Twenty-five floors up, Bob Burk stood on the bare concrete floor of the unheated expanse he plans to transform into stylish penthouse apartments with a wide view of downtown St. Louis.
Where St. Louis businessmen brothers Michael and Steven Roberts failed, Burk and his Chicago-based development firm, UrbanStreet Group, plan to succeed with the 25-story glass-and-concrete Roberts Tower and seven other former Roberts properties.
Over the years, the brothers sank $50 million into the tower, plus millions more into the Roberts Orpheum Theater, Mayfair Hotel, Roberts Lofts on the Plaza and four adjacent buildings on Locust Street.
Burk’s investment group bought the entire portfolio for $16.5 million. He said last week that the new owners expected to spend about $50 million on the buildings, starting with the tower.
The Robertses built the tower with the goal of filling it with 55 luxury condos. But as the tower went up in 2009, the for-sale housing market went down. The brothers sold no condos. A first-floor steakhouse closed within six months.
Last summer, they abandoned their ambitious downtown plans by offering for sale the tower and the seven other buildings, including the largely vacant Locust Street structures they had hoped to redo as a boutique hotel.
Matt Bukhshtaber, a CBRE broker who represented the Robertses in the sale, said Friday that the properties drew interest from developers nationwide. UrbanStreet moved the quickest.
Burk, managing partner of the developer, said he saw a good opportunity in downtown St. Louis.
“We attacked it really fast,” he said. “It was a unique opportunity.”
The deal closed in October. For one low price, UrbanStreet got the shell of a contemporary tower ready for completion, a theater, a former school board headquarters redone as apartments and four empty buildings.
The sale was not “the bargain of the century,” Bukhshtaber said, noting that the former Roberts properties will require a lot of investment if they are to pay off for the new owner.
“You have a tower that is empty, a theater that’s empty and a hotel that’s not doing well,” he said.
However, the large investment by an out-of-town developer signals that downtown St. Louis is becoming stronger and more attractive as a real estate market.
UrbanStreet’s new holdings are on or near the 800 and 900 blocks of Locust Street.
“You’re talking about two blocks of properties that are going to be transformed,” CBRE’s Bukhshtaber said.
Real estate experts said that while the downtown condo market is slowly rebounding from the dark recessionary days of 2008, the rental market has remained vibrant. As a result, the Roberts Tower will get apartments instead of condos.
Burk said work should begin in March to put 132 luxury apartments in the tower. On the top floor, where the Roberts planned two penthouses, UrbanStreet will build three large apartments and, for all the building’s tenants, a fancy party room with a view of the Arch.
Once the tower project is under way, UrbanStreet will focus on its other St. Louis holdings with its management partner, North American Properties of Cincinnati, Burk said. New management already is in place at the Lofts on the Plaza, the apartments situated in the former St. Louis School Board headquarters.
Burk hopes to revive the Orpheum Theater, which went dark last year. What will happen with the Mayfair has yet to be determined.
“We’re not hotel guys,” he said. “Because of that, (the Mayfair) is probably our biggest challenge.”
The Mayfair, which struggles with low occupancy, might affiliate with a national chain, operate as a boutique hotel or be put up for sale, Burk said.
More certain is UrbanStreet’s intent to find a new operator for the Roberts Tower restaurant. Burk said its kitchen was large enough to serve the restaurant and the now-closed dining rooms at the adjoining Mayfair.
UrbanStreet hopes eventually to eliminate the “abyss” created by those vacant Roberts properties and find uses for the buildings that complement the Culinaria grocery and other successful office and residential buildings nearby, he said.
Despite plans by UrbanStreet and other developers for hundreds of new apartments over the next couple of years, the downtown market is unlikely to become overbuilt, real estate experts said.
Chris Grus, a real estate agent who focuses on downtown, said that even with the large number of new apartments in the pipeline, demand was likely to keep up with supply for the next three or four years. The Roberts Tower’s sleek style, floor-to-ceiling windows and party room should lure renters looking for luxury, he said.
“The open-glass look is something we don’t have in downtown St. Louis,and I think it will catch on,” Grus said. “When people live downtown, they want amenities for the premium price that building will fetch.”
Burk, 46, was born in St. Louis but moved away as an infant when his father, a Shell Oil executive, got a job transfer. As Burk stood last week on the tower’s penthouse level, he said the “excitement” of downtown was “fantastic,” adding that lack of “density is your biggest issue here.”
Part of UrbanStreet’s St. Louis strategy is to rebrand the former Roberts properties, many of which carried the brothers’ name. An exception might be the tower, which is topped by a “Roberts Tower” sign in huge letters illuminated at night. Will UrbanStreet change the tower’s name?
“We’ll probably just keep it,” Burk said.