HOUSTON-With two years invested in the planning, a local developer has secured the first leases to launch construction on the $200-million Houston Pavilions. The mixed-use development, with House of Blues as part of the venue, will add 700,000 sf of top-tier space in the CBD.
Ground will break this spring, with completion set for fourth quarter 2007. Patterned after the 350,000-sf Denver Pavilions, Houston's version will be bordered by Dallas, Polk, Main and Caroline streets. It will contain 350,000 sf of retail space, 140 condominiums and 200,000 sf of office space. The Los Angeles-based House of Blues Inc. has preleased 43,000 sf of retail space while Texas Minor Emergency Center & Wellness Clinic has taken 37,000 sf in the office component.
According to development partners Geoffrey Jones and William Denton, the goal is to be 100% leased by the time the Pavilions opens. "We're already close to 30% leased right now, based on current negotiations," says Denton who is president and CEO of Entertainment Development Group Inc. of Los Angeles.
The partners tell GlobeSt.com that the retail leases are on average, 10 years, with office tenancy somewhat shorter. "We'll do five, seven and 10-year leases for the office space," adds Jones, who is CEO of locally based Texas Real Estate Fund Inc. and an independent developer.
CB Richard Ellis Inc.'s Houston office is preleasing the office space, opening talks at $24 per sf to $25 per sf. Denton's company and Richard Kaufman & Associates of Los Angeles are handling the retail preleasing, quoting $36 per sf, triple net. Denton says the most desirable retail mix will be exclusive apparel and specialty shops, restaurants and entertainment venues to create the kind of "destination location" that the developers have in mind.
The condominiums will be developed a "major national residential developer," says Denton, who says the partnership already has sold the air rights. "They'll physically start the construction about eight months after we start," he says.
Denton says the partners intended to keep the development plans "close to the vest." But, Jones chimes in, the development ended up as the "worst-kept real estate secret in Houston." The partners believed the ensuing excitement is partly because Houston is a good location for this type of development. "It's the fourth largest city in the country that's gone through its own renaissance," Denton explains, citing Toyota Center, Minute Maid Park and the expansion of the George Brown Convention Center and University of Houston as examples.
Jones says the renaissance, combined with the completion of the light-rail system, made the Pavilions project a logical choice. "The combination of all those various infrastructures and amenities made it obvious to us that this site was perfect for what we were trying to do," he adds.
Hellmuth, Obata & Kassabaum Inc. of San Francisco and Laguarda Low Architects LLC of Dallas designed the Pavilions. DE Harvey Builders from Houston is the general contractor.
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