The Woodlands Wants OXY To Move Headquarters From Greenway Plaza

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The Woodlands Wants OXY To Move Headquarters From Greenway Plaza Occidental Petroleum Corp. has put real estate matters on the back burner since acquiring Anadarko Petroleum Corp. for $38B earlier this year. That hasn’t stopped the real estate community from chiming in on the future of Anadarko’s twin towers in The Woodlands. The Woodlands Area Economic Development Partnership has one solution: Move the headquarters to The Woodlands. “This is where we want them to be,” CEO Gil Staley said during Bisnow’s Future of Montgomery County event in The Woodlands. “I am selfish. We want the headquarters.” However, this is no simple task. Staley said OXY CEO Vicki Hollub, who lives in Galveston, said she had not considered relocating the company to The Woodlands from Houston’s Greenway Plaza, where its headquarters has been since it relocated from Los Angeles five years ago. A few weeks ago, Staley, along with a host of community and business leaders, met with Hollub to present a unified message about the importance of OXY to the region. Among the first major corporations to locate in The Woodlands, Anadarko opened its first 30-story building in 2002 and the 31-story tower in 2014.

The move spurred economic development with additional corporate office campuses and healthcare expansion nearby. Anadarko is the largest private employer in Montgomery County, totaling about 3,700 employees including part-time and contract workers. The departure of the oil and gas company could result in lower sales tax revenue, homes sales and traffic counts for the area, Staley said. OXY is offering a voluntary severance package to its employees. Once it is complete, the company will have a clearer picture of the number of total employees and where they will work. “We don’t make any assumptions on anything, especially when you have an acquisition like that,” Staley said. “We all know that it will have an impact on this community.”OXY has a lot of real estate decisions to make. The firm plans to sell the ConocoPhillips headquarters in the Energy Corridor, which it purchased a few months prior to the Anadarko acquisition, according to the Houston Chronicle. The original plan was to move to the vacant campus but OXY canceled that plan because the campus was not big enough for the combined company. The 62-acre site went to market earlier this month, per the Chronicle. CBRE is expected to accept bids for about six weeks and target mixed-use developers, schools and universities.

For now, OXY plans to maintain its existing office presence in Greenway Plaza and The Woodlands. The firm could lease or sell The Woodlands towers in the future, but locals are optimistic it will stick around. “One thing we have found in The Woodlands market when people get here and are living here, they don’t really like leaving,” Colliers International co-Chairman and principal Bob Parsley said.

For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at: www.houstonrealtyadvisors.com Thank you for your interest.

Sep 2019

Sold! Land under just-purchased Addison building is sold again

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Investor Admiral Capital resells the land under its new Addison office building.

Investors who just purchased an Addison office have already sold the deal – not the building, but the land under it.

New York-based Admiral Capital Group last week purchased the new Fourteen555 project – a 249,564-square-foot office building on the Dallas North Tollway.

The building was completed last year by developer Cawley Partners and is 95% leased to tenants including Occidental Chemical.

After closing the purchase, Admiral Capital, in turn, resold the land under the building to Woodbranch Investments Corp.

Admiral will continue to own and operate the building on a 99-year lease from Woodbranch Investments.

The investor in a similar transaction flipped the land under two Collin County buildings it purchased earlier this year to real estate investment trust Safehold Inc

It’s a way for the investor to capitalize the purchase and spread the cost over years of land lease payments, real estate brokers say.

New York Life Real Estate Investors, on behalf of New York Life Insurance Co., provided the ground lease financing for the latest Addison deal.

“We are pleased to provide this long-term financing which represents an attractive risk-adjusted return given the look-through value of the property,” Leslie Cassingham, Senior Director in New York Life Real Estate Investors’ Southwest Regional Office, said in a statement.

New York Life says it has done similar transactions with Woodbranch Investments.

Woodbranch is a private, Houston-based investment firm.

Sep 2019

$1.2B acquisition of Houston-based real estate services co. canceled, new CEO named

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Houston-based Stewart Information Services Corp. (NYSE: STC) and Jacksonville, Florida-based Fidelity National Financial Inc. (NYSE: FNF) have mutually agreed to cancel their merger agreement.

Fidelity would have acquired Stewart in the cash-and-stock deal, which was valued at $1.2 billion when it was announced on May 2018, but the former will now pay the latter a $50 million reverse termination fee.

