Sterick Building Redevelopment

[VSRJ]

Note: This is a merged thread. Discussion regarding the 2023 redevelopment announcement begins here.

March 31, 2023:

Exclusive: Sterick Building purchased by local team; full redevelopment in the works

Quote

 

The Sterick Building has towered over the corner of Third Street and Madison Avenue for nearly a century, a symbol of Memphis' changing fortunes — for good and ill. The "Queen of Memphis" was a neo-Gothic marvel uplifting the skyline and telling of the city's prosperity across the middle 20th century. But, by 1987, it's final commercial tenants moved out, and the 29-story high-rise went dark.

It has stood empty since then, first as a domineering reminder of mass disinvestments Downtown, and then increasingly as an anachronism of blight that persisted despite the renaissance and revitalization going on all around it. 

Now, the Sterick is ready to join a new era in Memphis, a glowing piece of an ever-growing promise of a brighter future.

Acquiring it as Sterling Hedrick LLC, a team led by Memphis developer Stuart Harris has purchased the Sterick property at 8 N. B.B. King Blvd. and the nearby Avis car lot from the family trust that has owned the land since before the skyscraper was built. The closing documents were signed just prior to the publication of this story.

The deal also dissolves the 99-year lease that has been owned for decades by New York City-based Equitable Holdings LLC and its corporate forebears. The coordinated move to acquire the property and terminate the lease in one fell swoop sees the land and the tower united under one entity for the first time in its history.

 

Original November 12, 2018 Post:

Big day for Memphis development news:

Sterick building hits the market with 'serious offers' coming in, RFP to follow

https://www.bizjournals.com/memphis/news/2018/11/12/sterick-building-hits-the-market-with-serious.html

Quote

 

It's been empty since the 1980s, but Downtown's iconic Sterick Building may not be vacant forever.

The three related families that own the land at 8 N. B.B King Blvd., which the building sits on, have listed it for sale with CBRE Inc. and hope to find the right developer to bring it back to life.

"Its time is coming soon," said Henry Grosvenor, one of the heirs. "We've had initial conversations with quite a few [developers]. … We engaged CBRE to put together a marketing effort to do a national and international request for proposals (RFP)."

Though there are many hurdles between the property being listed for sale and its eventual revitalization, the listing is a significant step for the Sterick, which has been stuck in the mud for decades.

With Downtown development heating up, Grosvenor said he had recently started hearing from multiple local developers interested in the property and was receiving "some pretty serious offers." He and his relatives hired CBRE to determine interest from non-Memphian developers then decide which developer to work with.

CBRE began marketing the property on behalf of the Grosvenor, Petree, and Jefferds families about a week ago. In the past week, brokers Johnny Lamberson and Terry Radford have received "an awful lot of inquiries from all across the country", Lamberson said.

"The timing right now is as good as it has ever been, with what's happening Downtown and in downtowns all over the country," Grosvenor said.

"We have the best, most iconic building available in Tennessee," Lamberson said.

CBRE's marketing efforts will last 35 more days. After that point, an RFP will be issued to interested parties, who will have 45 days to complete.

Lamberson said right now he expects potential developers to pursue a mixed-use project, but there are a variety of options.

"We’re all in discovery phase of what this thing could be," Lamberson said.

A redevelopment of the building wouldn't be without its challenges. To start with, getting multiple family members to agree on real estate transactions is notoriously tricky. Lamberson said he's enjoyed working with all the family members, who are "very involved" and have "interesting input."

Also, the families only control the land, not the building. Charles Niles Grosvenor Jr. helped negotiate a 99-year land lease in the late 1920s, which allowed developers R.E. Sterling and Wyatt Hedrick to build the Sterick Building in 1929.

New York-based AXA Equitable Life Insurance Co. has controlled the land lease — which has fewer than 10 years remaining — since the 1970s. Grosvenor said AXA is supportive of the building being sold and its redevelopment. The insurance firm could not be reached for comment Monday.

On top of these logistical challenges, the building itself has issues. The 351,000-square-foot structure has low ceilings, some asbestos, and some lead paint.

But those challenges, Grosvenor said, are neither worse than in similar buildings of its age nor insurmountable.

"Crosstown [Concourse] was incredibly complex, and this would probably be similar," Grosvenor said. "But, it's a priority for the city, county, and state. … The key is to get the right developer involved."

 

 

Edited April 1, 2023 by VSRJ

[East Side Urbanite]

My favorite skyscraper in Tennessee. Sure hope it's saved. A gem.

