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THE WOODLANDS, TX-Stream Realty Partners LP is preparing to develop its first office project in the region. Ground will break May 1 on a 180,000-sf building, the first of three planned for the 500,000-sf Stream Office Center.

The Dallas-based Stream is finalizing construction costs on spec project, which will sit on a 35-acre tract at the intersection of Sawdust and Sawmill roads. Land in the area is trading for $3 per sf to $5 per sf.

The first building is scheduled for completion in second quarter 2009. Paul Coonrod, senior associate with Stream Realty’s Houston office says the second building’s start will be determined by the market. “Once we feel comfortable with lease-up on the first phase, we’ll get moving on the second,” he says.Coonrod says the space is being quoted at $18 per sf, triple net. In addition, Stream is interested in selling about 10 acres to a retail developer.

Coonrod tells GlobeSt.com that Stream opted to put its first project in the far north submarket because of its tight vacancy rates and increasing demand for class A office space. “The situation right now is that growth in that submarket is strong, but there isn’t much land or office space in close proximity to where Woodlands residents live,” Coonrod explains. “With this project, we hit both of those.”

According to Grubb & Ellis’ 2007 yearend report, vacancy is 5% in the Conroe/Montgomery County submarket for office space across all classes. Out of a 522,141-sf inventory, 26,310 sf is vacant and 205,322 sf is under construction.

Coonrod adds that Stream Realty is looking for more land to develop, but says no specific submarket is targeted. “Stream’s platform allows for employees to source new acquisitions and developments,” he says. “If we find the land, and it’s reasonable, then we’ll make a move on it.”

Coonrod and Stream vice president Brad Fricks are preleasing the spec project. Stream’s Brice Hill, senior vice president of development services, is overseeing development. Powers Brown Architecture in Houston is the designer. The general contractor hasn’t been selected.

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