The Sept. 10 announcement comes just days after the Federal Trade Commission filed a lawsuit to block the deal. Fidelity and Stewart are two of the four largest title insurance underwriters in the U.S., the FTC said in a Sept. 6 press release. The FTC alleged that “the merger would substantially reduce competition in-state markets for title insurance underwriting for large commercial transactions, and in several local markets for title information services,” the release states.

“While we were disappointed with the FTC’s decision regarding Stewart’s combination with Fidelity, we are well-positioned to execute on a standalone strategic plan built around growth and profitability,” Thomas Apel, Stewart’s chairman of the board, said in Stewart’s Sept. 10 press release.

Also in the release, Stewart announced that Matthew Morris, who has served as CEO since 2011, has assumed the role of president. Effective immediately, he was replaced as CEO by Frederick Eppinger, who has more than 35 years of experience in finance and strategic marketing in the insurance industry and has been a Stewart director since 2016. Most recently, he served as president, CEO and director of The Hanover Insurance Group, retiring in 2016. He also previously served as a partner for McKinsey & Co., a global management consulting firm.

“Fred’s proven track record of aggressively growing a company and increasing shareholder value while he was CEO at Hanover Insurance Group, coupled with his passion for Stewart’s success, makes him ideally suited to serve as CEO at this critical juncture,” Apel said in the release. “We also are pleased that Matthew Morris will remain with the company as president, working with Fred and our leadership team to accelerate our strategic plan.”

Meanwhile, John Killea, who has been president of Stewart since 2017, will retain his roles as general counsel and chief legal officer.

“The actions we have taken today are designed to enhance our strength, focus our company on the opportunities before us and build a leadership team with the best mix of experience and expertise to drive value creation,” Apel said in the release. “To further support the new direction, we will be actively reviewing the Board’s makeup to ensure the appropriate mix of diversity as well as operational and growth-oriented experience.”

Sep 2019

Fuller Realty Partners buys Westchase office building

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but the building is valued at about $14.8 million on Harris County tax records.

Houston-based Fuller Realty Partners has added another west Houston office building to its portfolio and will turn to fill the substantially vacant property.

It’s Fuller Westchase Place affiliate bought Westchase Place, a six-story office building at 11200 Richmond from Dallas-based Capstar Real Estate Advisors. The purchase price was not disclosed, but the building is valued at about $14.8 million on Harris County tax records.

The 150,000-square-foot-plus building was built in 1999 and substantially renovated in 2009 and 2013. An on-site garage has a generous parking ratio of 4.4 cars per 1,000 square feet.

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“We’re willing to spend money for building improvements to get it leased up,” said Steve Darnall, a principal, and chief operating officer of Fuller Realty Partners. “It’s only 44 percent occupied. The owner purchased this a while back and has lost tenants with the oil and gas downturn.”

Fuller should have an advantage in the market, Darnall said. “We liked it because this building, for its class, is probably the newest and nicest. Given our purchase price, we’re going to be able to compete or undercut rental rates of what we consider lesser properties.”

Rudy Hubbard, Kevin McConn and Rick Goings of JLL marketed the property for Capstar. The property last changed hands in 2013 when oil was riding high and companies were expanding.

The office availability rate, including sublease space, in Westchase reached 27.9 percent in the second quarter, according to commercial real estate firm Transwestern. That compares to 13.7 percent when the building was last sold, in 2013. By comparison, the Houston region overall posted a 23.5 percent availability rate in the second quarter, up from 16.2 percent at the time of the last sale.

Fuller Realty, which will manage and lease the property in-house, plans to break up some of the larger spaces to create speculative suites that will be easier to lease, Darnall said. In addition, the building could accommodate a company that needs up to two floors of contiguous space.

The Westchase submarket, centered around Beltway 8 and Richmond, absorbed 238,212 square feet of office space in the second quarter, according to Transwestern. Large deals included a 114,000-square-foot lease for Honeywell’s relocation to CityWestPlace, a 108,109-square-foot lease by Empyrean Benefits at Pinnacle Westchase, a 90,000-square-foot lease for LJA Engineering at Westchase Park II, a 67,000-square-foot renewal for ABB at Westchase Park I, and a 40,796-square-foot renewal for U.S. Physical Therapy at Briar Forest Crossing.

