Throughout the first quarter of 2017, the US office market continued its gradual shift into a new phase of the economic cycle. Spurred by rapidly rising business and consumer confidence but hindered by a very tight labor market and bifurcated leasing market conditions, occupancy growth slowed to 3.6 million square feet even as rents rose rapidly and demand for quality space remained strong, says JLL in a recent office report. Changing labor market conditions have begun to shape the characteristics of the leasing market as companies find it increasingly difficult to recruit talent without sharp increases in wages: 34.3% of activity was comprised of renewals and an additional 29.3% represented relocations with no significant change in footprint. Both leases of more than 1 million square feet executed during the first quarter—News Corporation in New York and JC Penney in Dallas—were renewals, as were 56.9% of all leases larger than 250,000 square feet. On the other hand, 45.7% of leasing activity smaller than 75,000 square feet represented some form of growth, indicative of the importance that smaller tenants play, particularly in the technology and creative sectors, according to the JLL report.—Lisa Brown

BY THE NUMBERS

HOUSTON—The Houston office market's glut of sublease space maxed out at the end of the third quarter 2016 at about 12 million square feet, says NAI Partners.

NEWS AND NOTABLES

HOUSTON—JLL continues the strategic expansion of its disposition business in Houston with the addition of three new experts Donna Kolius, Pierce Owens and Kaylie Walker. The group will join JLL's brokerage team focusing on multi-market dispositions, national portfolio strategies and sale leasebacks for corporations, private equity firms, real estate investment trusts, investors and retailers.

DEAL TRACKER

ARLINGTON, TX—Marcus & Millichap facilitated the sale of Garden Park Apartments, a 252-unit multifamily community. Mark Allen, a senior associate in Marcus & Millichap's Dallas office represented the seller, a limited liability corporation from California and procured the buyer, a Dallas-based limited liability corporation. Built in 1968, the property is located at 1609 Sherry St., which provides access to interstates 20 and 30, Highway 360 and the President George Bush Turnpike.

AUSTIN, TX—The Willi Law Firm purchased a 2,273-square-foot office condo within Mesa Oaks, building 6. The seller was represented by Matt Levin and Patrick Ley with ECR, bringing the entire 120,000-square-foot new construction office campus to 100% leased or sold.

AUSTIN, TX—ECR represented the buyer of an office condo totaling 5,468 square feet in building IV at 5900 Southwest Parkway. The buyer was represented by Matt Fain with ECR and seller by Chad Jewell with Austin Office Space.

AUSTIN, TX—GLL Real Estate Partners today completed the purchase of Capital Ridge, a LEED certified, 216,511-square-foot class-A office building with structured parking in Austin's desirable Southwest submarket. Completed in 2015, Capital Ridge is 100% leased on a long-term basis to Apple Inc.

CENTENNIAL, CO—ARA, A Newmark Company announces the $91.6 million sale of Villas at Holly and Villas at Homestead, a two-property, 456-unit portfolio. Vice Chairmen Terrance Hunt, Shane Ozment, Jeff Hawks and Doug Andrews represented California-based real estate firm, Kennedy Wilson, in the sale of the employment-centric, value-add portfolio. ARA Newmark executed the $26.25 million sale of Villas at Holly, located at 6760 South Glencoe St., to Atlanta-based Triumph Management Group earlier this year. Villas at Homestead, located at 6857 South Homestead Parkway, less than one mile from Villas at Holly, recently sold for $65.35 million to the Bay Area's Jackson Square Properties.

DALLAS—Austin-based taqueria Tacodeli is set to open its newest location in Dallas. JLL successfully negotiated the lease for the popular taco chain at The Hill Shopping Center, located at the corner of Walnut Hill Lane and US-75 Expressway. JLL executive vice president Mark Newman and Alex Whitman negotiated the 10-year, 2,500 square-foot retail lease on behalf of Tacodeli. SRS Real Estate Partners' Dawn Greiner represented the landlord Capref Walnut Hill LLC.

ENGLEWOOD, CO—After brokering the land to develop this multihousing community, ARA, A Newmark Company completes the cycle for Alta Cherry Hills with a sale of the class-AAA 306-unit asset. The property occupies the highly visible, southeast corner of the “South Broadway Mile” and West Hampden Avenue, a haven for retail and dining options south of downtown. Vice chairmen Jeff Hawks, Doug Andrews, Terrance Hunt and Shane Ozment represented Atlanta's Wood Partners in the trade to privately-owned Bell Partners Inc., of Greensboro, NC.

