Employment counts remained steady with the DFW economy ranking second in the US with a 2.7% job growth rate. As such, DFW continues to show a strong demand for new office product coming to market, according to CBRE's Q1 DFW Office MarketView. There are 20 projects in the construction pipeline with a pre-lease rate of 57.7%, highlighting the demand for new office product. The market ended the first quarter with negative (470,212) square feet of absorption, mainly due to a sizeable corporation moving into its own building. Asking rates were dampened slightly for a DFW-wide average of $24.25, a decrease of 73 basis points from last quarter. A combination of corporate consolidations into smaller spaces and newly delivered construction kicked up vacancy rates by 90 basis points to 20.5%.—Lisa Brown

BY THE NUMBERS

AUSTIN, TX—Austin's overall vacancy rate grew to 8.1% in first quarter 2018, an increase of 20 basis points quarter-over-quarter, although down 30 basis points year-over-year. Net absorption registered 648,577 square feet as of the quarter's end, outpacing the five-year quarterly average of 516,365 square feet. New construction delivered during the first quarter stood at 954,758 square feet, as the development pipeline has soared, averaging 4.2 million square feet during the past five quarters. Full-service average asking rents dropped slightly by $0.06 per square foot quarter-over-quarter to $34.86 per square foot, after a record-breaking close to 2017 at $34.94, per NAI Partners' Q1 2018 Quarterly Austin Office Market Report.

HOUSTON—Per NAI Partners' Q1 2018 Quarterly Houston Office Market Report, Houston's overall vacancy rate increased to 21.4% in the quarter, up 70 basis points quarter-over-quarter, compared to a 150-basis-point increase year-over-year. While net absorption closed fourth quarter 2017 at positive 238,931 square feet, first quarter 2018 went back into negative territory at -1,245,983 square feet. Direct space was responsible for -441,806 square feet and sublease space represented -831,015 square feet. Overall occupancy in the Houston office market remains below 80%—the current rate of 78.6% is the market's lowest historical level recorded since NAI Partners began tracking office market activity in 1999. The overall average asking gross rent is up $0.14 at $28.24 per square foot from last quarter, and $0.34 from a year ago.

HOUSTON—The NAI Partners Sublease Index—measured by the amount of sublease space as a percentage of total available space—increased 10 basis points to 15.6% in March. The increase was due in part to Sonoco Logistics placing 86,000 square feet of sublease space—the total of its lease—on the market at Lake Pointe Plaza in Sugar Land.

AUSTIN, TX—For the first time since 2006, CBRE research redrew the Austin office submarket boundaries to better reflect the evolving market dynamics of Texas' Silicon Hills. As a result, CBRE defined and created three new submarkets, termed North, Northeast and Southeast Austin. CBRE partnered with its Austin sales professionals at the beginning of 2017 to create and redraw Austin's office submarkets. The full scope of these new boundaries will be reflected in the first quarter 2018 market reports. Primary changes include dividing the large North Central submarket into North and Central, separating the expansive East submarket into East and Northeast, and refining the South submarket into South and Southeast.

NEWS AND NOTABLES

AUSTIN, TX—ARA, A Newmark Company welcomes multi-housing expert Matthew Day as senior managing director in the Central Texas office that serves Austin and San Antonio. He is responsible for originating and managing multifamily investment sales across the region, working alongside a team of 26 multi-housing specialists in Central Texas led by vice chairman Patton Jones. Prior to joining ARA Newmark, Day held leadership roles in the national investment acquisitions platforms of Fogelman Properties and Steadfast Companies, acquiring more than $2.4 billion in multifamily assets across the Midwest, Southwest and Southeast. Since 2012, he has closed 31 deals in Texas with an aggregate value of $1.1 billion.

DALLAS—Steve Triolet has joined Younger Partners as director of research.

HOUSTON—NAI Partners landlord services division continues to expand its office project leasing capabilities in Houston, hiring Lesley Rice and Andy Parrish as associates.

SAN ANTONIO—Kotel Investments Inc. has named NAI Partners' landlord services division as manager of its San Antonio retail portfolio. As a result, NAI Partners has brought veteran San Antonio-based property manager, Cindy James, on to oversee the six-property, 205,000-square-foot portfolio—a significant San Antonio property management assignment that includes 1546 Babcock and 12066 Starcrest Dr., among other retail centers.