The deal comes as a number of office buildings have changed hands across the Houston market recently, including 600 Travis, 1616 Voss, 7500 San Felipe, 6363 Woodway and HP’s new campus in Springwoods Village.

“Due to the counter-cyclical nature of Houston’s economy relative to the rest of the country, combined with the overall capital markets environment and historically low-interest rates, the investor demand in Houston office is higher than we’ve seen since 2014,” said Kevin McConn of JLL.

The building is close to the new Trailside Park at the southern end a trail that extends northward to Houston Community College at Westheimer and Hayes. The Westchase District worked with area building owners on the park, which has a picnic table, zip line, chairs, and public art.

“It’s a nice little green space in the middle of a dense urban environment,” said Sherry Fox of the Westchase District.

Fuller Realty’s latest acquisition follows its recent purchase of the Parkview I and II office buildings at 330 Barker Cypress Road and 333 Cypress Run Road in the Energy Corridor. The portfolio was 11 percent leased at the time of sale.

While there are no specific leases to announce, interest in the Parkview project has been good, Darnall said.

The deal boosts Fuller Realty’s office portfolio to more than 2 million square feet in 13 buildings. It also owns 9801 Westheimer in the Westchase District.

Sep 2019

Sealy & Co. buys large distribution warehouse in NW Houston

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An affiliate of Sealy & Co. has acquired a recently built distribution warehouse totaling nearly 500,000 square feet in the far northwest Houston area near Waller.

The 479,806-square-foot building at 18140 Kickapoo Road was acquired by Sealy Industrial Partners for an undisclosed price.

“Houston’s rapidly growing industrial market and increasingly low vacancy rates are attractive to us,” Scott Sealy Jr., the company’s chief investment officer, said in an announcement.

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The property, on the south of U.S. 290 about eight miles past the Grand Parkway, was developed by Broad-Ocean, a China-based manufacturer of electric motors. The building is across U.S. 290 from the expansive Daikin Texas Technology Park. Broad-Ocean is a supplier to heating and cooling equipment maker Daikin.

Broad-Ocean, which leases the property, offer the new owner stable occupancy for several years, according to Sealy & Co.

“This is a core asset with features we believe to be attractive to many of the surrounding manufacturers, suppliers, and distributors,” Sealy said. “We’re looking forward to executing our strategy of acquiring at a discount to replacement cost and stabilizing the asset.”

Scott Sealy Jr., Jason Gandy, and Tom Herter led the Sealy investment services team on the transaction, while Tom Lynch and Mark Redlingshafer of CBRE represented the seller.

Sealy & Co. a commercial real estate investment and operating company with corporate offices in Dallas and Shreveport, La.

Sep 2019

Had Breakfast with Joe Theismann; Houston Country Club

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The Houston Country Club hosted Joe Theismann; Motivational Speaker, and former NFL champion this morning during a breakfast conference sponsored by Holba. He discusses his biggest tip for success: being in service to the world and he used JJ Watt as a prime example to explain that.

Joe Theismann says he remembers everything that happened that night he broke his leg. He says it was the day that he died and got brought back to life in a way that he is forever grateful for. He took all of the encouragement from the stands as they gave him a standing ovation. He was encapsulated by the roar of the crowd as he was being pushed away on the stretcher.

In a room full of Real Estate Brokers who were there to witness Theismann’s wisdom they deliberately ignore their eggs and bacon that’s in front of them, they are mesmerized by his presence. I mean, how can you resist that bacon smell? That’s how mesmerizing Joe Theismann’s energy was.

He has so much energy at 7:30 in the morning and wasn’t even drinking a cup of coffee. What is his secret? His secret is success and admiration. His top love language is probably affirmation I bet you his super bowl rings on that one. All of them.

Sep 2019

How is Houston Attracting Millennials to Invest in Commercial Real Estate?

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Over the past few years, Houston has shown strong economic growth. It cannot be denied, however, that the commercial real estate industry in Houston does not contribute that much to the state’s economic growth. This is the main reason why the state is pursuing different businesses, particularly run by millennials, to invest in the commercial real estate industry.

Commercial Real Estate

By definition, commercial real estate pertains to various types of properties which are not used for residential purposes – this includes retail properties, office buildings, apartments, or even vacant land that can be developed for commercial purposes. Houston has several commercial real estate brokers, and CXRE Commercial Real Estate is one of the companies offering management and leasing services specifically for business properties. Even with top agencies such as CXRE, it is unfortunate that the commercial real estate industry still does not seem to witness its full potential. Hence, the commercial real estate industry in Houston aims to reinvent how they do business by enticing millennials who have the courage in starting up their own companies with a tenant-centric mindset.

