Trammell Crow, Principal to Develop 530,000-SF Office Buildling

HOUSTON-Pointing to dwindling space and growing demand in the Energy Corridor submarket, Trammell Crow Co. and Principal Real Estate Investors are preparing to break ground on a 20-story, 530,000-square-foot, class A office building this fall. The building, the first phase of what could build out to 1.5-million-square-foot development, will be built at a price tag of at least $150 million.

The as-yet unnamed project is situated on close to 19 acres at the corner of North Eldridge Parkway and Interstate 10.  TCC and PREI purchased the land from the Texas General Land Office and, according to Aaron Thielhorn, managing director with TCC’s Houston business unit, the acreage is among the last in the submarket that is development-ready. “There are other sites available that don’t have the infrastructure, or that require rework,” he adds. 

Kitty corner to the new commercial real estate development, on the northeast corner of North Eldridge and Interstate 10 are the Energy Center I and II buildings, totaling 630,000 square feet, also developed by Trammell Crow and Principal Real Estate Investors. That project broke ground in late 2006 and was completed by 2008.

Though preleasing is more common before construction launches these days, Thielhorn tells GlobeSt.com that fundamentals at work in far west Houston mean the partners feel comfortable beginning construction this fall without a lead tenant in hand.  “We’d love to prelease the building,” he acknowledges. “But we feel comfortable enough with the market that we can proceed on a spec basis.” Giving the partners that confidence, he goes on to say, was the leasing velocity of the submarket; the Energy Center project was completely leased by late 2009.

“Occupancy in the submarket is strong, and we’ve experienced strong absorption over the past few years, with a limited number of available blocks of contiguous space and a limited construction pipeline,” Thielhorn notes. “When those things occur, rental rates increase, along with a shortage of space.” WorleyParsons would understand the issue of shortage of space in the Energy Corridor – the company recently signed a lease at Reserve at Park Ten for one of the last large blocks of space in the far west submarket.

The office building will include a nine-level, free-standing parking garage with energy efficient features with an eye toward achieving LEED Gold Certification status by the U.S. Green Building Council. Delivery is expected to occur in late 2014.

Thielhorn along with TCC’s Kevin Schmok and Brandon Houston will lead he development team. Leasing will be handled by Cody Armbrister and Steve Rocher with CBRE’s Houston office. Asking rent rates are in the upper $20s per square foot, net.