[Lexy]

This needs to happen!  I love that building.

[dxfret]

Both the Sterick and 100 North Main buildings are in horrible condition.  Sterick is worse off and has been empty and deteriorating since 1986 and tied up in ongoing legal disputes.  100 N Main, once HQ of Union Planters Bank,  has been in big decline for many years and totally shuttered  for almost 5.  The local news media have done stories about fires, falling exterior slabs and such. Rehabbing either would be a mammoth expense and risk in this already moribund area of north downtown. Both of these towers were once icons of the downtown Memphis skyline.  The nearby government area has also seen TN  state offices move away from downtown to other parts of town. A new hotel is badly needed and planned as the Cook convention center is being  upgraded. 

[Dale]

56 minutes ago, dxfret said:

Both the Sterick and 100 North Main buildings are in horrible condition.  Sterick is worse off and has been empty and deteriorating since 1986 and tied up in ongoing legal disputes.  100 N Main, once HQ of Union Planters Bank,  has been in big decline for many years and totally shuttered  for almost 5.  The local news media have done stories about fires, falling exterior slabs and such. Rehabbing either would be a mammoth expense and risk in this already moribund area of north downtown. Both of these towers were once icons of the downtown Memphis skyline.  The nearby government area has also seen TN  state offices move away from downtown to other parts of town. A new hotel is badly needed and planned as the Cook convention center is being  upgraded. 

You don't seem terribly confident in either project. I got the impression that 100 N Main was good to go, that the building was going to be stripped to the core and reclad.

[bnacincy]

I would have torn down the Cook and made the Pyramid the Convention Center before Bass got a hold of it. After of course removing  the steel cladding and replacing it with blue tinted glass the kind of which sits atop the Pyramid. Maybe even adding a couple of smaller pyramids next to it as demand warranted. This would have facilitated the rehabilitation of the Pinch District with new hotels AND......what about moving the zoo just north of the Pinch and making it the northern terminus for the streetcar?

100 North Main I think is salvageable......the Sterick is iffy-real iffy. The Civic Center plaza was built in the early 70's and has the look by 1971.

Nice looking if you're the Brady Bunch but not so much if you're not.

[dxfret]

The real question is how deep are the pockets of an investor and how much confidence do they have in Memphis, especially downtown?  It would be far more cost efficient to demolish both 100 N Main and Sterick and build something new that is tailored to today’s needs.

A huge problem with 100 N Main is the tiny parking garage with turns so tight even compact cars can barely navigate it.  The building has all kinds of other structural problems and has badly deteriorated. A few years ago the Commercial Appeal ran a photo essay of the interior spaces and shows just how far gone the building has deteriorated.  Sterick Bldg  is older still and in worse shape  

Also a huge expense in rehabilitating any building in Memphis is to add the required seismic protections.  Memphis is right on the New Madrid fault and it is hugely expensive to bring such structures up to current code.  They had to spend a tremendous amount of $ on the Pyramid to retrofit for earthquakes before it became a Bass Pro Shop.  

I lack confidence in both projects simply because downtown Memphis and has a long history of failed projects. The One Beale proposal has been postponed and scaled back many times and nothing has developed. The north end of downtown is especially problematic, with so many vacant lots and dead space.  The Bass Pro Shop Pyramid is isolated from downtown as it’s cut off by the interstate bridge and the nearby Pinch area will only really begin to develop over by St Jude Hospital. 

 

[Tennessine]

6 hours ago, dxfret said:

I lack confidence in both projects simply because downtown Memphis and has a long history of failed projects. The One Beale proposal has been postponed and scaled back many times and nothing has developed. The north end of downtown is especially problematic, with so many vacant lots and dead space.  The Bass Pro Shop Pyramid is isolated from downtown as it’s cut off by the interstate bridge and the nearby Pinch area will only really begin to develop over by St Jude Hospital. 

I understand that feeling. I am always skeptical of new high-rises proposed for downtown Knoxville. Nothing has gone up there since the 1980s and several projects have failed since then. Currently, a 26-story residential tower is proposed for downtown Knoxville. We shall see if it turns out. I think it's too ambitious for the market.

[21jump]

On 11/28/2018 at 3:49 PM, bnacincy said:

I would have torn down the Cook and made the Pyramid the Convention Center before Bass got a hold of it. After of course removing  the steel cladding and replacing it with blue tinted glass the kind of which sits atop the Pyramid. Maybe even adding a couple of smaller pyramids next to it as demand warranted. This would have facilitated the rehabilitation of the Pinch District with new hotels AND......what about moving the zoo just north of the Pinch and making it the northern terminus for the streetcar?

