Hansji Urban bought the Luhrs Tower and two other buildings in downtown Phoenix last month for $28 million.

PHOENIX – A Southern California hotel developer paid $28 million late last month for a block of land in downtown Phoenix, and three landmark 1920s-era buildings that stand upon it.

Hansji Urban, a business unit of Irvine, Calif.-based Hansji Hotels Inc., claimed the 10-story Luhrs Building and the 15-story Luhrs Tower – Phoenix’s first two skyscrapers – and the nearby six-story Luhrs parking garage from Winston Management & Investment Inc. of San Mateo, Calif. The deal closed during the last week of October.

Rajan Hansji, a principal at Hansji Urban, said the company will invest between $5 million and $6 million upgrading the two taller buildings, which will remain as office space. Construction is slated to begin on the nearly empty Luhrs Building as soon as the city issues Hansji Urban the necessary building permits. The company hasn’t yet settled on a plan for the Luhrs parking garage, but it is considering demolishing the structure and building a branded chain hotel on the site.

"Right now, we are focused on renovating the Luhrs Building because it is only 5-percent occupied. This gives us a great opportunity to clean it up and bring it up to as close as the Class-A property that it is," Hansji said. "As soon as the city gives us the OK, we will begin working on it. But so far, they have been very receptive to our plans, so I don't foresee any delays. Our architect has already begun working on the project."

Hansji said the Luhrs Building rehabilitation project will target the 78,000-square-foot building's dated interior; the company plans to focus on the structure's systems, its central core and lighting, but will take on other interior improvements as tenants begin to come aboard. Hansji estimated the renovations will take four to six months to complete. From there, Hansji Urban will begin work on the 163,000-square-foot Luhrs Tower, which is currently 95-percent occupied.

“The Luhrs Tower is pretty much full, with many of the tenants in the professional-services industry,” Hansji said. “It’s in pretty good shape, so it won’t require as much work as the Luhrs Building. But we do plan to clean it up inside and tailor it to the creative industry.

Hansji Hotels is a relatively new arrival to Arizona’s real estate development scene. In 2006, the company reopened the former Sunshine Hotel & Suites in downtown Phoenix as the 160-room Radisson City Center hotel, after investing approximately $8 million to improve the property.

The company was founded by brothers Shirish and Arun Hansji in 1974, the year they emigrated from India to the United States. They got their start in the hospitality industry with the 25-room Hacienda Hotel; today, Hansji Hotels controls more than 1,000 hotel rooms across the southwestern United States. It is led by Rajan Hansji and his brother, Sajan.

The three Luhrs buildings were constructed in the 1920s. Built in 1924 at a cost of $553,000, the 130-foot-tall, L-shaped Luhrs building is faced with brown brick, with marble ornamentation on the uppermost two floors and a heavy cornice at the top.

The 185-foot-tall Luhrs Tower opened in 1930 and features a modern commercial design with art deco accents and Spanish colonial influences. At the time of its completion, it was the tallest building in Arizona.

Both structures are listed on the Phoenix Historic Property Register, and as such, Hansji Urban has pledged to work closely under the city’s historic preservation rules as part of the buildings’ rehabilitation. Thus far, officials at Phoenix City Hall – including Mayor Phil Gordon – like what they’ve seen and heard from Hansji Urban about its plans for the buildings; the change in ownership coincides with a wave of redevelopment that is sweeping the downtown Phoenix district, which the city has branded “Copper Square.”

"What I've heard about Hansji Hotels' plans for the Luhrs block in the heart of our downtown is great," Gordon said. "With the expansion of our convention center, we need more downtown hotel rooms and with all the other revitalization downtown, there is also more demand for downtown office space. What's more, by preserving the beautiful Luhrs Tower and Luhrs Building, they're preserving vital Phoenix history, texture and unique character in the midst of all the new construction taking place."

The Luhrs properties are located immediately south of Patriots Park in the original Phoenix town settlement; the area will become part of CityScape -- a massive, $900 million mixed-use project that recently broke ground. When completed, CityScape will span three city blocks and be anchored by residential, retail and office buildings.

“These buildings have tremendous potential,” Hansji said of the Luhrs buildings. “They’re located in the heart of downtown Phoenix, right where CityScape is going up. The light rail will pass right in front of them, [Arizona State University] is building its new campus in downtown and people are moving into the area to experience urban living. It is all very positive.”