Uptown Trophy's Occupancy Jumps, Rates Bump

"The leasing at the Crescent has been phenomenal," says Tony Click, vice president of leasing. "The organic growth is busting at the seams." The latest deals, he tells GlobeSt.com, are a 17,000-sf, 10-year lease by a newcomer to the trophy asset, Merrill Corp., and a 10,573-sf, 86-month deal for an expanding tenant, WhiteHorse Capital Partners LP. Several more leases, pushing 20,000 sf, are waiting to be inked for Uptown's premier mixed-use complex at 100, 200 and 300 Crescent Court, according to Click.

The recent flurry has filled three of the four floors vacated in April by Carrington, Coleman, Sloman & Blumenthal LLP, which put the building owner on notice in November 2005 that it was looking to relocate from Crescent's prized possession. "If I had two or three extra floors, I could lease them," Click says, adding he has three promising prospects for the fourth.

Crescent senior vice president Michael Lewis says the going-forward plan, with 100% occupancy at hand, is to use the owner's other class AA buildings in the inventory to offer expansion space for tenants, or in Crescent's preferred language, their customers. The leasing momentum is pushing the Crescent to possibly its highest peak in recent years.

"There was a period where the amount of space was just a fraction off 100% and that's where we're going to be in a short period of time," Lewis says. "One of the toughest things we have as a landlord when we get to this percentage is managing the customer base and their growth."

Lewis acknowledges that Crescent does have some developable land in Uptown, but adds that it's not likely an office building will rise on the infill parcels. Not only is the barrier construction cost, upward of $300 per sf to match the Crescent's caliber, but there also are several office projects on others' drawing boards. "Too many people are looking through rose-colored glasses," Lewis says, "and not at who's going to get hurt. The Crescent will be fine, but the impact will be on smaller class A or quality buildings in Downtown and Uptown. Very few customers at the Crescent would even remotely consider going anywhere else even if it's something we built."

Click says Merrill Corp. will move in Oct. 1 to 100 Crescent Court in line with a corporate strategy shift to seat offices closer to mega-legal and financial clusters, which is an overwhelming majority of the Crescent roster. "They will have a built-in clientele right here," he says. "That's what attracted them to the Crescent." Merrill is planning a similar move in Houston.

Due to the nature of Merrill's business, Click says the bulk of the space is being built out as large conference rooms for closings. Matt Construction Co. is doing the finish-out. Phil Puckett, principal with locally based Trammell Crow Co., represented Merrill while Click and Lewis brokered the terms for the owner of record, Crescent TC Investors LP.

In a direct deal, WhiteHorse, also planning an Oct. 1, occupancy, is expanding after 18 months in the asset. The firm will add 6,728 sf to take its total to 10,573 sf and its new address to the second floor of 100 Crescent Court.

Click says the current overview is most "customers" are locked in until 2010. The average finish-out, shared by tenant and owner, runs $60 per sf to $120 per sf. The leasing momentum has all leases being stair-stepped and a rent hike to $35 per sf plus electric. "We've moved rates a couple bucks," he says. "Rates are going to start going up in all nicer buildings."