"Exel has a staggered lease expiration. There are five leases, one for each building," says Mike Parker, associate director in Holliday Fenoglio Fowler LP's Houston office. He and HFF senior managing director Rusty Tamlyn represented Invesco in the disposition of City Park East at 8503-833 City Park Loop.
Parker tells GlobeSt.com that one of the challenges was getting buyers comfortable with the idea of the lease structure and the fact the tenant wasn't going anywhere any time soon. The project has on-site rail access, which the tenant especially likes, he explains, adding it also would difficult for the plastics manufacturing company to find comparable space elsewhere in the city.
Similar properties have traded for $30 per sf, give or take. Parker says the 1970s-era park attracted offers from private fund and institutional players, both locally and out of state.
"The industrial market in Houston is catching the eye of a lot of buyers," Parker says. "It's still seen as a value play. Investors can come in here and buy property significantly below replacement costs."
Parker says the buyer had a previous relationship with Invesco, which is what ultimately won the property in the all-cash trade. "They'd done business before in other parts of the country as well as Texas," he adds. "It was one institution selling to another and certainty of closure."
Parker points out that the asset, which was on the market about three months, generated demand because industrial product for investment is scarce. "This acquisition opportunity provided the buyer with the rare opportunity to make a significant multi-building industrial acquisition with regards to size, scale and onsite rail spur access," he says.
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