TA Realty acquired the East Belt Business Park, a 350,000 SF, four-building industrial plan near the Port of Houston in Houston’s Southeast submarket. The seller, Morgan Stanley Real Estate Investing was represented by the JLL Industrial Capital Markets. East Belt Business Park comprises two rear-load and two cross-dock buildings that feature 20- to 24-foot clear heights, 114 dock-high doors, 14 drive-up ramps, 510 parking spaces and truck courts ranging from 120- to 180-foot . The property has been more than 90 percent leased since delivery. East Belt Business Park is three miles from the Port of Houston, a 25-mile long waterway that services 8,200 vessels and 215,000 barges each year.
Cushman & Wakefield (NYSE: CWK) announced today that the firm has acquired Colvill Office Properties, a leading provider of office agency leasing services in Houston. Colvill Office Properties currently directs leasing and marketing efforts for 17 million square feet of Class-A office space in Houston.
“As one of the five largest metro areas in the U.S., Houston remains a critically important market for Cushman & Wakefield,” said Andrew McDonald, President of Cushman & Wakefield’s West Region. “Providing our clients with the most respected and accomplished office agency in Houston complements our investor services platform significantly in Texas. The Colvill team has a proven track record of creating exceptional value for their clients and shares our commitment to collaboration and innovation.”
The Colvill Office Properties team has more than 130 collective years of experience and is a four-time recipient of the Owner’s Representative of the Year award as voted by the Houston Office Leasing Broker’s Association (HOLBA). The Colvill current portfolio includes more than 30 individual properties in the CBD, Energy Corridor/Katy Freeway, Galleria/Uptown, Westchase, West Belt, Springwoods and Inner Loop submarkets.
“We could not be more thrilled to join one of the world’s pre-eminent commercial real estate firms,” said Chip Colvill, the founder and former president/CEO of Colvill Office Properties, who joins Cushman & Wakefield as Executive Vice Chairman. “The depth and breadth of Cushman & Wakefield’s global platform and the outstanding team already on the ground here in Houston will enable us to deliver even more value for our building owners, taking what we’ve built at Colvill over the last two decades to the next level with the Cushman & Wakefield international platform.”
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation, and other services.
Olin Corp. is renovating a 62,500-square-foot office building in Lake Jackson to create a Technology and Administration Center that will serve as the main building for its Texas operations. The Missouri-based chemical manufacturer will consolidate more than 200 employees from seven area offices to 604 Highway 332 when renovations are completed this summer.
Olin, which has 1,200 employees in the Freeport area, worked with the building owners to create a collaborative work environment. The building, which allows room for future growth, will have a training hall with seating for 130. Dallas based owner/developer St. Ives Realty and partner LandPlan Development are leading the construction. Houston-based Osborn & Vane Architects designed the renovations and LSI Construction is handling construction. Olin will maintain its office in the Energy Corridor.
San Antonio-based Kairoi Residential was hired by a joint-venture of Argosy Real Estate Partners and InvestRes to provide property management services for Kingsland West, a 305-unit apartment community at 18325 Kingsland Blvd. in the Katy area. The joint venture acquired the property, which had been damaged by Hurricane Harvey and subsequently renovated, in November 2018.
Spring Branch Independent School District purchased a 22,381-square-foot warehouse on 4.7 acres at 2425 Campbell Road, from Camnora Ltd. Brad Elmore of NewQuest Properties and John Leggett of Leggett Properties represented the seller, a partnership that includes several investors who live in Spring Branch. The site, originally planned for townhome development, will be used for the expansion of Northbrook High School. PBK is the architect for the project, while Satterfield & Pontikes will handle construction.
Mond Properties purchased a vacant 95,170-square-foot office building at 10500 Richmond Ave. David Carter and Jeff Peltier of Colliers International assisted the seller, a commercial mortgage-backed securities (CMBS) trust represented by special servicer LNR Partners. The building, which lost Worley Parsons as its sole tenant in 2018, is on five acres at the corner of Richmond and Rogerdale in the Westchase District.
Hackbarth Delivery Service leased 49,701 square feet at 1350 Salford Drive. Harper Gully with CBRE represented the tenant. Ed Bane with Bridge Commercial Real Estate represented the landlord, Stonelake Capital Partners.