That would have been cool but I believe that Bass Pro did an excellent job renovating the Pyramid, and I initially thought it was silly that the city allowed Bass Pro to take over the property. There are nice plans for a major Pinch district redo between the Pyramid and St Jude's but there hasn't been any news on the project in several months.  The real shame is the freeway and that monstrosity of the I-40/Riverside Dr interchange that cuts that area off from the rest of downtown.

I'm excited to see the Sterick building come back to life.  I graduated from the University of Memphis and love seeing the positive steps the city is making.

[Memphisborn]

There has been recent talk of the possibilities of Repurposing the “Queen of the South”. Would love to see it become Hotel/ Apts/condos.

As to the Sterick Building, at 8 N. B.B. King Blvd., Young said there is an ongoing conflict between building ownership and a tenant with a long-term lease not set to expire until 2025, though he added he was hopeful to see a resolution between the two parties before then. 

[Memphisborn]

4 minutes ago, Memphisborn said:

There has been recent talk of the possibilities of Repurposing the “Queen of the South”. Would love to see it become Hotel/ Apts/condos.

As to the Sterick Building, at 8 N. B.B. King Blvd., Young said there is an ongoing conflict between building ownership and a tenant with a long-term lease not set to expire until 2025, though he added he was hopeful to see a resolution between the two parties before then. 

https://www.cityrealty.com/nyc/midtown-west/jw-marriott-essex-house-160-central-park-south/5973
 

Something like this would be ideal. 

[DRG901]

How recent talk are we dealing with?  I haven't heard anything since pre-2019 and haven't heard since.  Some things have happened since then I've heard that have delayed some other things.  And that might be an understatement.

[The Guardian of Memphis]

A hotel & condos definitely. More of those are needed. Question is, where would people park? Maybe build a parking garage in front of Sterick. Don’t know if the crosstown concourse model would work, i.e.: art gallery, high school, medical clinics, etc. Seems like that would work well though.

[Memphisborn]

23 hours ago, The Guardian of Memphis said:

A hotel & condos definitely. More of those are needed. Question is, where would people park? Maybe build a parking garage in front of Sterick. Don’t know if the crosstown concourse model would work, i.e.: art gallery, high school, medical clinics, etc. Seems like that would work well though.

Idk if concourse model is right fit for Sterick however Hotel/ condo would be ideal in that area of downtown close to AZP/ FedEx forum. It could be additional hotel space for conventions. That’s the model it’s best suited for IMO

[dxfret]

The only viable solution for both the Sterrick Bldg and 100 North Main is to totally demolish them.  Both structures are too far gone and renovation would not be economically feasible.  These buildings are urban blight and a stain on downtown Memphis. 

[Memphisborn]

37 minutes ago, dxfret said:

The only viable solution for both the Sterrick Bldg and 100 North Main is to totally demolish them.  Both structures are too far gone and renovation would not be economically feasible.  These buildings are urban blight and a stain on downtown Memphis. 

Interesting are u aware there is already a developer that has a viable redevelopment plan for 100N main?? that has been approved and is moving forward. Ground breaking is scheduled first quarter 2023.

[dxfret]

24 minutes ago, Memphisborn said:

Interesting are u aware there is already a developer that has a viable redevelopment plan for 100N main?? that has been approved and is moving forward. Ground breaking is scheduled first quarter 2023.

Highly unlikely to happen as a recession is already underway and the Memphis market remains one of the weakest in the country.   

[The Guardian of Memphis]

18 hours ago, Memphisborn said:

Idk if concourse model is right fit for Sterick however Hotel/ condo would be ideal in that area of downtown close to AZP/ FedEx forum. It could be additional hotel space for conventions. That’s the model it’s best suited for IMO

Agreed. The only way to go is mixed use. So will most of the parking go next door underneath the Indigo? Will there be enough space?

Also, since the ceiling heights are so low, what will have to be done to correct this?

[MDC26]

The building/lease is owned by AXA Equitable Life Insurance company. They aren’t going to give it away. No one is going to simply buy the building/lease  from them, because it expires in a couple years, and will revert over to the land owners at that time. So, it’s virtually worthless.

The family that owns the land wants to control the building, so they probably aren’t going to sell the land until they do. It’s obviously more valuable when they own the building too. Also, no one would want to buy land in which they can’t do anything with it or the building that’s on it for 2 1/2 years. 

