Shopping center nearly full after filing for bankruptcy
Within two-and-a-half years, the Hill Country Galleria has gone from bankruptcy to being almost fully occupied.
The 152-acre development in Bee Cave is leased out of office space and has about 96 percent retail occupancy, said Adrian Overstreet, the manager of the Galleria. Overstreet and several partners purchased the Galleria out of bankruptcy in 2010.
The Galleria in 2010 had 60 percent retail occupancy and one office tenant, Overstreet said.
“It has kind of arrived,” Overstreet said of the Galleria.
Purchased out of bankruptcy
Overstreet and his partners purchased the Galleria out of bankruptcy for $75 million. The original developer, Opus West Corp., had taken out a $192 million loan to build the Galleria in 2008.
Overstreet said the Galleria was hurt by the economic downturn that hit soon after it was built. Also, the bankruptcy meant Opus West Corp. did not have the long-term vision necessary to complete the project, Overstreet said.
“People in bankruptcy live day-to-day instead of trying to see the light at the end of the tunnel,” he said.
Overstreet, who has practiced and taught bankruptcy law, said buying a property out of bankruptcy is risky. But, he said, the risk has seemingly paid off.
“It was a beautiful project, and it seemed like with a little time and a little tender love and care, it could be turned around,” he said. “Hopefully we have proven that is correct.”
Sales tax revenue
The amount of sales tax generated by the Hill Country Galleria has increased annually.
The Hill Country Galleria in 2011 generated $1.630 million in sales tax revenue. The Galleria generated $1.402 million in 2010, and $1.326 million in 2009.
Under an agreement with the city, about half of the sales tax revenue generated by the Galleria goes back to the Galleria. The money goes back to the Galleria owners because of the approximately $21 million in public improvements the original Galleria owners put into the area.
Opus West Corp. built Bee Cave Parkway from Bee Caves Road to RR 620, gave the city land and money to build City Hall, donated a 50-acre tract of land for Bee Cave Central Park, and buried electric lines along Hwy. 71.
A portion of the sales tax revenue will go back to the Galleria for about 11 more years, Overstreet said.
Overstreet said he expects the sales tax revenue generated by the Galleria to keep increasing, especially with the addition of Whole Foods Market.
The approximately 35,000-square-foot grocery store opened June 19 and has been doing well since it opened, Overstreet said.
“From the numbers I see, they are doing really well, and we are really to happy to have them,” he said.
Mark Dixon, Whole Foods Southwest Regional president, said the company did extensive research before opening a store in Bee Cave. He said the store has been a good fit with the community.
“We knew Bee Cave was ready for a Whole Foods Market and that there is certainly a demand for high-quality natural and organic foods,” he said. “We chose the Hill Country Galleria location for its visibility and convenient location for the residents of Bee Cave and the surrounding neighborhoods.”
Elpi Constantinou, who lives in Austin but works near the Galleria, said she has been to the Whole Foods five times since it opened. She said the grocery store is a nice community asset.
Under state law, the City of Bee Cave cannot say how much sales tax revenue the Whole Foods location is generating, Bee Cave City Manager Frank Salvato said.
Growing service area
Overstreet said the growth of the Bee Cave area bodes well for the Galleria. There are 3,000 additional houses being planned for Bee Cave and the surrounding area, he said.
The Hill Country Galleria has a wide service area that stretches from Eanes ISD to Marble Falls, and from Lakeway to Dripping Springs, Overstreet said.
Overstreet said the stores that are unique to the Galleria bring in customers from an even farther service area.
Dogadillo owner Michael Conrad, whose dog boutique store has been at the Galleria since 2007, said business has been improving.
“But there is still room to grow,” he said.
The Hill Country Galleria has plans for an additional office building in the center of the Galleria. Overstreet said the building will be constructed after it gets final city approval.
There are also plans for a new retail building east of Madam Mam’s, a Thai restaurant that opened during the summer at 3921 Market St., Ste. P-100. The 8,000-square-foot building could have a doctor’s office and cleaners or shipping store, Overstreet said.
The building is already 40 percent leased, and Overstreet said it could be built by Dec. 1.
A national restaurant has signed on to lease the space in front of Barnes & Noble, Overstreet said. Construction is expected to start next year.
Two pad sites were built this year and are ready to be occupied, Overstreet said. He said the buildings could be home to a large restaurant or store.
The Galleria owners are looking to increase the number of entrances into the shopping center. The Galleria recently got a new entrance off Bee Caves Road, and the city approved a new sign for the entrance in August.
Overstreet said there are future plans to build a road into the Galleria off RR 620.
“We’ve got some more plans for the place,” Overstreet said. “We aren’t done yet.”