Millennials and Start-up Companies

There are differences, but not opposing views, over the span of years that millennials are born. Nonetheless, millennials make up a quarter of the world’s population, making them a significant consumer group. They are also most passionate in what they believe in that the rise of social enterprises came hand in hand with the millennial generation. Alongside with the rise of social enterprises is the boom of start-up companies, powered by no one else but millennials themselves. These are the reasons why different industries attempt to lure millennials into their circle because millennials are considered the future of further economic growth.

Houston’s Commercial Real Estate and the Millennials

Houston’s commercial real estate industry is no different from other industries, attracting millennials to invest in their business. After all, the founder of the most popular start-up

companies born out of rented apartments are no other than millennials. Hence, most brokers now offer:

Connectivity. Brokers are ensuring that the properties and locations they offer have internet availability because this is the main factor that is essential for a business typically founded by a millennial.
Integrated Systems. Millennials prefer convenience, which is why walkability and systems integrated within the business location such as nearby hospitals, schools, parks, and grocery stores are being ticked as essentials in the property offer.

Neighborhood. Even business areas are now made friendlier, in favor of the millennials, both in terms of the amenities offered and environment sustainability. Studies show that more and more millennials are now being aware of the environmental impact of their actions, hence their goal is to minimize their carbon footprint, which is why they prefer locations that are environmentally friendly, at the same time economical.

Final Word

It is true that the millennial generation has a great impact, not only in the commercial real estate industry but in different industries. With the millennials accounting for a quarter of the world’s population, it cannot be denied that this generation has the potential to reshape Houston’s commercial real estate industry, and in a bigger sense, the future.

Sep 2019

Northwest Houston property sold after transition from retail to medical office plaza

A professional plaza catering to medical businesses in northwest Houston has sold for an undisclosed sum to a

Northwest Houston property sold after transition from retail to medical office plaza

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A professional plaza catering to medical businesses in northwest Houston has sold for an undisclosed sum to a local firm.

Houston-based investment firm SGRE Stone Center Ltd. sold Hearthstone Professional Plaza, which is located at 15003 FM 529, to Signal Hearthstone LLC, according to a news release.

State tax records show Signal Hearthstone LLC is registered to Houston-based commercial real estate firm Finial Group.

The 16,142-square-foot plaza is anchored by HCA Houston Healthcare, which has leased 5,900 square feet of Class A office space in the plaza. The plaza Is 92 percent occupied, with five of the six current tenants being medical providers.

SGRE acquired the 1.4-acre property in May 2016. The firm tasked Houston-based NewQuest Properties with transitioning the plaza from a traditional shopping center to one focused on medical offices.

Chris Dray, executive vice president of NewQuest Properties, and Rachael Keener, a vice president at the company, represented SGRE in the sale of the plaza. Terms of the sale were not disclosed. But as of Jan. 1, the land and building were valued at $2.6 million, according to the Harris County Appraisal District.

“It’s the Amazon-proof and recession-proof kind of real estate that people want to own,” Dray said in a statement. “The seller is a value-add player who wanted to get it stabilized and sold.”

Eugene Lang of Agate Properties represented Signal Hearthstone, which is starting out with no lease rollovers in the near term and one vacancy, totaling 1,231 square feet.

NewQuest is one of several firms that have recently launched practices specifically focused on medical properties. Ashley Strickland, a vice president with NewQuest, leads her firm’s new full-service health care and wellness real estate division. In April, the firm said it created the new division to meet the demand from the emerging “retailization” of the medical industry, which is bringing patient care and communities closer together.

And just last week, Lee & Associates in Houston launched its own medical business line with the hiring of associate Daniel Wyatt, who specializes in medical office brokerage.

Properties in Houston geared toward medical businesses have garnered a great deal of developer attention in recent years.

Last month, Dallas-based Stream Realty Partners delivered its first medical office building in Houston, a new 102,000-square-foot facility aimed at providing more convenient health care in Hedwig Village. Hedwig Place, as the building is known, is located at 8731 Katy Freeway and offers five floors of space specifically designed for medical care plus a ground-floor restaurant.