The Grosvenor family may even want to develop it themselves. Why spend any money to buy it when they get it for free in April 30, 2025? 

Regarding the redevelopment, it will be cost prohibitive. There’s environmental issues, so that is probably asbestos that will need abatement. It will need Seismic upgrades. There’s also the issue with floor height, which I believe is 8 ft. This will make installing HVAC ductwork difficult. One option may be for the ductwork to be installed every 3rd floor, and deliver it to the floors above and below it. But this will decrease the amount of useable space. 

To make it work, whoever redevelops it will need to make use of all available historic tax credits, get a max 30-year PILOT, and have rental rates on the high end. It will need to be all apartments, or apartments with boutique hotel, and some retail on ground floor. 

[The Guardian of Memphis]

Well Crosstown was deemed "impossible" but look what happened with that. $200m price tag with financing from HUD, the city, and many different banks.

Wonder how much Sterick would fetch. Crosstown is more than a 1.5m sq ft. and Sterick is 350k. With all of the upgrades and improvements, would the cost to renovate be like $500m? Don't know if the city can make any more loans, or would they be able to, in 3 yrs.?

Edited October 17, 2022 by The Guardian of Memphis

[Memphis4ever]

On 10/15/2022 at 9:54 AM, dxfret said:

The only viable solution for both the Sterrick Bldg and 100 North Main is to totally demolish them.  Both structures are too far gone and renovation would not be economically feasible.  These buildings are urban blight and a stain on downtown Memphis. 

As an architect you are absolutely incorrect.. The most sustainable building is an existing one and to be fair those are some of the best built structures of the older buildings.  Plus with their large  height our skyline would shrink by half.

[Memphisborn]

9 hours ago, Memphis4ever said:

As an architect you are absolutely incorrect.. The most sustainable building is an existing one and to be fair those are some of the best built structures of the older buildings.  Plus with their large  height our skyline would shrink by half.

Thanks for your professional in put there is a reason why Memphis has redeveloped a lot of old historic buildings.  U can’t build buildings like crosstown, Tennessee brewery, chisca, 100N main, Sterick etc. they are once in a lifetime builds. Retrofit is absolutely the way to go. 

[VSRJ]

It would be a challenge but surely there are other similar buildings in the world that have been brought back to life even with asbestos, low ceilings, etc.? If there's a will, there's a way (even if it's costly). Memphis struggles in a lot of areas, but adaptive reuse is not one of them. I believe it can be done, it might just take a little creativity.

[MDC26]

7 hours ago, VSRJ said:

It would be a challenge but surely there are other similar buildings in the world that have been brought back to life even with asbestos, low ceilings, etc.? If there's a will, there's a way (even if it's costly). Memphis struggles in a lot of areas, but adaptive reuse is not one of them. I believe it can be done, it might just take a little creativity.

It’s absolutely possible. It will be difficult, and expensive, but it can be done. And, I think it has to be done.  It’s too beautiful of a building to tear down.  It would be catastrophic to lose 100 N Main and the Sterick. There has been zero real attempt to do anything with the Sterick at this point, due to the lease conundrum. I think it may cost in the $200 million range to renovate.

 I really wish the Medical Center Towers would get repurposed too. I know it looks quite ugly now,  but I think it could look cool if done right. It’s a 20-story building and we don’t have a surplus of those. UTHSC owns it, and I think wants to tear it down. It also would have been cool if the Baptist Towers could have been kept and turned into apartments. 

[Memphisborn]

11 hours ago, MDC26 said:

It’s absolutely possible. It will be difficult, and expensive, but it can be done. And, I think it has to be done.  It’s too beautiful of a building to tear down.  It would be catastrophic to lose 100 N Main and the Sterick. There has been zero real attempt to do anything with the Sterick at this point, due to the lease conundrum. I think it may cost in the $200 million range to renovate.

 I really wish the Medical Center Towers would get repurposed too. I know it looks quite ugly now,  but I think it could look cool if done right. It’s a 20-story building and we don’t have a surplus of those. UTHSC owns it, and I think wants to tear it down. It also would have been cool if the Baptist Towers could have been kept and turned into apartments. 

Sterick is definitely on the city Radar to be repurposed it’s not that far in future 2024-2025 I believe we will start to see more interest and plans presented. 
 

https://wreg.com/news/could-the-90-year-old-sterick-building-be-memphis-next-big-thing/