and playground space, and more.

Again, Hudson appears to be a developer capable of delivering a large, mixed-use project. Earlier this month Hudson Holdings closed on the historic Mark Twain building (Kansas City Athletic Club) in Kansas City. Planned there are a hotel and apartments. The group also owns the 400K sf historic Starks Building in downtown Louisville.

It was reported in March that Hudson purchased the Textile Building in downtown Cincinnati for $12M. Greenbaum told the Cincinnati Business Courier the firm is focused on historic adaptive re-use. “We’re an urban developer. We love downtown markets,” Greenbaum stated. Speaking to Cleveland.com regarding the Huntington Building he stated, “We think that Cleveland as a city is starting to boom. We are here for the long term.” The Textile Building was completed in 1906 and is 12-stories and 235,384 sf. A $70M renovation is planned.

The Huntington Building in Cleveland:

Huntington Building - Cleveland

The Starks Building – Louisville, KY:

Starks Building_Louisville

The Textile Building – Cincinnati, OH:

Textile Building_Cincinnati

ULI St. Louis TAP Powerpoint – Railway Exchange Building by nextSTL.com

 

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*quotes by Avi Greenbaum to nextSTL added 05/12/2016

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  • Patrick Albright

    They started work last week.

  • Timothy Pekarek

    There has been a lot of complaining about the lack of new skyscrapers in the city. I think that part of the story is that we had this huge inventory of 19th and early 20th century buildings available – much more than cities like Denver and Indianapolis. Developers have been slowly going through these often vacant and in the case of the Railway Exchange Bldg. – quite large buildings and rebuilding, and reusing them. The best thing about the city is looking around and seeing the many historic buildings that have been saved. One of the worst thing would be the loss of many others such as St Bridget of Erin church which was brought down earlier this year.

  • citylover

    What do you think ground retail could be? I wish Famous and Barr resurrected itself or some kind of St. Louis based retail invented itself. Perhaps a fashion incubator startup. Id love to see H&M. I know that’s basic but i think it’s a good start for affordable, wide range retail downtown. Need something family oriented in the future tho.

  • Chris R

    I would like to announce that I have every building in downtown that is over 4 stories tall under contact, and I am going to be submitting plans for a “Boutique / Mixed Use / Micro / Market Rate” project. Actually, I will talk about it a lot, make some awesome drawings, and then let the building sit there for 5 years until it sells to another developer. Welcome the the world of St Louis Development. All apologies to people like the Gills, and a few select others. The use of the term mixed uses is just code for, “really what ever the bank wants to see / give me money to build.” Note to all St Louis developers: A mixed use development is not an old building with ground floor retail and apartments above. Real mixed use developments are places like Bicknell City in Miami, or City Point in Brooklyn. If Cortex as a whole was one development that that would be perfect.

    • Adam

      “A mixed use development is not an old building with ground floor retail and apartments above.”

      ???

      Maybe you’re splitting semantic hairs (re “development”), but a building with ground floor retail and residential above is by definition mixed use.

    • Chicagoan

      A building with first-floor retail and apartments above is definitely a mixed-use building.

      I suppose it’s not as mixed-use as some apartments/condos/hotel/office spaces/retail developments that happen in bigger cities, but this is still a great thing for St. Louis.

    • John R

      Surely if the RR/X is renovated it will be as a mixed-use project. Also, almost all of these recent major projects announced or speculated on downtown are being undertaken by non Saint Louis developers…. I believe only the Gills working on the Hotel Saint Louis and residences and Koman on the new build by Busch. The rest are from elsewhere in the Midwest and beyond… Milwaukee, Kansas City, Indianapolis, Tennessee, Florida and Turkey etc.

    • Roobah

      Mixed use is what the bank says it is when you try to get a loan. Mixed use is different than live-work-play/entertainment buildings which have the idea you can do everything you need and never have to leave. Those are idea live/work spaces IMO.

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  • Don

    God’s Speed Hudson Holdings! They are talking on a very big project in a very big building. My fingers are crossed for them.

  • This paragraph is funny:
    It was reported in March that Hudson purchased the Textile Building in downtown Cincinnati for $12M. Principal Avi Greenbaum told the Cincinnati Business Courier the firm is focused on historic adaptive re-use. “We’re an urban developer. We love downtown markets,” Greenbaum stated. “We think that Cleveland as a city is starting to boom. We are here for the long term.” The Textile Building was completed in 1906 and is 12-stories and 235,384 sf. A $70M renovation is planned.

    Did Mr. Greenbaum confuse Cincinnati and Cleveland, or is it just a typo?

    This announcement may just be the game-changer for downtown. What has long been a huge deadweight on downtown is now poised to be the focal point that ties all the disparate progress together, right in the heart of the CBD.

  • citylover

    Dreams do come true!! I’m so excited. I read this post and freaked out. Top favorites of downtown architecture being revitalized. Kind of symbolic I think. Famous and Barr is out and startups, mixed use replacing it. We obviously need to remember the world’s fair and early 20th century prosperity, but I think people in Stl are ready to move on. I’m getting good feelings

  • ParallelParker

    Thank God. Something needed to happen with this property to give downtown St. Louis a big boost.

  • shad schoenke

    Good news! This area is such a life-sucking drain.

    And, BTW, look at the streetlights and traffic lights in Cincinnati!
    I was living there in the mid-90s when that city did the streetscape improvements. No countless cycles of studies nor public input. They just did it. That was the city’s plan to turn around downtown: new streetlights, sidewalks, trees and traffic lights. It was constructed fast and had a huge impact.

    Not sure why STL drags its feet for decades on the most obvious fix.

    Soapbox over.

  • Presbyterian

    I was just looking over a map of downtown St. Louis, mentally mapping all the redevelopment projects along Olive and Locust. I kept hitting a huge hole at the Railway Exchange. I’m so glad to hear there is movement!

  • Ben Harvey

    This is absolutely huge for downtown. I like that they are fixing the ugly garage too.

  • Alex P

    The two greatest pieces of the TAP presentation are the ability to redevelop the building incrementally and the lack of dependence on office space. Let’s hope both actually happen.

    • John R

      Macy’s also closed the DT Pittsburgh store a year or two ago after a similar down-sizing… new owners quickly purchased it and announced a mixed-use redevelopment plan for the 1M sq. ft. plan that (other than the potential condo ownership) looked like something ULI took a close look at for its RR/X TAP.

  • John R

    Great to get this out of Yackey’s hands and into a more resourced developer. Look forward to seeing details and timeline, but just the mere interest from a major player like this just adds to the argument that downtown has regained a level of excitement that seemed to have waned not long ago and is now back on a better track.