ENGLEWOOD, CO—A fund advised by CBRE Global Investors has acquired Alexan CityCenter, a 438-unit class-A garden-style apartment community with 13,000 square feet of ground floor retail in the Denver area, and renamed the property ArtWalk CityCenter. Located at 801 Englewood Pkwy., a commuter-friendly submarket of Denver, the property is connected to the Englewood Light Rail station, which provides direct access to Downtown Denver, the Mile High Stadium, Union Station and the airport.

ENGLEWOOD, CO—CBRE, Ogilvie Properties and Earth Treks announced that the former Sports Authority headquarters is going to be repurposed into the nation's largest climbing gym. CBRE's Matt Burgner and Daniel Close represented Earth Treks Climbing and Fitness in the 52,000-square-foot lease. Earth Treks already has one Colorado facility in Golden and four other gyms in the Northeast.

HOUSTON—Gorrondona Engineering Services signed a new 20,000-square-foot industrial lease at Kennedy Greens Business Park, 4641 Kennedy Commerce Dr. JLL's Ryan Fuselier and Geoff Perrott represented the tenant in the transaction. Greg Barra, Conrad Bernard and Bo Pettit of Boyd Commercial represented the landlord, Clay Development and Construction.

HOUSTON—NAI Partners represented Broadstone IELC Texas LLC in the disposition of a 7,806-square-foot single tenant medical office building located at 926 North Wilcrest Dr. Joshua Lass-Sughrue of NAI Partners represented the seller, Broadstone IELC during the negotiations, while Ada Wang with KW Commercial represented the buyer, Zhanglu Texas LLC.

PARKER, CO—HawksView Hospitality, a Colorado-based member of Hotel Brokers International, announces the successful marketing and sale of two hotels in the first quarter of this year. The hotels sold include the Hampton Inn & Suites, which has 84-rooms, built in 2006 and the Super 8, which has 74-rooms, built in 2002.

PEARLAND, TX—Marcus & Millichap facilitated the sale of Sonic, a 1,362-square-foot, net-leased property located at 7031 West Broadway. Jason Saunders, Bruce Bentley III and Douglas Diffie, investment specialists in Marcus & Millichap's Austin office, had the exclusive listing to market the property on behalf of the seller, a private investor.  The buyer, a private investor, was secured and represented by Matthew D. Wenzel and Brian Wine, investment specialists in Marcus & Millichap's Long Beach and West Los Angeles offices. Sonic has operated at this location for over 18 years. The property was built-to-suit for Sonic in 1998.

Throughout the first quarter of 2017, the US office market continued its gradual shift into a new phase of the economic cycle. Spurred by rapidly rising business and consumer confidence but hindered by a very tight labor market and bifurcated leasing market conditions, occupancy growth slowed to 3.6 million square feet even as rents rose rapidly and demand for quality space remained strong, says JLL in a recent office report. Changing labor market conditions have begun to shape the characteristics of the leasing market as companies find it increasingly difficult to recruit talent without sharp increases in wages: 34.3% of activity was comprised of renewals and an additional 29.3% represented relocations with no significant change in footprint. Both leases of more than 1 million square feet executed during the first quarter—News Corporation in New York and JC Penney in Dallas—were renewals, as were 56.9% of all leases larger than 250,000 square feet. On the other hand, 45.7% of leasing activity smaller than 75,000 square feet represented some form of growth, indicative of the importance that smaller tenants play, particularly in the technology and creative sectors, according to the JLL report.—Lisa Brown

BY THE NUMBERS

HOUSTON—The Houston office market's glut of sublease space maxed out at the end of the third quarter 2016 at about 12 million square feet, says NAI Partners.

NEWS AND NOTABLES

HOUSTON—JLL continues the strategic expansion of its disposition business in Houston with the addition of three new experts Donna Kolius, Pierce Owens and Kaylie Walker. The group will join JLL's brokerage team focusing on multi-market dispositions, national portfolio strategies and sale leasebacks for corporations, private equity firms, real estate investment trusts, investors and retailers.

DEAL TRACKER

ARLINGTON, TX—Marcus & Millichap facilitated the sale of Garden Park Apartments, a 252-unit multifamily community. Mark Allen, a senior associate in Marcus & Millichap's Dallas office represented the seller, a limited liability corporation from California and procured the buyer, a Dallas-based limited liability corporation. Built in 1968, the property is located at 1609 Sherry St., which provides access to interstates 20 and 30, Highway 360 and the President George Bush Turnpike.

AUSTIN, TX—The Willi Law Firm purchased a 2,273-square-foot office condo within Mesa Oaks, building 6. The seller was represented by Matt Levin and Patrick Ley with ECR, bringing the entire 120,000-square-foot new construction office campus to 100% leased or sold.