Riverstone Property Management purchased an 18,643-square-foot office building at 1000 FM 1960 W. from A-K Texas Venture Capitol. David K. Meyers of NewQuest Properties represented the seller. Friedman Real Estate represented the buyer.
Othon leased 13,761 square feet at 575 N. Dairy Ashford. Gary Lawless and Dustin Cruz with Cresa represented the tenant. Steve Rocher and Kristen Rabel with CBRE represented the landlord, I-10 EC Corridor #2 LP.
Zohra and Riyaz Momin purchased a 3,380-square-foot four-plex at 415 W. Polk St. in Montrose. The buyers plan to fix up the 1930s building and rent the suites. Jojo Tharayil of Excel Realty Co. represented the buyers. Cotton Munson of Davis Commercial represented the seller, GFK Associates.
Advanced Analysis leased 7,150 square feet at Wynwood Business Park, 7245 Wynnpark Drive. Will Austin with Bridge Commercial Real Estate represented the tenant. Garret Geaccone and Boone Smith with Stream Realty Partners represented the landlord, KKR.
Associated Energy Group/AEG Fuels, a provider of aviation fuel and services, subleased 5,630 square feet at 8686 New Trails Drive in the Woodlands. Ryan Dierker of Newcor Commercial Real Estate represented the subtenant. Angela Barber and Tim Gregory of JLL represented the sublessor, ETCL Woodland LLC.
JobSparx, an employment resources firm, renewed its 2,655-square-foot office lease at 14500 Torrey Chase. Zack Wheeler with Newcor Commercial Real Estate represented the tenant. Jason Gibbons of the Finial Group represented the landlord, 14500 Torrey Chase LLC.
A little while back, I wrote about how an emerging new category of workplace alternatives are attracting attention from both the venture community and some of the commercial real estate’s biggest players.
One such company is Austin-based Swivel, which has developed an agile leasing platform and network. The startup just raised $8 million in Series A funding led by Jim Breyer of Breyer Capital (who’s also backed the likes of Facebook and Spotify). Breyer is contributing $5 million of the capital. JLL Spark, the venture arm of commercial real estate brokerage giant JLL, put up the remaining $3 million. The financing brings Swivel’s total raised to $14.6 million, according to its Crunchbase profile.
Swivel raised an $850,000 seed round in 2016 and then another $1 million in June 2017. In 2018, the company brought in another $4.8 million in what Swivel founder and president Scott Harmon described as a Seed 2 round.
The startup has been testing its model across Texas, mostly in Austin and some in Dallas and Houston.
“Everything seems to be proven right and working,” Harmon told Crunchbase News. “So we raised this round to scale up nationwide.”
How it works
Harmon founded Swivel in late 2016 with some initial incubation capital from Floodgate. He and Floodgate Co-Founder Mike Maples had started and sold a software company together in the late 1990s called Motive and decided they wanted to work together again.
They both had a passion for “simplifying the office,” Harmon said and felt like the commercial real estate office market needed to be disrupted.
So how does it work? Pre-qualified member companies can contract with Swivel’s landlord partners for turnkey office space on flexible terms with little or no upfront capital expenditure and no lease lock-in.
Landlords use the company’s agile leasing platform to backstop their leases for member companies. (I wrote about a similar startup, Landing, recently that is focused on flexible apartment leases). Using Swivel, leases are typically a 12-month commitment with a maximum of four years.
Clients are able to use Swivel’s software to configure and design the space however they want; most offices are between 3,000 and 10,000 square feet. Companies need only to give 60 to 90 days notice before moving out and they are not charged any penalties or move-out fees and don’t have to deal with subleasing.
Since its network launch in 2019, Swivel has signed up over 30 landlords representing more than 150 properties across Austin, Dallas, and Houston.
What it is and what it’s not
Harmon is quick to point out that unlike other flexible workspace operators such as WeWork or Knotel, Swivel is not a landlord. It does not lease space.
“We’re more like a VRBO for office space,” he told me. “People who own properties use our technology and platform to lease to new tenants on more flexible terms. Landlords make the money and share their profits with us.”
For example, a landlord can open up two floors in a building specifically to be listed via Swivel. They can charge a (10 to 20 percent higher) price per square foot because of the flexible terms, but it will still come out to about half the cost of a co-working space, Harmon said. The swivel will completely furnish the space, and “the building becomes more valuable,” according to Harmon.
