LAURA ELDER The Daily News
GALVESTON — Redevelopment of the long-vacant Falstaff Brewery building advanced considerably this week when the Port of Galveston’s governing board agreed to lease the building in its quest for more parking spaces to accommodate the growing number of cruise ship passengers sailing from the island.
The Wharves Board of Trustees on Thursday agreed to a lease that would give the port 324 parking spaces — 231 indoor and 93 outdoor — for $18,000 a month in rent.
The port would share revenues exceeding $50,000 a month. It would keep 60 percent net of sales tax and developer Jerome Karam would receive 40 percent. The lease is for five years with renewal options.
Karam is expected to provide a turnkey parking facility complete with fresh paint, lighting and restrooms, possibly by October. The lease doesn’t take effect until the site is ready for cruise-ship parking, Port Director Mike Mierzwa said. The port, which seeks to be the market leader in the lucrative cruise parking industry, would manage the facility at 3303 Church St. north of Broadway, where Karam plans to eventually develop a boutique hotel and commercial spaces.
The deal is a win for the port, which is expecting a wave of new cruise passengers this fall as larger ships sail from the public docks. And it’s a coup for Karam, a Friendswood attorney and developer who in recent months has turned around languising properties that others dared not touch.
Karam in early June bought the 313,000-square-foot building and surrounding land with immediate plans to develop lots for cruise-ship passengers to park their cars. The parking endeavor is expected to generate revenue to pay for environmental cleanup at the site. Deed restrictions forbid the property from being used for residential purposes before 2017, and then only after the Texas Commission on Environmental Quality deems the cleanup was sufficient.
Cruise-ship parking is a hotly competitive island industry.
More than 600,000 cruise passengers travel to the island yearly, mostly by car, and need places to park. Some leave their cars at hotels, while others use various lots near the cruise terminals along Harborside Drive. The port vies with private lots. The port controls about 2,560 parking spots; private firms own more than 1,000.
The Falstaff parking lot will be used for passengers sailing on Carnival Freedom. In June, Carnival Freedom sailings averaged about 540 cars, but the port had only about 400 spaces in its lots designated for that ship, Mierzwa said. Even as more private lots come online, there’s a need for more parking spaces for cruise passengers who arrive on the island early for sailings while cars of passengers about to disembark from ships still sit in lots.
There’s such a demand for cruise parking spaces, Karam entertained several offers before deciding to forge an agreement with the port, he said.
“There’s an amazing amount of people who are coming to the island for vacations on Galveston cruise lines,” Karam said. “I thought the port had a better handle on the inner workings of the cruise line industry. And I thought they could appreciate my vision of delivering a premier indoor parking garage dedicated for cruise line parking.”
Mierzwa said Karam made a fair offer for the spaces.
Crews for weeks have been working to clean up the Falstaff site. Falstaff Brewery, once a sizable island employer, closed in 1981. In the past 10 years or so, at least four developers have attempted to resurrect the old building, which was constructed in 1905 and changed hands several times before Falstaff closed. The Galveston Historical Foundation considers the building significant. Some neighbors considered it an eyesore, however, and advocated for its demolition. The Falstaff building is the last standing in the island’s Factory District.
The next phase at the Falstaff site is development of a boutique hotel, which would appeal to people who want to begin their vacation experience a couple of days before their cruise, Karam said.
Karam has become one of the most prolific and bold developers in the county. Among his most recent and visible developments is the transformation of the once troubled Mall of the Mainland, 10000 Emmett F. Lowry Expressway in Texas City. Karam, along with an out-of-state partner, in March finalized the purchase of the 451,000-square-foot property, which has since signed on commercial tenants.
Last year, Karam bought the 150,000-square-foot building from Macy’s, which closed its department store at the mall in 2012, but still owned the property. Since then, Palais Royal has moved its mall store to the redeveloped Macy’s building. A 42,000-square-foot World Gym also opened earlier this year in Macy’s building.
Karam last month announced another success when he finalized the sale of 150,000-square-foot Dillard’s building at the Texas City mall to First Baptist Church of Texas City.
Reach reporter Laura Elder at 409-683-5248 or [email protected].