Stream has already acquired land for a second medical office building, to be called Spring Valley Place, near the intersection of Interstate 10 and Campbell Road. That project is expected to be completed by the end of 2020.

Also in August, Houston-based Jacob White Construction broke ground on a three-story medical office building at 4460 Bissonnet St. in Bellaire. Bissonnet Medical Plaza, as the project is known, will offer tenants over 52,000 square feet of medical office space.

Sep 2019

Principal Real Estate Sells 20 Greenway Plaza in Houston

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The new owner worked with an HFF team to secure the seven-year, fixed-rate acquisition financing. The 10-story tower was 95 percent leased at the time of sale.

Cigna Realty Investors
Dan Miller
HFF
Principal Real Estate Investors
Stockdale Capital
Trent Agnew
For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at: www.houstonrealtyadvisors.com Thank you for your interest.

Sep 2019

International investors take a small step back from US commercial real estate, as yield is less attractive

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KEY POINTS

International investors became net sellers of commercial real estate this year for the first time since 2012. There was no one country accounting for the change, instead of a small pullback in purchases that changed the investment equation.
Investors made direct acquisitions totaling $21.3 billion in the first half of 2019 but sold a little bit more at $21.4 billion, according to a new report from Real Capital Analytics.
“That’s the real challenge investors face right now. There is not some better option when they’ve got a high-quality property that’s cash flowing,” said Jim Costello, senior vice president at Real Capital Analytics.

GP: Manhattan office buildings REITs commercial real estate

Pedestrians walk past commercial real estate in Manhattan.

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International investors became net sellers of commercial real estate this year for the first time since 2012. There was no one country accounting for the change, instead of a small pullback in purchases that changed the investment equation.

Investors made direct acquisitions totaling $21.3 billion in the first half of 2019 but sold a little bit more at $21.4 billion, according to a new report from Real Capital Analytics.

“Prices are at record high levels in the U.S. Our cap rates are at record low levels. On the face of it, it would be hard for investors to put money to work in the U.S. The yield opportunity is not what it was a few years ago,” said Jim Costello, senior vice president at Real Capital Analytics. Blackstone is buying U.S. warehouse properties from Singapore-based GLP for $18.7 billion

In the second quarter alone, acquisitions dropped 37% from a year ago. That is due in part to some very large deals that closed last year, so the comparison to this year was skewed by that. When international investors purchase assets in the U.S., they typically have to put a lot of money to work at once in order to be operationally efficient. The same is true of huge sales.

“We will see huge net selling by cross-border investors in the second half of the year when the announced purchase of GLP by Blackstone closes,” added Costello.

While investors are still active, it is simply becoming harder to hedge against all the risks in the market, especially currency exchange rates and interest rate volatility. They purchased less so far this year, but they also sold less.

“If I have a good cash-flowing asset right now, and it’s a devil I know, as opposed to the uncertainty in the world, and when you have so much uncertainty increasing, and you’re not sure what’s going to happen next in the economy, stick with the devil you know, as opposed to sell the property and then how to I redeploy that cash? That’s the real challenge investors face right now. There is not some better option when they’ve got a high-quality property that’s cash flowing,” said Costello.

Investors are increasing spending on the office and apartment sectors after making a big push into retail last year. They’re putting more capital into the New York City area; Boston; Seattle; and Las Vegas, but putting less into Los Angeles; Phoenix; San Jose, California; and Washington, D.C., according to the Real Capital report.

Canada, Germany, and Singapore are the top buyers of U.S. commercial real estate by dollar volume. While Canada and Germany increased their investments annually, Singapore’s dropped by 55%.

China is a much smaller investor, but its dollar volume fell a steeper 74%. that is due to stricter government restraints on capital in the past year. Elsewhere, investors in the Middle East have stepped up significantly in the U.S. apartment market, which could be a flight to safety given volatility in oil prices.

The recent drop in interest rates has not come into play yet because commercial real estate deals can take 20 to 30 weeks to close, and interest rates didn’t really start falling dramatically until the last few months.

“So on a trailing basis, we’ve had a pipeline that’s been a little bit shut down,” Costello said.

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Monthly Archives: September 2019

Investor Admiral Capital resells the land under its new Addison office building.

The new owner worked with an HFF team to secure the seven-year, fixed-rate acquisition financing. The 10-story tower was 95 percent leased at the time of sale.