“We work with hundreds of landlords,” Harmon said, “and we allow them to make more money by bringing a different kind of client into their building and providing a new class of service.”
Swivel is also not out to replace commercial real estate brokers, opting instead to partner with them so it saves money on marketing as well. It works out well for all involved, Harmon said.
Looking ahead
Swivel’s target market is tech-enabled companies in their growth phase, which make up about half of the tenants leasing through its platform. (It works with tenants such as Dremio, Graylog, Guideline 401k, hOp, Plivo, Samcart, TalentRobot, and Verify.)
The process is a more appealing one to tech upstarts that simply prefer a more digital process in general.
“They’re just used to the flexibility and that sort of convenience in other parts of their lives,” Harmon said.
But Swivel has also helped a number of multinational companies that require flexibility for their satellite offices.
The company plans to use its new capital primarily to expand across the U.S. in 2020. It is in talks with landlords in Boston, New York, Northern Virginia, Charlotte, N.C., Los Angeles, Salt Lake City, Utah, Denver, and San Francisco.
“Expansion cities are a finite list and expand based on how our landlord partnerships unfold,” Harmon said. “Landlord partners will determine the order and timing of opening up each market.”
For his part, Breyer believes Swivel’s business model is an ideal approach to help landlords be able to meet the evolving needs of tenants.
“As a VC, one of my mantras [to portfolio companies] is ‘don’t sign anything longer than two years,’ ” Breyer told me. “Real estate hasn’t kept up with that, as the leasing business hasn’t yet been tech-enabled, particularly in very important markets, like Silicon Valley and Austin.”
In general, he also believes flexible leases will become more and more important in general given workforce needs.
“The next generation thinks about flexibility first and foremost,” Breyer told me. “Swivel gives landlords the opportunity to attract the tenants of the future.”
Atlanta-based Stonemont Financial Group recently launched phase one of its 540-acre Southwest International Gateway Business Park in El Campo, Texas, around 60 miles southwest of Houston.
“We have officially closed on the land and completed all of our designs, and we’re in the process of breaking ground as we speak,” Stonemont Financial CEO Zack Markwell told FreightWaves during an interview Wednesday.
The new park, which could house up to 8 million square feet of industrial space, is located along Interstate 69, almost midway between Houston and San Antonio, and about 200 miles from the U.S.-Mexico border.
The first phase of construction will include two warehouses: a 125,000-square-foot distribution center and a 200,000-square-foot speculative warehouse. The park will have full intermodal and transload capabilities once completed in 12 to 15 months, according to Stonemont officials.
Vitro Chemicals, a subsidiary of Monterrey, Mexico-based Vitro, has already signed on as a tenant for the 125,000-square-foot distribution center. Vitro is one of the largest glass manufacturers in the world.
Markwell said another reason they picked El Campo was to capitalize on its location along the Kansas City Southern Railway NYSEKCS.
“We have been working with KCS for the last four to five years in finding the optimal location where we had frontage on their line and then also frontage on I-69,” Markwell said. “All of that is a very strategic location to the Houston market, but also the important markets of San Antonio, Austin, and Dallas.”
KCS’s major hubs include Kansas City, Missouri; Shreveport, Louisiana; New Orleans; Dallas; and Houston. KCS’s Mexico-based affiliate, Kansas City Southern de México (KCSM), operates across northeastern, central, southeast-central and southwest-central Mexico.
Markwell said by connecting the new industrial park to the KCS rail line, Mexico-based manufacturers can use KCS for cross-border shipping from their factories in Mexico, all the way to the park, and closer to major distribution centers in Houston, San Antonio, and Dallas.
Tenants will also benefit from customs preclearance that enables users to bypass rail and highway backups at the border crossing, as well as avoid backlogs of truck and rail traffic at existing regional parks and ports closer to the congested Houston metro area.
“Our manufacturers in Mexico are moving the border north — if you think about it that way — where they are coming from Mexico, coming to Laredo today and then breaking down and either drawing from that point or staying on and switching carriers and going throughout the United States and distributing back into Texas,” Markwell said. “What we’re doing is moving that border north to just 62 miles outside of Houston and serving it from that point.”
