According to Rusty Tamlyn, senior manager with Holliday Fenoglio Fowler LP's Houston office, the busted economy last fall changed the plans for the asset at 4522 Fredericksburg Road. "Most people just wanted to stabilize the asset and try to fill the existing space, rather than tearing down and redeveloping," says Tamlyn, who partnered with Doug Hazelbaker, senior managing director with HFF's Dallas office on behalf of the seller.
Tamlyn tells GlobeSt.com that the center, which is anchored by a SuperTarget that was not part of the deal, had already been under contract last fall. However, the frozen credit market prevented that potential buyer from obtaining financing.
"It was difficult to get financing on a deal that was basically break-even as this was," Tamlyn explains. "Unfortunately, that group was unable to put anything together."
The group that ultimately bought the center is led by a Houston retail expert, and the deal struck was all cash. The sales amount was kept under wraps due to concerns over taxes, but the Harris County Appraisal District puts a value of between $12 million and $15 million on the property.
Tamlyn says the 1960s-built center is in an area with a high concentration of Hispanics, and the new owners plan to find tenants that can serve that market. He adds that the Target in question has an owner-management agreement prohibiting another grocery store from taking space in the center, meaning the grocery component of the store has exclusivity. "That Target is one of the best-performing units in the system," Tamlyn comments.
But rather than a redevelopment ploy, which would be difficult to accomplish in the current market, the owners will invest what is needed in tenant improvements to fill the place up. No major redevelopment is in the near future, Tamlyn says.
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