AUSTIN, TX—ECR represented the buyer of an office condo totaling 5,468 square feet in building IV at 5900 Southwest Parkway. The buyer was represented by Matt Fain with ECR and seller by Chad Jewell with Austin Office Space.

AUSTIN, TX—GLL Real Estate Partners today completed the purchase of Capital Ridge, a LEED certified, 216,511-square-foot class-A office building with structured parking in Austin's desirable Southwest submarket. Completed in 2015, Capital Ridge is 100% leased on a long-term basis to Apple Inc.

CENTENNIAL, CO—ARA, A Newmark Company announces the $91.6 million sale of Villas at Holly and Villas at Homestead, a two-property, 456-unit portfolio. Vice Chairmen Terrance Hunt, Shane Ozment, Jeff Hawks and Doug Andrews represented California-based real estate firm, Kennedy Wilson, in the sale of the employment-centric, value-add portfolio. ARA Newmark executed the $26.25 million sale of Villas at Holly, located at 6760 South Glencoe St., to Atlanta-based Triumph Management Group earlier this year. Villas at Homestead, located at 6857 South Homestead Parkway, less than one mile from Villas at Holly, recently sold for $65.35 million to the Bay Area's Jackson Square Properties.

DALLAS—Austin-based taqueria Tacodeli is set to open its newest location in Dallas. JLL successfully negotiated the lease for the popular taco chain at The Hill Shopping Center, located at the corner of Walnut Hill Lane and US-75 Expressway. JLL executive vice president Mark Newman and Alex Whitman negotiated the 10-year, 2,500 square-foot retail lease on behalf of Tacodeli. SRS Real Estate Partners' Dawn Greiner represented the landlord Capref Walnut Hill LLC.

ENGLEWOOD, CO—After brokering the land to develop this multihousing community, ARA, A Newmark Company completes the cycle for Alta Cherry Hills with a sale of the class-AAA 306-unit asset. The property occupies the highly visible, southeast corner of the “South Broadway Mile” and West Hampden Avenue, a haven for retail and dining options south of downtown. Vice chairmen Jeff Hawks, Doug Andrews, Terrance Hunt and Shane Ozment represented Atlanta's Wood Partners in the trade to privately-owned Bell Partners Inc., of Greensboro, NC.

ENGLEWOOD, CO—A fund advised by CBRE Global Investors has acquired Alexan CityCenter, a 438-unit class-A garden-style apartment community with 13,000 square feet of ground floor retail in the Denver area, and renamed the property ArtWalk CityCenter. Located at 801 Englewood Pkwy., a commuter-friendly submarket of Denver, the property is connected to the Englewood Light Rail station, which provides direct access to Downtown Denver, the Mile High Stadium, Union Station and the airport.

ENGLEWOOD, CO—CBRE, Ogilvie Properties and Earth Treks announced that the former Sports Authority headquarters is going to be repurposed into the nation's largest climbing gym. CBRE's Matt Burgner and Daniel Close represented Earth Treks Climbing and Fitness in the 52,000-square-foot lease. Earth Treks already has one Colorado facility in Golden and four other gyms in the Northeast.

HOUSTON—Gorrondona Engineering Services signed a new 20,000-square-foot industrial lease at Kennedy Greens Business Park, 4641 Kennedy Commerce Dr. JLL's Ryan Fuselier and Geoff Perrott represented the tenant in the transaction. Greg Barra, Conrad Bernard and Bo Pettit of Boyd Commercial represented the landlord, Clay Development and Construction.

HOUSTON—NAI Partners represented Broadstone IELC Texas LLC in the disposition of a 7,806-square-foot single tenant medical office building located at 926 North Wilcrest Dr. Joshua Lass-Sughrue of NAI Partners represented the seller, Broadstone IELC during the negotiations, while Ada Wang with KW Commercial represented the buyer, Zhanglu Texas LLC.

PARKER, CO—HawksView Hospitality, a Colorado-based member of Hotel Brokers International, announces the successful marketing and sale of two hotels in the first quarter of this year. The hotels sold include the Hampton Inn & Suites, which has 84-rooms, built in 2006 and the Super 8, which has 74-rooms, built in 2002.

PEARLAND, TX—Marcus & Millichap facilitated the sale of Sonic, a 1,362-square-foot, net-leased property located at 7031 West Broadway. Jason Saunders, Bruce Bentley III and Douglas Diffie, investment specialists in Marcus & Millichap's Austin office, had the exclusive listing to market the property on behalf of the seller, a private investor.  The buyer, a private investor, was secured and represented by Matthew D. Wenzel and Brian Wine, investment specialists in Marcus & Millichap's Long Beach and West Los Angeles offices. Sonic has operated at this location for over 18 years. The property was built-to-suit for Sonic in 1998.