Bottom of the Cycle is Good Timing for Buy
With those economic conditions in mind, Granite Properties acquired Eldridge Place, an 824,632-square-foot three-building class-A office complex in the Energy Corridor of West Houston for $78.4 million.
HOUSTON—The metro should experience healthy economic growth in 2019 and 2020, as long as outside influences such as energy prices, US expansion and global growth continue in Houston’s direction. Outside influences of net migration, construction and consumer confidence must also stay in alignment, according to a report by NAI Partners.
With those economic conditions in mind, Granite Properties recently acquired Eldridge Place, an 824,632-square-foot three-building class-A office complex in the Energy Corridor of West Houston for $78.4 million. Located at 737, 757 and 777 N. Eldridge Pkwy., the complex has direct access to Interstate 10, Memorial Drive and North Eldridge Parkway near West Houston, which is home to much of the Energy Corridor’s employee base.
Eldridge Place features connected covered parking and consists of One Eldridge Place, located at 777 N. Eldridge Pkwy., a 12-story 239,417-square-foot building that’s 62.1% leased; Two Eldridge Place, located at 757 N. Eldridge Pkwy., a 14-story 279,329-square-foot building that’s 77.9% leased; and Three Eldridge Place, located at 737 N. Eldridge Pkwy., a 13-story 305,886-square-foot building that’s 71.1% leased. The complex will offer in excess of 600,000 square foot of space in the coming five years.
“We feel comfortable with the ability to lease based on market conditions,” Scott Martin, Granite executive managing director, tells GlobeSt.com. “We try to take advantage of cycles and affected commodities create opportunities. The timing is critical; we are reaching the bottom of the cycle so it’s good timing. This is my fifth oil cycle with 30 years in the business and we all know real estate goes as the oil industry goes.”
The three properties are undergoing a $20.6 million capital improvement program, which will continue through 2019, and include fully renovated lobbies and mechanical upgrades, and the raising of the electrical source to protect the properties from future weather issues. Granite will continue to update the buildings’ amenities including the onsite conference center, fitness center and cafe. Three Eldridge Place will be available for a full-building user in January 2020. It features a commercial kitchen, cafeteria, a large lunchroom, conference and training center, and a customer lounge.
The Granite team will implement building-wide community enhancing programs. Eldridge Place is LEED certified and Energy Star-rated. The project offers an abundance of natural light and is in walking distance to Terry Hershey Park, which has 496 acres of public green space with a 12.2 mile trail.
Jeff Hollinden, senior managing director, and Martin Hogan, senior director of HFF, represented the seller. Paul Bennett, senior director of investments, and Martin of Granite Properties, represented Granite. Eldridge Place is being leased by Granite led by Steve West, senior director of leasing at Granite.
“With the continued recovery of the Houston economy and Houston’s solid job growth, we’re working to expand our Houston portfolio with high quality assets in great locations, like Eldridge Place,” said Martin. “As real estate owner, we look forward to providing a customer-centric work environment that enhances productivity and fosters community.”
With the acquisition of Eldridge Place, Granite expands its Houston portfolio to more than 2.3 million square feet of class-A office buildings. Granite also owns and manages 3355 W. Alabama, 2925 Briarpark, Weslayan Tower-24 Greenway Plaza, Granite Tower 290 and Briarpark Green in Houston.
“We are also looking at development opportunities with long lead times which are positioned at the right time in the cycle,” Martin tells GlobeSt.com.
The outlook for Houston tempered as leading indicators mostly slowed during the past three months, based on data from the Federal Reserve Bank of Dallas–Houston Economic Indicators. Revisions to data from earlier in the year show that 2018 Houston employment growth has been healthy but not as strong as early estimates suggested. Houston jobs were revised down from an annual 3.3% from December 2017 to October 2018, to 2.4%. While slower, growth is still above the historical average rate of 2.1%. The revised data puts Houston on track to have added about 73,000 jobs in 2018. The biggest revisions of jobs removed were in professional and business services and construction. Leading year-to-date job growth sectors are now manufacturing, education and health services, and construction.