HOUSTON-Buchanan Street Partners has partnered with CarVal Investors to acquire a 165,399-square-foot office building at 2100 West Loop South in the Galleria submarket. The Southern California partners bought the property from a Moody National Cos. affiliate in an off-market transaction.
The sales price was kept under wraps, though the Harris Central Appraisal District assesses the 1970s, class B building at $14.2 million. According to Timothy J. Ballard, co-founder and president of Buchanan Street Partners, the goal is to invest in improvements ranging from cosmetic upgrades to deferred maintenance repair. Ballard tells GlobeSt.com that approximately $3 million is being directed toward lease-up activities; the building is currently 82% occupied. An additional $2.5 million will be dedicated to the upgrades, which Ballard anticipates should be completed by the end of the year. Improvements will include lobby and restroom upgrades, exterior painting and a new entryway. Transwestern is handling leasing and marketing for the building.
Ballard says he sees plenty of upside in the project – current rents are below market plus the building’s location is in a submarket that is active when it comes to office property lease-up. “The building has great floor plates for boutique tenants,” he says.
Buchanan Street Partners is no stranger to Houston — its acquisition of 2100 West Loop South is its third office acquisition (and second with CarVal Investors) during the past two years. Ballard says 2100 West Loop South came to the attention of Buchanan Street Partners after a search of buildings in Houston that would work for the company’s portfolio. The company then approached Avison Young broker Darrell Betts, who had worked with Moody National in the past, to make the unsolicited offer for the property.
Ballard says he’d like to buy one or two more buildings in Houston in 2013, but acknowledges that finding the right product at the right price is becoming more difficult. “The challenge there is that everyone has discovered this is a vibrant market; the office absorption is fantastic and it has the kind of dynamics that are positive overall,” Ballard explains. “But it makes it harder to buy there.”
On the opposite side of the coin, Buchanan Street has put two buildings totaling 261,413-square-foot at Beltway 8 Corporate Centre on the market close to two years after buying them. “When we bought the buildings, they were at 74% occupancy,” Ballard comments. “Occupancy is now 100%, and consist of largely long-term leases to Fortune 500 tenants. From our standpoint, this is a stabilized asset, and we’re more of a value-add buyer.” Dan Miller and Robert Williamson with HFF have the Beltway 8 Corporate Centre assignment.