The former Falstaff brewery in Galveston has moved a step closer to redevelopment with a new owner who plans to convert the hulking industrial building and surrounding plot into a parking lot for cruise passengers and, later, condominiums and a boutique hotel.
The new owner, a Friendswood attorney, has been aggressive in purchasing older properties for redevelopment, including the Mall of the Mainland in Texas City. Plans for the brewery building’s renaissance could signal new life in an area of the island that was hard hit by Hurricane Ike in 2008.
“In terms of large-scale renovation, this is the most aggressive project in the attempt to succeed in mixed-use development” on the island, said Jeff Sjostrom, president of the Galveston Economic Development Partnership. “It could be a shot in the arm for (the area north of) Broadway. There are many exciting developments in Galveston, but this is in the center of the corridor and could kick-start other projects.”
Under partial ownership by Adolphus Busch, the original Galveston Brewery opened to much fanfare in the 1890s. It re-emerged after Prohibition as the locally owned Galveston-Houston Breweries manufacturing Southern Select and other regionally popular brews and later became a thriving local outpost of the Falstaff brand before its closure in 1981.
The building has been vacant ever since, although it was featured in an obscure horror film in 2010.
Since 1981, the 310,000squarefoot property has changed hands several times. The most recent firm to make a run at its redevelopment was Dallas based firm Matthews Southwest, which had the building under contract in 2013. That deal was never finalized.
Now comes Jerome Karam, a Friendswood attorney known for redeveloping older properties, whose JMK5 Holdings Galveston, LLC, took over the property officially in May. The developer plans to use the property’s three building for parking space for cruise passengers, a boutique hotel and condominiums. All of the buildings will have retail components, he said.
Redevelopment of Galveston’s Falstaff site seen as boost for Deal of the Week: New tenant to take seven floors of building Houston area near the top in apartment permits Houston a top housing market, but lagging job growth an issue Kingwood to grow along with the area around it Texas single-family home sales, prices keep rising Sjostrom noted other private and public investments rising up in the heavily industrialized North Broadway corridor, west of the downtown and Strand retail areas. He said the city is working on demolishing rundown sites there and opening up more property for development.
“It was the hardest hit area,” he said, referring to the storm. “The momentum and critical of mass of opportunity if done correctly could benefit the island overall.”
Galveston Mayor Jim Yarbrough described the shuttered and deteriorating Falstaff site as an inhibiting “psychological issue” for the area. He said little investment has been made in the area over the last 50 years or so, but the city has begun putting public money toward rebuilding there.
“If we can get it refurbished and rehabbed that would be another psychological statement that things are changing and we are moving in the right direction,” he said.
Yarbrough said many projects in Galveston, including the redevelopment of the brewery site, have been talked about for decades. He said environmental issues and increased costs often get in the way.
The centuryold Falstaff that rises above the city over two city blocks is considered significant by some and nuisance by others. There have been attempts to demolish the property or redevelop it over the last few decades. Its eeriness attracted Epiphany Filmwerks to film “Hellstorm” in the building.
Dwayne Jones, executive director Galveston Historical Foundation, said the historic brewery is important to the culture of Galveston. Falstaff was a major employer in his hey day. It featured a popular tasting room with a patio that overlooked the city. The foundation has listed the property several times on its list of “endangered” sites.
“We underestimate the impact of the company,” Jones said. “It’s an important property for where it is.”
The Port of Galveston will be the first to use the Falstaff site. The Wharves Board of Trustees last week approved a fiveyear lease of $18,000 per month to use the first floor of the building for cruisepassenger parking, port spokeswoman Cristina Galego said.
Karam’s company will receive 40 percent of gross revenue net of sales tax above $50,000 per month, according to the terms of the lease. The developer will use the revenue from parking to help fund other parts of his plan for the site. The port will manage the facility.
The 100,000squarefoot parking site will have 231 parking spaces inside and 93 outside.
The building should be operational by Oct. 23.
To ready the site for parking, developers are cleaning up the largest of its three buildings. They have changed out 83 skylights, cleaned up asbestos and torn out interior walls. They are also redoing the flooring.
Other than the parking facility, a sixstory and a 10story building will also be redeveloped in housing and a hotel. Karam said he is in the process of interviewing hotel brands for the next phase of the Falstaff site project.
Karam is also in the process of redeveloping the Mall of the Mainland in Texas City. He first purchased a building from Macy’s. A Palais Royal moved into that space. A World Gym also opened earlier this year in the building. Karam has also sold the Dillard’s building at the mall to First Baptist Church of Texas City.
The developer said he is rapidly leasing space for what he called “1980s prices.” He said he hopes the mall will be full in 18 months.
“It’s what I do,” Karam said. “I take property that no one else wants.”