The purchase price isn't being disclosed for the 12-story prize on 3.5 acres at 10777 Westheimer Rd., but industry experts say similar assets in the Westchase submarket have sold for $175 per sf to $195 per sf. Walton Street Capital walked away with the asset because of its quick ability to close and previous relationship with the seller, according to Robert Williamson, managing director in Houston for Holliday Fenoglio Fowler LP. In addition to Williamson, the sales team included HFF managing director Jeff Knowles and Granite's investments director Paul Bennett.
Williamson tells GlobeSt.com that "the current rent rates are 20% below market" in the fully leased building. In addition, he adds Petrobras America Inc. will depart its top floor spot in 2008 to move into Granite Westchase II, a 318,000-sf building currently under construction at 10350 Richmond Ave., less than two miles away. "That will leave about 48,000 sf vacant or about 10% of the building," Williamson says, citing the additional upside in the play.
However, Williamson says Walton Capital had no difficulty with the upcoming vacancy because class A office space is in demand in the Westchase submarket, with vacancies hovering in the sub-6% range. "They also have a little time to find a new tenant," he adds.
During its two-year hold, Granite put several hundred thousand dollars into renovating One Westchase's lobby. "I'm sure the buyer will do ongoing upgrades, but nothing major is planned," Williamson says. "This is still considered the dominant building in Westchase."
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