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CPS Energy's board of trustees has set a $145M price tag for the renovation of the former headquarters of AT&T and Valero Energy on McCullough Avenue.
The decision, first reported in the San Antonio Express News, caps a six-year process that has included a proposed trade, a potential renovation and finally the purchase of the two towers on the McCullough property last summer.
The 430K SF AT&T towers can be seen from the decks of both Interstate 35 and Interstate 37. The decision to maintain and improve existing buildings is another step in rehabilitating the image of Downtown San Antonio office space, which has often lagged other areas of the city, NAI Partners San Antonio Vice President of Investment Joshua Swank said.
"San Antonio is not centrally focused the way Austin is," Swank said. "For a long time, downtown was looked at in a negative light from the office side, and it really dragged the whole market down."
CPS Energy's commitment to the property and the submarket — the electric utility is only moving from one part of Downtown to another — is a vote of confidence in Downtown, adding to Frost Tower's groundbreaking as the first new Downtown tower since 1989 and an estimated 13,000 apartment units in the development pipeline.
"The trend is really changing," Swank said. "The idea of Downtown San Antonio appeals to millennials and the idea that buildings are being renovated, or improved, really keeps the feel of a city changing from the ground up."
Monday's vote on the guaranteed maximum price came with the selection of Sundt Construction as the construction manager at risk. The total maximum price, which includes land, architectural fees and construction, would be $210M, CPS spokeswoman Nora Castro confirmed. The goal will be to open the building in 2020.
CPS Energy expects to complete the project without a rate increase and plans to sell off excess property valued in the range of $50M to $60M, Castro said. The renovation of the current project will cost less than renovating and expanding CPS Energy in its existing space on Navarro Street on the River Walk.
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