HOUSTON-After eyeing the Bayou City for some time as a potential investment destination, AF Westchase LLC has made its move into the area by snagging the 176,977-square-foot Westchase Corporate Park. The buyer, a joint venture between Adler Real Estate Fund (managed by Adler Group) and TriGate Capital, acquired the multitenant business park from PS Business Parks Inc. for $9.8 million.
Located at 11201-11331 Richmond Ave., the park, which was built in the early 1980s, was 85% occupied. Matthew L. Adler, Adler Group’s chief investment officer says Westchase Corporate Park hit the partners’ sweet spot perfectly.
Westchase Corporate Park offers a good value-add opportunity through lease-up, Adler explains. Furthermore, “Houston’s been a market we’ve been targeting for a long time,” Adler tells GlobeSt.com. “It’s similar to markets in which we’ve been successful for many years, including South Florida. We’re excited to have successfully closed on this property.”
Houston’s growth story, combined with the product itself--consisting of smaller bay offices and multiple tenants--provided a perfect combination for the Miami-based Adler and partner TriGate, which is headquartered in Dallas.
Adler says the JV wants more, and is seeking properties with value-add potential through lease-up, and have a variety and diversity of tenants. “We’re looking at multitenant to the point in which there are no one or two main tenants that are so large, they’d have a negative impact through default,” Adler comments.
He adds that the joint venture is looking for warehouse, flex and office assets. Another requirement is that the assets be in areas with strong economic and transportation infrastructure drivers. The Westchase Corporate Park transaction came about four months after the JV’s first acquisition, that of the Byrd Center Business Park in Richmond, VA.
Other than being in a desirable market for the buyer, Westchase Corporate Park offered another advantage: It was below replacement cost. “It’s hard to imagine that someone would be able to find land, build speculatively and come close to being able to compete with us on rents,” Adler says. Adler says the Adler Group will put an in-house leasing and property management team at its new asset.
PS Business Parks was represented by CB Richard Ellis’ Houston and Dallas offices. The buyer was represented in-house by Adler and Jeffrey Yarckin, managing member of TriGate Capital.
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