R
idgemont Properties has recently acquired three office buildings located on Houston Street in San Antonio, Texas, from GrayStreet Partners, a private equity firm based in San Antonio. The buildings in question are the Frost Bros. building at 217 East Houston Street, the adjoining Bennett and Schaum buildings at 223 East Houston Street and 225 East Houston Street respectively, which collectively span an impressive 87,450 square feet. These buildings have been home to a variety of high-profile tenants, including Bohanan's Prime Steaks and Seafood, The Palm restaurant, and the renowned architecture firm Gensler.

    CBRE and Shop Companies have been tasked with leasing the available retail and office spaces within these buildings, which total 5,400 square feet of retail space and 17,000 square feet of office space respectively. Ridgemont Vice President Trebes Sasser Jr. expressed his enthusiasm for the acquisition, stating that "It's irreplaceable real estate that has excellent retail."

    The purchase of these buildings is seen as a positive development for San Antonio's office market, which has been struggling with high vacancy rates since the onset of the pandemic. However, according to CoStar, San Antonio is expected to lead the nation in office rent growth over the next four years, with annual increases of 1.5 percent. While this forecast is lower than the nearly 4 percent surge in office rents seen over the past year, it remains a favorable outlook for the sector considering the challenges it has faced.

    GrayStreet's sale of these buildings marks the end of its nearly decade-long involvement with Houston Street, which began in 2015 with the purchase of the Kress and Vogue buildings. Despite GrayStreet's significant investment in revitalizing these areas, the envisioned vibrant commercial hub never fully materialized. As a result, GrayStreet has divested from several downtown properties in recent years, redirecting its attention to other ambitious projects such as the Broadway East mixed-use development near Pearl and potential redevelopment plans for the Lone Star Brewery complex.

    Ridgemont is optimistic about the strategic location and historical value of the Houston Street properties, believing they will attract businesses due to the energy brought by nearby developments like the Alamo Visitor Center and Museum expansion and UTSA's downtown expansion. Sasser expressed confidence in the long-term potential of these buildings, stating, "We feel like we're in a trough, and we're going to be riding that upswing over the next however many years of our holding period."