Business deals in the Bluff—new ventures ahead, including new xAI land plans and $170 million hotel remodel

MEMPHIS, Tenn. (WMC) – A busy week filled with breaking business news in Memphis. Wednesday, the Economic Development Growth Engine (EDGE) for Memphis and Shelby County revealed Elon Musk’s xAI wants to lease hundreds of acres of land in the Bluff City.

On Tuesday, the Memphis City Council gave the green light for the City of Memphis to buy the largest hotel in town, with ambitious plans to remodel the property.

The city’s plan to buy and transform the aging Sheraton Hotel looks a lot like another big scale project: the renovation of Tom Lee Park.

City leaders are looking at the same type of public-private partnership to transform the old hotel into one that can host first-class conferences and conventions.

”Think of it as the city investing in itself,” Memphis Business Journal Reporter Stephen MacLeod told Action News 5.

MacLeod said the city’s vision for The Sheraton, which is joined via skywalk to the $200 million, newly remodeled Renasant Convention Center, is ambitious but doable.

“The reason this had to happen now,” he said, “is if it didn’t, it would have gone out to auction, and it could have fallen into the hands of someone who would have just sat there and let it rot. So, step one is done. We’re going to issue bonds and stabilize the property.”

This particular property is critical to the city’s tourism industry. Memphis can’t book large conventions because it lacks the number of rooms needed to attract those kinds of events.

MacLeod said within two years, the city will transfer the property to a non-profit whose board will handle the $170 million remodel and the day-to-day operations.

It’s similar to how the non-profit Memphis River Parks Partnership led the $62 million renovation of Tom Lee Park and now operates the park today.

The other big story MacLeod broke in the MBJ on Wednesday: Elon Musk’s xAI is interested in leasing 552 acres of land near his supercomputer facility in the old Electrolux factory in Southwest Memphis; EDGE is the current property owner.

The deal starts with a 21-year lease, with no rent due in the first year. The annual rent after that would be $1.65 million with a 2.5% increase each year, and the option to sign two more 10-year leases or buy the property outright.

“Usually when you see a lease this long, there’s an opt-out at the five or 10-year mark if things don’t work out,” said MacLeod, “But this one is xAI locking in for 20-plus years with options to extend out to 40 years or buy forever. That’s a pretty big deal.”

Also new this week: xAI submitted schematics to the state of Tennessee to build a greywater treatment system to reuse wastewater to cool its computing equipment instead of using clean tap water.

Interested in learning more about the xAI supercomputer? A representative from xAI will be at an EDGE special-called meeting in Memphis this Friday, October 4 at 3:00 p.m. at 516 Tillman. This will be the public’s first chance to question the company about the supercomputer project and xAI’s plans for the Bluff City.

To read more of Stephen MacLeod’s excellent reporting on these topics and more, click here: https://www.bizjournals.com/memphis/news/2024/10/02/elon-musk-xai-seeks-land-near-colossus.html

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