Innovation Luhrs: How two historic high-rises will transform downtown Phoenix
Two of the oldest buildings in Phoenix are ushering in a revival of small businesses and startups downtown.
The Luhrs City Center has undergone a $10 million renovation and already houses up-and-coming firms ranging from law to technology. The Tallwave High Tide startup commercialization program, announced last month, could change the atmosphere of the historic building cluster and offer a different vibe for a growing downtown business scene.
At least, that's what the property investors want to see out of the repurposing project.
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"Vibrant young professionals is what we want," said Billy Shields, an investment partner in Anaheim, California-based Hansji Corp., which owns the buildings.
He also is a longtime Phoenix political insider and a former head of the Phoenix Firefighters Union.
The goal of the High Tide program is to help entrepreneurs quickly and effectively build their ideas into viable, scalable and sustainable companies, said Robert Wallace, Tallwave's executive vice president of marketing.
"The primary goal is to draw innovation and make Luhrs City Center a tech and innovation hub in downtown Phoenix," Wallace said.
Tallwave will announce its selected companies in mid-March. The program will run from March 23 until June.
If companies are from out of town, the hope is that they will decide to stay in Phoenix, but that's not a requirement. Hansji officials also are hoping companies will want to lease permanent office space in their building.
Hansji, known primarily for hotel development, bought the historic Luhrs buildings for $28 million in October 2007. The city block bounded by Jefferson and Madison streets and Central and First avenues houses the neo-classical Luhrs Building and the 14-story art deco Luhrs Tower. The property also includes a one-story Luhrs Arcade connecting those two buildings, a 19-story Luhrs City Center Marriott under construction and a six-level parking garage.
Revitalizing downtown
Hansji bought into a vision that Phoenix could have a bustling downtown with the Luhrs buildings as a major component.
"We love Phoenix, and we're very passionate about what we're doing," said President Rajan Hansji, whose father, Shirish Hansji, started the company about 40 years ago. "We wanted to continue the history of the block. We felt this energy in downtown. We believed in it."
The Phoenix City Council awarded the company a $500,000 historic preservation grant in 2008 to restore the two main Luhrs structures.
At the time of the purchase, the Luhrs Building was vacant and deteriorating. Now, it is 100 percent occupied, and the Luhrs Tower is about 75 percent occupied. Hansji said he expects both buildings to be full by the end of the year with retail, startup law firms and tech companies.
"We wanted to work toward entrepreneurial companies and have a little more fun. Those types of companies who think outside the box will make these buildings even more unique," he said.
The developer is sweetening the pot for startups with an offer of $100,000, office space, living expense stipends, housing (if the company is from out of town) and $45,000 in commercialization resources. The business aid will come through the inaugural High Tide at Luhrs City Center business program, which starts at the end of March.
Building with startups
Scottsdale-based venture development firm Tallwave announced its first corporate partnership with Hansji in January and will run the High Tide program.
It's the fourth competition by Tallwave, and the first to include dedicated office space for the eight to 10 startups chosen for the program, said Robert Wallace, Tallwave's executive vice president of marketing.
"We wanted to help bring energy to this building. It was sort of a perfect match after meeting," he said.
The chosen entrepreneurs will use the 3,500-square-foot third floor of the Luhrs Tower and be given the opportunity to build products and take them to market.
"We want it to be a very collaborative, open work space conducive to workshops, hands-on, rapid prototyping, position, branding and sales systemization," Wallace said.
At the end of the three-month program, two companies will receive $50,000 each in convertible notes, with no equity exchanged if the company doesn't raise money, Wallace said.
Applications are coming in from as far away as France and are the best Tallwave has seen in its competitions, Wallace said.
The goal is to continue the High Tide at Luhrs City Center program, and possibly entice graduating companies to move into one of the buildings permanently, Hansji said.
Already home
The center already has drawn some tech business interest. Giftcard Zen, a Flagstaff-based tech startup that purchases unwanted gift cards and resells them, is opening a second office March 1 on the seventh floor of the Luhrs Tower.
Giftcard Zen founder Aaron Dragushan said he wanted to open in downtown Phoenix to seek a better talent pool to keep up with the company's growth. The private company won't reveal revenue, but said it buys or sells a gift card every 10 seconds. The owners hope to add 20 employees to the 20 they will start with at Luhrs.
"I think this building has an amazing energy," said Dragushan, who started the company two and a half years ago. "We love the amount of light this floor gives us, and we love how stylish the building is. When you step off the elevator, you feel like you want to work here."
Hansji's efforts with Luhrs is not just about technology firms. Bitter & Twisted Cocktail Parlour opened last May on the Luhrs Building's ground floor. Ross Simon, who calls himself the proprietor and principal barman, said opening the parlor was a lifelong dream.
"This space epitomizes what historic Phoenix wants to be," Simon said. "I love the energy. I love the light rail going by. I love the vibe."
The throwback bar and restaurant targets the dinner and weekend crowd, Shields said.
"The building speaks for itself," said Simon, who also likes the new apartments and condos in the area. "A bar like this is a perfect fit. It was an easy decision to open here."
Hayley Ringle covers technology and startups for the Phoenix Business Journal.