Sterick Building poses tall order
Posted: Wednesday, January 18, 2012 6:46 am
By: Wayne Risher, The Commerical Appeal
By WAYNE RISHER
The Commercial Appeal
MEMPHIS (AP) — The lights are on, but nobody’s home.
Once the Queen of Memphis, the Sterick Building reigned as Tennessee’s tallest structure from 1930 through the mid-1950s, only to fall vacant and unwanted, if not unloved, 25 years ago.
Despite a flurry of behind-the-scenes activity, it’s unclear if or when the Sterick’s fortunes will rise again. It’s too big and challenging to develop in today’s brutal real estate environment.
The Downtown Memphis Commission has taken aim at the 29-story tower at 8 North Third as part of a campaign to force owners to fix up uninhabitable buildings, broken sidewalks and eyesores.
The owner, AXA Equitable Life Insurance Co., and its Memphis property manager have raked out debris, removed graffiti and lighted stairwells in recent months.
The owner has engineers evaluating structural conditions.
But Downtown officials fear that ultimately, saddled with a 330,000-square-foot white elephant, the owner will do as little as possible until a 99-year land lease runs out in 13 years.
“To the credit of the property owners, it’s not boarded up. It’s not as bad as it could be,” said Paul Morris, president of the Downtown commission.
“What’s not acceptable is the plan to do nothing, to cocoon the building and leave it. It seems right and just to me to demand they comply with the law,” Morris added.
A family real estate company including Memphians Henry and Niles Grosvenor stands to take ownership of the building on April 30, 2025, under terms of a lease signed by their great-grandparents in 1926.
The lease requires the building to be maintained and handed over “in good order,” but exactly what that means is subject to legal interpretation.
Ross Sterling, who founded Humble Oil and was later Texas governor, and his architect son-in-law, Wyatt Hedrick, put their names together and built the Sterick.
It’s on a corner where the Grosvenors’ great-great-grandfather, Napoleon Hill, in 1881 erected a mansion befitting the Gilded Age.
The Sterick was the tallest building in Memphis from its opening into the 1960s, but it has been vacant since 1986.
Older Memphians may recall how it defined the city skyline, particularly the view from Arkansas. The original white exterior was repainted yellow in an unsympathetic renovation before it went vacant.
“I definitely feel it’s a landmark worth saving,” said June West, executive director of the private, nonprofit historic preservation group Memphis Heritage Inc.
West recalled as a child going to appointments with her eye doctor and her dentist, professional golfer Cary Middlecoff, in the Sterick building.
The land lease and economy have relegated the building to development “limbo,” she said. “The joke has been that the company wants to give the building to the Grosvenors, but why should they take it?”
To assume ownership would be to assume responsibility for repairs and maintenance, a losing proposition in view of currently dim development prospects.
The Grosvenors sued the Equitable in 1999 to enforce the “good order” provision of the lease, leading to the Equitable’s last major investment, including a new roof, about a decade ago.
“It’s frustrating,” said Henry Grosvenor, whose real estate company has developed condos in the Goodwyn Building and apartments in the Commerce Title Building. “There are some things that are happening to the Sterick that if they don’t address, are going to get worse.”
“We’ve made some requests so it wouldn’t sit there 13 years,” he added. “If we could redevelop it with the help of the city and the Downtown Memphis Commission, we would certainly like to push for that and do whatever we can to get this off dead center.”
AXA Equitable spokeswoman Jo Ann Tizzano gave this statement:
“AXA Equitable became the lessee of the Sterick Building when it foreclosed on a delinquent loan made to a prior lessee. Given the overall high vacancy rate for office buildings in the Downtown area and low rental rates, the company does not intend to lease the building at this time.
“AXA Equitable has and will continue to maintain the building so that it does not pose any danger to the public, and the company employs security personnel to keep it secure.”
Morris said a “dream” scenario would be a hotel on lower floors, apartments on middle floors and condominiums on upper floors. He’d like to see owners and developers approach the building in phases from the ground up.
The Sterick is of similar vintage as the much-smaller Lincoln-American Tower, which was re-done as apartments in the Court Square Center development.
Willie Chandler, a partner in Court Square Center, said the Sterick’s most daunting issues are the land lease and sheer size.
“When the lease was entered into, neither party could have envisioned the conditions that now exist. Who in 1924 could have anticipated that a 400,000-square-foot building could be worth nothing?”
“I think it’s going to sit there until 2024,” Chandler continued. “I don’t see any way around it. Once you even become interested in it, it takes money, for architects, planners, engineers. It just costs money from the developer’s side. Nobody’s going to start work on it if there’s no path to having something done.”
Grosvenor said Down-town’s recent history points to a mixed-use redevelopment of the Sterick.
“I get phone calls all the time from people who are interested in developing it. It’s a matter of timing. Look how many buildings were vacant 10 years ago. There are not many buildings like that left. It’s obviously going to be challenging, but it can be done.”