Woodlands Development Corp. will put 4 Waterway Square at the corner of Waterway Square Place and Woodloch Forest Drive. The building will be connected to a 1,900-space garage, both situated at the heart of the Waterway District in Woodlands Town Center and both scheduled for completion in summer 2009. The Woodlands team didn't return telephone calls to comment on the project by deadline, but market sources are pegging construction costs at $200 per sf to $300 per sf.

The building was designed by Elkus-Manfredi of Boston, with D.E. Harvey Builders of Houston as the general contractor. Gensler of Houston is the architect of record. Conine & Associates of the Woodlands is handling the leasing.

John Richardson, senior vice president in Colliers International's Houston office, says 4 Waterway Square is going vertical in an area where class A office space is tight and contiguous office space is practically non-existent. Richardson isn't involved with the development, but does live in the Woodlands.

"The Woodlands is heavily regulated," Richardson says. "It's great for them, but not for the area. There's a lot of pent-up office demand and nowhere to put people. I have a number of clients in the Woodlands that would love to expand, but can't because of lack of inventory."

Grubb & Ellis Co.'s office market report for the first quarter shows the 3.7-million-sf inventory has 394,064 sf vacant, factoring out to 10.5% of the stock. Transwestern's Q1 report shows a smaller inventory, 2.8 million sf and 6.8% vacancy.

Richardson tells GlobeSt.com that in a tight market, tenants either wait for new product to come on line or move out of the Woodlands to other locations like Greenspoint or Shenandoah, which is just north. Developers too will "go to the outskirts to build," he adds. "All of this is unfortunate for the business community."