The park will also be part of a Foreign Trade Zone (FTZ), with additional local and state economic incentives available for tenants.
Ridgeline Property Group, an Atlanta-based commercial real estate development firm, is partnering with Stonemont to develop Southwest International Gateway, Business Park.
Pittsburg, Kansas-based Watco Companies will operate the short line railroad connecting the buildings to the KCS mainline. Houston-based NAI Partners will oversee leasing at the park.
Sempra LNG has subleased 66,772 SF at 1500 Post Oak Blvd., an office tower in Uptown Houston. Paul Penland and Graham Horton with CBRE Houston were brokers for the subtenant. Tim Relyea and Morgan Relyea Colt with Cushman & Wakefield of Texas, Inc. were brokers for the sublandlord, BHP.
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HaiDiLao Hotpot has leased 6,295 SF of restaurant space in Katy Grand at Interstate 10 and the Grand Parkway/TX 99, Houston, from NewQuest Properties. Heather Nguyen and Rebecca Le of NewQuest represented the landlord. Pierre Yu, an independent Houston broker, represented the tenant.
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Lee & Associates – Houston represented Southern Star Buske, LLC in the sale of 18 acres on Conroe Park West Drive in Conroe. Mike Spears and Trey Erwin of Lee & Associates – Houston represented the buyer.
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Bk Yale, Ltd. sold an 8,200 SF office on 0.54 acre to Cedar Street Partners, LP, 204 W. 19th St., Houston. Scott Carter with CBRE Houston was the buyer’s representative and Matthew Berry and Robbie Kilcrease, also with CBRE Houston, where the seller’s representatives.
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Pearland Group Investments has purchased 6.15 acres at 14923 Hooper Road, Pearland, from Thao Hoang. Brad LyBrand of NewQuest Properties represented the seller. Steve Dome of Marathon Realty Advisors represented the buyer.
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Othon, Inc. has obtained a new 13,761 SF office lease at 575 North Dairy Ashford in Houston. The tenant’s brokers were Gary Lawless and Dustin Cruz with Cresa. Steve Rocher and Kristen Rabel with CBRE in Houston represented the landlord, I-10 EC Corridor #2 Limited Partnership.
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Lee & Associates – Houston represented Williams Brothers Construction Company in the sale of 15.32 acres on Highway 90 in Houston. Frank Blackwood and Trey Erwin of Lee & Associates – Houston represented the seller and Stephen Schneidau with Cushman & Wakefield Houston represented the buyer, IDEA Public Schools.
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ACF Pyrotechnic, LLC, secured a lease for 13,010 SF of industrial space at 2413 South Houston in Pasadena, Texas. Doc Perrier with Finial Group represented the tenant.
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Holman Fenwick WillianUSA has renewed an office lease for 21,074 SF at 5151 San Felipe in Houston and plans to expand. Drew Morris and Jim Bell with Savills were brokers for the tenant. Jason Presley and Warren Savery with CBRE in Houston represented the landlord, Granite Barnhart Sage Plaza, LP.
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Global development and construction firm Skanska has announced that its new Bank of America Tower in downtown Houston received a three-star rating from Fitwel, a certification system for optimizing building design and operations to support human health and well-being.
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Chemical & Engineering, Inc. has renewed an office lease for 8,813 SF at 2100 Space Park Drive in Houston. Missy Downey with CBRE in Houston represented the tenant while Ace Schameus and Jenny Seckinger with Colliers were brokers for the landlord, TechTrans International, Inc.
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The Woodlands-based adWhite Marketing & Design has relocated its headquarters to the Magnolia Crossing development in Magnolia, Texas. Lease negotiations were handled by Newcor Commercial Real Estate. Ryan Dierker and Matt Gonzales of Newcor represented the tenant with the acquisition of 1,521 SF of office space at 33300 Egypt Lane.
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HRD Interests, LLC, purchased an 11,187 SF structure on .72 acre at 2409 Airline Drive, Houston, from Sam A. Messina, trustee of the Lillie G. Messina Exempt Bypass Trust. Chris Dray and Alex Wright of NewQuest Properties represented the buyer. Pam Messina of Messina Properties represented the seller.