DEAL TRACKER

AUSTIN, TX—GFF Architecture leased 1,685 rentable square feet at 800 Brazos. The landlord was represented by Jason Steinberg and Matt Levin with ECR and the tenant was represented by Chris Perry with Aquila Commercial.

AUSTIN, TX—Schneider Electric leased 5,281 rentable square feet at 9101 Burnet. The landlord was represented by Matt Levin and Rebecca Zigterman, and the tenant was represented by Marc Vanderslice with Colliers International.

AUSTIN, TX—3Core Systems leased 1,282 rentable square feet at 9101 Burnet. The landlord was represented by Matt Levin and Rebecca Zigterman.

AUSTIN, TX—The Greentree Group leased 2,115 rentable square feet at Centre Creek Plaza, located at 1812 Centre Creek Dr. The landlord was represented by Matt Levin and Rebecca Zigterman with ECR.

AUSTIN, TX—IBM leased 6,259 rentable square feet at 823 Congress. The landlord was represented by Matt Levin and Jason Steinberg with ECR.

AUSTIN, TX—Signature Science leased 5,230 rentable square feet at Reunion Park, located at 8501 N. MoPac. The landlord was represented by Matt Levin and Jason Steinberg with ECR and the tenant was represented by Ryan Kasten with Cushman & Wakefield.

AUSTIN, TX—NAI Partners Austin arranged an 11,200-square-foot industrial sublease at 4301 Willow Springs Rd. NAI Partners' Troy Martin represented The Porter Company in the Austin industrial sublease. The subtenant leasing The Porter Company's space is Accurate Leak and Line.

CARROLLTON, TX—MORSCO Supply LLC subleased 21,060 square feet at Valwest Business Park IV, 1520 Luna Rd. Eric Crutchfield with Stream Realty Partners represented the sub-landlord, Temperatsure LLC.

DALLAS—Venture Commercial Real Estate announced that McGregor Converse and Steve Church have completed the sale of Point Two Turtle Creek Condominiums in Dallas' Uptown neighborhood. Converse and Church represented Point Two Turtle Creek Condominium Association in the sale of 49 units located at 2700 and 2728 Welborn St., just blocks from The Mansion at Turtle Creek. The buyer, Toll Brothers Apartment Living, a subsidiary of Toll Brothers Inc., is expected to begin construction this summer on a 21-story high-rise at the site. This will be Toll Brothers Apartment Living's first high-rise development in Texas.

DALLAS—Stream Valley Partners announces Alston & Bird is relocating from Harwood No. 4 at 2828 Harwood St. to Chase Tower at 2200 Ross Ave. in the Arts District. The law firm will occupy 36,081 square feet across a portion of the tower's 22nd floor and its entire 23rd floor. Stream Realty Partners' JJ Leonard, Matt Wieser and Jackie Smith represented Chase Tower landlord, Fortis Property Group. CBRE's Phil Puckett and Michelle Donaldson represented Alston & Bird.

DALLAS—Weitzman, representing the seller, has negotiated the sale of the 711 Elm St., a five-story building incorporating 137 spaces on multiple levels of parking as well as 7,200 square feet of street-level retail space. The purchaser was a local investment group. Matthew Rosenfeld, Mike Allen and Kevin Butkus with Weitzman handled negotiations. The building was constructed in 1925 and renovated in 1990. In addition to the parking garage, 711 Elm St. features a retail line-up that includes 7-Eleven and a barber shop. The building is located on approximately 10,000 square feet of land.

DENTON, TX—Greysteel has been named exclusive advisor and agent for the sale of Audra Heights, an attractive 72-unit multifamily property. Greysteel managing directors, Doug Banerjee and Boyan Radic, senior investment associates Andrew Mueller and John Marshall Doss, and investment associates, Andrew Hanson and Will Clarke who are all based in the company's Dallas and Fort Worth offices, are marketing the property. Audra Heights is a community of 36 duplexes located off of Audra Lane and Bayfield Drive. The duplexes range in year of construction from 2010 to 2017 with an average year built of 2014. All units are three bedroom, two and one-half bathrooms spreading between 1,550 square and 1,706 square feet.

FLOWER MOUND, TX—AmerCareRoyal LLC leased 63,346 square feet at Lakeside Corporate Center, 700 Lakeside Pkwy. Blake Kendrick and Jeremy Kelly with Stream Realty Partners represented the landlord, RREEF. Jim Brice at Holt Lunsford Commercial Inc. represented the tenant.

