Creative Office Infusion Looks to Tackle Demand

HOUSTON—Houston-based Triten Real Estate Partners’ recently announced Heights adaptive reuse project, M.K.T., will provide an infusion of creative office space for which there is growing demand but little available inventory in Houston. M.K.T. is located at the southeast corner of North Shepherd Drive and the Heights Hike and Bike Trail.

The project will convert five dock-high industrial buildings into an urban district that will include 100,000 square feet of office space and 100,000 square feet of curated retail. Triten selected JLL to lease all of the creative office space.

“Houston lags both coasts with respect to creative office offerings,” said JLL’s Russell Hodges, who along with Bubba Harkins will lease the office component on behalf of Triten Real Estate Partners. “There is significant demand for this product type starting to come from traditional office users as companies seek to differentiate themselves through real estate to compete for top talent.”

The office component will provide customizable spaces ranging from 2,000 to 40,000 square feet and will cater to more open-concept users. Certain tenant spaces will allow for the addition of skylights, private restrooms within the space and the possibility for private outdoor terraces along the Heights Hike and Bike trail. The buildings’ original use as warehouse space will give tenants the flexibility to incorporate aspects of the original design into the office space. For instance, 24-foot ceiling heights leave room for interior loft or mezzanine spaces that are typically not feasible in traditional office buildings.

“Tenants across industries are looking for the unique elements of creative space to build their brand and recruit the next generation of talent,” Hodges tells GlobeSt.com. “Nationally, we’re seeing creative office space command premium rents, experience fast lease up and fetch record-high disposition pricing. Yet, it’s an underserved niche in Houston. M.K.T. will provide a much-needed infusion of creative office space to the Houston market and is an indication of the type of product we can expect to see more of.”

Indeed, M.K.T. is expected to attract technology, arts, media and professional services office tenants that align with the independent spirit of the Heights. The project is expected to be ready for occupancy the first quarter of 2020.

Austin-based Michael Hsu Office of Architecture and Houston-based Method Architecture are providing design services on the project. SWA Group is the landscape architect on the project.

Triten is developing the mixed-use destination in partnership with Houston-based Radom Capital and Boston-based Long Wharf Capital. The project pays homage to the site’s history and its name is an abbreviation for the Missouri-Kansas-Texas railroad that originally ran through the Heights.

“With every project, you need to let your plans be informed by the legacy of the neighborhood and what it needs today,” said Scott Arnoldy, founder and managing principal at Triten Real Estate Partners. “We plan to weave features of the existing buildings into the modern structures and use the history of the neighborhood to develop a hallmark lifestyle destination for the community. The finished product will be a cultural and community amenity that will grow, evolve and improve with the neighborhood for years to come.”

The heavily traveled Heights Hike and Bike Trail serves as the northern border of the project. Catering to pedestrians and cyclists, the project will have 1,700 feet of frontage on the Heights Hike and Bike trail, which sees more than 12,000 users a month. The project will include an urban boardwalk along the path with a series of terraces, patios and outdoor dining, open lawns for yoga and games, a hammock grove, and art installations.

One block south of the project, the White Oak Bayou Greenway Trail winds from 34th Street and T.C. Jester Blvd. to the northern edge of downtown, where it connects to miles of other trails.

While it is clear that the market is beginning the early stages of stabilizing, undoing more than 7 million square feet of occupancy losses and a near doubling of the vacancy rate will not happen overnight, JLL points out in its third quarter office report. Positive net absorption and a drop in vacancy in the third quarter was certainly a step in the right direction, but many more quarters of sustained growth are necessary before the market returns to a more balanced state. As such, Houston market conditions are expected to remain tenant favorable through the remainder of 2018 and well into 2019 at least, JLL predicts.