High-end fitness chain Life Time will open in downtown’s GreenStreet next year, filling a large vacancy in the once-troubled mixed-use complex and providing another sign that downtown is coming into its own as a residential neighborhood.
The new facility, which the company describes as an “athletic lifestyle resort,” will occupy the two-story space once filled by Books-A-Million, which shuttered its downtown store in 2012. In addition to the health club, Minneapolis-based Life Time will also bring its coworking concept to GreenStreet.
The coworking space, known as Life Time Work, will occupy 38,000 square feet in an 11-story office building at GreenStreet. The fitness space will fill 56,000 square feet, primarily in the two-story building at the southeast corner Main and Polk. In total, the company will occupy 94,000 square feet in the downtown development when it opens in 2020. Life Time declined to provide financial details or lease terms.
“It’s huge for our central business district to have something like that endorsing it,” said Bradley Freels, chairman of Midway, which owns the property with Lionstone Investments. “And I think it’s great for GreenStreet. Our vision is to make it a lifestyle, and this is a big part of it.”
The owners of GreenStreet, which spans four blocks Dallas and Polk between Main and Caroline streets, have been on a quest to rebrand the downtown complex and turn it into a destination, similar to what Midway did with CityCentre in west Houston.
In recent years, the companies have upgraded the aesthetics, adding stone pavers, wood accents and greenery. They’ve added new restaurants and pop-up retailers and built a 223-room luxury hotel called Alessandra.
Midway also converted more than 130,000 square feet of retail space to office space, most of which is spoken for. Tenants include coworking operator Spaces, startup accelerator MassChallenge and Spencer Ogden, a recruiter for the energy industry.
GreenStreet’s retail tenants include House of Blues, Lucky Strike and a bevy of restaurants and cafes.
While most of the retail space is spoken for, the property’s largest office tenant, NRG Energy, recently moved out of the office tower as it consolidated employees into One Shell Plaza. Midway is now marketing 195,000 square feet in the tower.
The developer is using the transition time to renovate the office building, renovating the lobby and making other improvements that will allow it to better suit multiple tenants.
Annual asking rents for downtown office space range between $31.35 to $44.65 a square foot, depending on the age and quality of the building.
The GreenStreet property dates to 2007 when it broke ground and was called Houston Pavilions. The developer had built a similar project in Denver and was hoping to replicate its success in downtown Houston.
The then-568,000-square-foot property was built for an estimated $180 million, supported in part by city funds. But after suffering a series of setbacks, from Hurricane Ike to the national recession, it never reached the potential its developer envisioned for it. The developer defaulted on a construction loan and a judge appointed a receiver to take over operations at the property in 2011.
The following year, Midway partnered with Los Angeles-based Canyon Johnson Urban Funds to buy the property for around $100, a source said at the time. In 2015, Houston-based Lionstone replaced Canyon Johnson in the partnership.
Midway and Lionstone have taken steps to cater to the small but growing downtown residential population of about 9,700, which pales in comparison to the roughly 157,000 people who work there.
Bob Eury, president of the Houston Downtown Management District, said the new owners of GreenStreet have been successful in repositioning the property focusing on hospitality, restaurants and services such as Life Time.
Others have been more cautious. Big-name retailers such as Target and Whole Foods have passed on the central business district, with Whole Foods opting to build a store in Midtown.
“We are always ever hopeful and we’ve worked it pretty hard,” Eury said. “With the majors they really look at heads in beds. What is not really picked up by the major retailers is our workforce and visitor population. Most of the analysis is on residential population.”
Life Time officials are optimistic about the prospects for growth.
“The development happening throughout downtown Houston over the past few years is exciting to see,” Parham Javaheri, the company’s executive vice president of real estate and development, said this week in an email. “The City, Central Houston and the Downtown District have focused on continued growth in the area and we saw a great opportunity to be a part of it.”
The company has been expanding its Houston presence for the past several years. It opened its first Houston club in 2004 and now has nine, two of which opened last year. One under construction in Greenway Plaza is scheduled to open later this year and another is planned in Shenandoah.
The company also has a club at Midway’s CityCentre near the southeast intersection of Beltway 8 and the Katy Freeway. In May, Life Time will open its first Texas coworking location there. The company leased 25,000 square feet in the CityCentre Five building.
Life Time aims to attract users in the 35-to-55 age range. Three levels of membership will range from $400 per month to work in an open plan without a dedicated desk to $620 per month for an enclosed office. Every membership will come with a membership to the health club.