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Jackie Day is editorial director of Real Estate Media’s Newsletter Division.

HOUSTON-Granite Properties Inc. broke ground on a 77,000-sf, first phase to a 300,000-sf office park, pushing out a project on the last vacant land along Beltway 8 between Interstate 10 and US Highway 290. The first structure in the three-phase build-out will deliver in February 2005.

The Granite Park Beltway 8 complex will be positioned at the Clay Road exit on the freeway’s west side. Granite is funding the full project cost in cash, Steve Carter, Granite’s industrial business manager in Houston, tells GlobeSt.com about a first phase with an all-in development tab of $90 per sf or about $6 million or $7 million. “The whole park will be about $20 million,” he says.

The Dallas-based developer’s Houston team expects to lease the facility for $11 per sf on a triple-net basis, with $20 per sf for improvement allowance “slab to deck,” Carter says. “That’s fairly typical for this area and our rates will be right in line for other office flex in the area.”

Granite bought the property three years ago. “We have just been waiting for the market and the competition to blend itself out of the picture, where we can bring this product onto this site,” Carter says. “The time was right and the demand has been good for this kind of product.”

The Granite Park Beltway 8 development will be flex space, either a hybrid of office and lab or office and light industrial. Demand for such space began with call center tenants several years ago and has sustained leasing interest although that kind of use has significantly tapered. Still, call center requirements–abundant parking and less common areas than typical office building designs–live on in projects like this, he says. “It has manifested itself as a back-office type of design where people need to get in and out of cars quickly and don’t need to mess with elevators and high-rise garages, but want a very nice office appearance,” he says.

Terry Kennedy of Houston-based Munson Kennedy Architects designed the one-story building, which is being built by Camden Construction of Houston. The tilt-wall building has glass on three sides.

Granite, eyeing a long-term hold, is marketing the property to tenants who need 7,500 sf to 77,000 sf. Carter expects the typical lease will range from 10,000 sf to 25,000 sf. “We’ve dialed in a 15-month lease-up, but we think we will achieve a much quicker lease-up rate than that,” he predicts. “We’re talking to several tenants now in excess of 25,000 sf for phase one and phase two.”

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