Office Market is Showing Steady Improvement
The job rate has grown at an annual rate of 2.2%, most of the office buildings that were damaged by Hurricane Harvey have been rehabbed and developers remain disciplined with lead tenants in place.
HOUSTON—According to the US Bureau of Labor Statistics, the Houston MSA created 67,100 jobs (not seasonally adjusted) between February 2017 and February 2018, an annual growth rate of 2.2%, which is above the national average job growth rate of 1.6%. And, most of the office buildings that were damaged by Hurricane Harvey in 2017 have been rehabbed and are back on line, GlobeSt.com learns.
Developers remain disciplined, only beginning new construction with a lead tenant in place, according to a first quarter 2018 Colliers International report. There are some four projects under construction including Capital Tower in the Central Business District and three projects in North Houston within the CityPlace development.
One development that opened some nine years ago is CITYCENTRE, a 50-acre mixed-use urban development. Recently, a $48.51 million refinancing loan was obtained for CITYCENTRE Five, a 201,437-square-foot class-A office building located within CITYCENTRE.
CITYCENTRE Five is located at 825 Town & Country Lane at the southeast corner of Interstate 10 and Beltway 8 in the Energy corridor. The property benefits from its location near some of the strongest demographics in West Houston. Average housing values within a one-mile radius of the property are more than $563,000 and average household income is roughly $179,000.
Developed by Midway, CITYCENTRE is a self-contained community of retail, dining, class-A office space, corporate penthouse residences, brownstones and lofts, apartments and the 266-room Hotel Sorella, a hospitality and conference facility. Surrounded by open-air plazas and green spaces, CITYCENTRE is also home to Life Time Athletic, a fitness facility and spa, and Studio Movie Grill, an eight-screen cinema, GlobeSt.com learns.
The refinancing was provided by Holliday Fenoglio Fowler LP. The HFF team worked on behalf of the borrower, Midway Companies, to secure the loan through New York Life Real Estate Investors. The HFF debt placement team representing the borrower included senior managing director Colby Mueck.
In other CBD office news, 1001 McKinney, a 23-story 375,440-square-foot office building has sold. The seller was a partnership between Cameron Management and Silverpeak Real Estate Partners, and the buyer was a partnership between TRC Capital Partners LLC and Amstar America LLC. 1001 McKinney was 76% leased at closing, providing the buyer with immediate upside through the lease up of vacant space and raising in-place rental rates to market.
“We strongly believe in the Houston CBD and have been looking for several years at historic buildings that offer compelling value for both tenants and our investors,” says Steve Lerner, president and CEO of TRC Capital Partners.
Situated on the corner of McKinney and Main, 1001 McKinney is convenient to the city’s METRO Light Rail, Greenlink Bus System and the city’s highway system, including Interstates 10, 45 and 69. Additionally, the property is linked to the underground tunnel system, which connects 95 full city blocks and offers more than 400,000 square feet of retail and restaurant space in a climate-controlled subterranean environment.
1001 McKinney was constructed in 1947 and is a historic landmark on the National Register of Historic Places. The LEED Gold and Energy Star-rated building was recently renovated and offers tenants an attached 2/1000 parking garage, on-site conference facility, bike room with showers and direct access from the lobby to Morton’s Steakhouse.
The HFF team represented the seller and procured the buyer. The HFF investment advisory team representing the seller included senior managing director H. Dan Miller, senior director Marty Hogan and real estate analyst Johnny Kight.