X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

(Read more on the industrial market.)

HOUSTON-A scrap metal company has won bragging rights over other bidders, walking away with a 265,000-sf industrial building in the southeast submarket. The asset, which ended up trading for just under its $5-million ask, attracted several offers in a market where large industrial space is at a premium and vacancy is in the single digits.

Valley Plaza-Donoho LLC of Houston acquired the 1960s-era building at 6002 Donoho St. a few years ago as an investment. Rob Chandler, principal with NAI Houston says both buyer and seller did well in the transaction because anyone bringing a similar project out of the ground would end up paying $75 per sf. The rail-served building sits on 11.66 acres.

“It’s also a lot harder to develop in Houston than it was five years ago,” Chandler says. “It takes longer for the entitlement process. And when it takes longer, it means more involvement, which ultimately adds to the final cost.” He and NAI senior associate Chris Kugle represented the seller while Stephen Schneidau of Cushman & Wakefield of Texas Inc. negotiated for the local buyer, AAM Partnership LP.

Recent reports peg the region’s industrial vacancy at 6.2%, a 0.3% dip in the past year, in a 419.5-million-sf inventory. The Southeast Near submarket’s 32.44-million-sf inventory is just 3.6% vacant.

Chandler tells GlobeSt.com that the Donoho building had a long-term tenant, but the lease expired just as the deal was closing, allowing the buyer to immediately move in and operate its scrap metal business from there. “The buyer did a rent-versus-own analysis and determined that with this type of pricing, owning would be advantageous,” he adds. “The outlook for the industrial market in Houston is strong.” He says the buyer plans to upgrade the 7,500 sf of office area.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.