FORT WORTH—Marcus & Millichap announced the sale of Altamesa Court Shopping Center, a 35,213-square-foot office property. Cody Payne, senior associate and Ross L. Meisner, associate in Marcus & Millichap's Fort Worth office, had the exclusive listing to market the property on behalf of the seller. The buyer was secured by Payne and Meisner. Altamesa Court Shopping Center is located on 2715-2785 Altamesa Blvd.

FORT WORTH—Institutional Property Advisors/IPA, a division of Marcus & Millichap, announces the sale of Hidden Lakes Apartments, a 312-unit multifamily asset. Will Balthrope, Drew Kile, senior director, and Joey Tumminello, associate, represented the seller and procured the buyer.

GARLAND, TX—KeyBank Real Estate Capital provided a $56.4 million first mortgage loan to Madera Residential for the acquisition of Landmark at Lake Village North. The 848-unit multifamily community was built in 1983 and is comprised of 69 two- and three-story apartment buildings, as well as one leasing office, a fitness center and a laundry facility. Amber Rao of Key's Commercial Mortgage Group arranged the non-recourse, floating-rate financing through a life company relationship, structured with a three-year interest only term. The loan also includes future capital expenditure funding of $5.4 million.

GRAPEVINE, TX—Hanes Industries renewed its 66,052-square-foot lease at International Airport Center, 615 Westport Pkwy. Steve Koldyke represented the landlord, International Airport Center Inc. Ryan Boozer with Stream Realty Partners represented the tenant.

HASLET, TX—Seth Koschak with Stream Realty Partners represented RR Reddy Real Estate in the purchase of 16 acres at 1251 Harmon Rd. Jim Klein with Texas Business Vistas represented the seller, Richard Korman.

HOUSTON—Holliday Fenoglio Fowler LP announces financing for 1218 Jackson, a recently renovated, 26-unit, garden-style apartment complex in Houston's Montrose neighborhood. The HFF team worked on behalf of Jackson Complex LLC to arrange a seven-year fixed-rate Freddie Mac small balance loan. The HFF debt placement team representing the borrower included senior director Kelly Layne.

HOUSTON—The team of Duane Morris attorneys represented Lovett Commercial in the $8.84 million financial closing of a commercial center through the Federal New Markets Tax Credit Program. Cadence Bank provided commercial financing, McCormick Baron provided New Markets Tax Credit allocation and Capital One Bank invested in the New Markets Tax Credits. The Duane Morris attorneys were Art Momjian, Lily Gao and Joel Ephross.

HOUSTON—Lee & Associates–Houston represented Family Endeavors in the lease of a 24,415-square-foot office space at 3010 Briarpark Dr. Robert LaCoure of Lee & Associates–Houston represented the tenant, and Jennifer Jordan with Savills Studley represented the landlord, MHWirth Inc.

HOUSTON—Lee & Associates–Houston represented Griffin Partners NB Office No.1 LP in a 9,077-square-foot office lease extension at 18050 Saturn Ln. Drew Lewis of Lee & Associates–Houston represented the landlord, and the tenant, Maxim Insurance Services, represented itself.

HOUSTON—Lee & Associates–Houston represented HTX Concrete LLC in the lease of a 6,000-square-foot industrial building at 6315 Theall Rd. Cooper Bagheri of Lee & Associates–Houston represented the tenant, and Michelle Soderberg represented the landlord, LCG Business Park LLC.

HOUSTON—Lee & Associates–Houston represented 2001 Kirby Building Inc./Griffin Partners in a 4,914-square-foot office lease extension at 2001 Kirby Dr. Chris Lewis and Jill Nesloney of Lee & Associates–Houston represented the landlord, and Beau Bellow with Jones Lang LaSalle represented the tenant, Reklaw Ventures.

HOUSTON—Lee & Associates–Houston represented ProCom Services in the sublease of a 4,391-square-foot office space at 10260 Westheimer. Robert LaCoure and Drew Donohue of Lee & Associates–Houston represented the tenant, and Lucian Bukowski with CBRE represented the sublessor, Franks International.

HOUSTON—Lee & Associates–Houston represented 11251 NWFB LP in the lease of a 3,510-square-foot office space at 11251 Northwest Fwy. Robert LaCoure and Rob Johnson of Lee & Associates–Houston represented the landlord, and Lesa French with Jones Lang LaSalle represented the tenant, Emerge Fellowship.

HOUSTON—Lee & Associates–Houston represented Terra Aerial Tech Solutions in the lease of a 1,116-square-foot office space at 10701 Corporate Dr. Robert LaCoure of Lee & Associates–Houston represented the tenant, and the landlord, LandPark Commercial LLC, represented itself.

HOUSTON—Lee & Associates–Houston represented Griffin Partners in the a 2,273-square-foot office lease extension at 602 Sawyer. Chris Lewis, Robert LaCoure and Drew Donohue of Lee & Associates–Houston represented the landlord, and the tenant, Pollan Hausman, represented itself.

HOUSTON—Lee & Associates–Houston represented MH LLC/Griffin Partners in the lease of a 2,323-square-foot office space at 602 Sawyer St. Robert LaCoure, Chris Lewis, and Drew Donohue of Lee & Associates–Houston represented the landlord and Dustin Cruz represented the tenant, Movement Mortgage.

HOUSTON—GBT Realty Corporation completed The Shoppes of Kemah in less than nine months on the heels of one of the most active hurricane seasons on record. Several tenants are open with others to follow during the next 100 days at the $16 million shopping center along Deke Slayton Highway immediately west of State Route 146.

HOUSTON—NAI Partners arranged the sale of a 34,000-square-foot industrial warehouse at 6001 Clinton Dr. NAI Partners' Chris Caudill represented the buyer, All Points Warehouse, while NAI Partners' Chris Kugle and John Ferruzzo represented the seller, Gazin LP, in the transaction.

HOUSTON—Cambridge Properties and United General Hospital have completed the largest lease yet at 7501 Fannin, with United General Hospital committing to a 44,569-square-foot lease at the 195,000-square-foot class-A medical building in the Texas Medical Center. Zach Leger, Jacob Aldridge and Rani Jones of NAI Partners' landlord services division represented Cambridge Properties, and David Greenberg at Greenberg & Company represented United General Hospital in the transaction.

HOUSTON—NAI Partners arranged a 6,011-square-foot industrial lease renewal for tenant Eagle Controls Inc. at 495 W. 38th St. NAI Partners' Jake Wilkinson represented the tenant Eagle Controls Inc. in the transaction.

HOUSTON—NAI Partners' Retail Services group arranged an 1,800-square-foot retail lease for Decadent Dessert Bar at 4340 Westheimer Rd. NAI Partners' Laura Diggs represented the tenant in the transaction.

LAKE JACKSON, TX—NAI Partners arranged a 1,530-square-foot retail lease for Jimmy John's Gourmet Sandwiches to join Smoothie King and Gigi's Cupcakes in the Jackson Square Development, located at 204 Highway 332 W. The property is currently under construction, with a summer 2018 completion. This will be Jimmy John's first location in the Lake Jackson market, anticipated to be serving sandwiches this fall.

LAKE JACKSON, TX—Lee & Associates–Houston represented Stewart Title Company in the lease of a 3,456-square-foot office space at 190 Abner Jackson Pkwy. Robert LaCoure and Drew Lewis of Lee & Associates–Houston represented the tenant, and Mike Vandaveer represented the landlord, HUE-ROM Management LLC.

RICHARDSON, TX—An affiliate of Momentum Commercial Realty Inc. sold an 85% occupied three-story office building containing approximately 73,152 square feet at 1010 E. Arapaho Rd. to GBP Industrial. Stream Realty Partner's investment sale team of Jamie Jennings, James Mantzuranis and Andrew Rabinovich as well as Matt Wieser with Stream represented the seller in the transaction. The purchaser was represented by Joe Wilson.

STAFFORD, TX—Lee & Associates–Houston represented Terra Aerial Tech Solutions in the lease of a 1,116-square-foot office space at 10701 Corporate Dr. Robert LaCoure of Lee & Associates–Houston represented the tenant, and the landlord, LandPark Commercial LLC, represented itself.

BUILDING BLOCKS

HOUSTON—The 35-story LEED-Platinum development officially topped out in downtown. Skanska and project partners came together to celebrate this milestone and hoisted to the top of the tower a ceremonial beam signed by members of the development, design and construction crew.

Instant Insights /

Middle Market Digest: This Week in the South and Mountain Regions

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