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Newmark Knight Frank has been involved in a number of recent real estate transactions, including the following four in Houston:
Owens & Minor Distribution, Inc. has renewed a 124,044 SF industrial lease at the Owens & Minor Building, 2700 Brittmoore Road. Jim Cooksey and Adam Faulk of NKF were agents for the tenant. Outside agents came from Stream Realty Partners and G&I IX Kempwood, LLC, the landlord for the property.
Interface EAP has extended its office lease for 5,017 SF at 2424 Wilcrest Drive. Greg Marconi of NKFwas an agent for the tenant. LandPark Commercial’s agents were also involved. The landlord is Sunblossom Wilcrest 2424, LLC.
Derby Management, LLC has obtained an office sublease for 4,337 SF at 675 Bering Drive. Philip Price of NKF as an agent for the tenant. Representatives from Cushman & Wakefield were also involved. The landlord is Encino Energy, LLC.
Evergreen Shipping Agency (America) Corporation has extended its office lease for 1,451 SF at West Loop I, 6565 West Loop South in Bellaire. Garrison Efird was the NKF agent for the tenant. Others from Pacific Oak Capital Advisors and PM Realty Group were also involved. The landlord is Keppel-KBS West Loop I and II, Inc.
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HSF Affiliates, LLC, has renewed its lease for 5,686 SF at 11000 Richmond Ave., Houston. Ashley Casterlin with Davis Commercial was a broker for the tenant. Kristen Rabel, Steve Rocher and Nina Seyyedin with CBRE in Houston represented the landlord, Woodbranch 11000 LLC.
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JLL Capital Markets announced it arranged a $20 million refinancing for Sam Houston Crossing II, a 160,000 SF office property in northwest Houston.JLL worked on behalf of the borrower, Buchanan Street Partners, to secure the five-year, 4.0% loan with East West Bank. The JLL Capital Markets team representing the borrower was led by John Ream and Laura Sellingsloh.
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Parsons Mcentire McCleary, PLC, has renewed its office lease for 6,473 SF at One Riverway, Houston. Jim Bailey at Cushman & Wakefield represented the tenant. Kristen Rabel, Parker Duffie and Marilyn Guion with CBRE in Houston represented the landlord, Riverway Holdings, LP, South Post Oak.
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Hackbarth Delivery Service, Inc. has obtained an industrial lease for 49,701 SF at 1350 Salford Drive, Houston, for its new location. Harper Gully with CBRE in Houston was a broker for the tenant. Ed Bane with Bridge Commercial Real Estate was a broker for the landlord, Stonelake Capital Partners.
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Cornil-Rowan Houston Ltd. sold a 29,250 SF industrial property on 2.31 acres at 300 Bammel Westfield in Houston to Archway Properties, LP. Bill Rudolf and Kyle Golding with CBRE Houston were the seller’s representatives. The buyer represented themselves.
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Lee & Associates – Houston represented Nazar Invest, Inc. in the sale of a 7,000 SF of industrial property at 15015 Fondren Road in Missouri City, Texas. Preston Yaggi and Cameron Hicks of Lee & Associates – Houston represented the seller and Brett Dishman with Boyd Commercial, LLC, represented the buyer, Jacob Ponniah.
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Ravago Americas, LLC, sold 220,000 SF of industrial property on 175 acres at 18314 Mathis Road in Waller, Texas, to LHG Real Estate, LLC. The seller’s representative was Jim Stark with CBRE Houston.
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Coca-Cola Southwest Beverages, LLC, sold 69,908 SF of property on 6.4 acres at 5800 Surrey Square in Houston to Industrial Fabrics, Inc.
The seller’s representatives were Brendan Lynch, Darin Gosda and Glynn Mireles with CBRE in Houston.
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The Nancy Davis Kimbrell Trust sold 9.34 acres of land on Karalis Road in Houston to The Square. Darin Gosda with CBRE Houston was the seller’s representative. The buyer’s representative was Srini Gogineni with Prime Gain Realty. CBRE also handled the sale of nearly 10 acres to an adjacent ownership group.
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Partners recently arranged a 13,817 SF office lease renewal for planned expansion at Advance Energy Partners, LLC, 11490 Westheimer Road in Houston, Partners’ Dan Boyles represented the tenant while the landlord, Hertz Westchase Park Plaza, was represented by Kurt Kistler at Moody Rambin.
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Panjwani Energy Properties, LLC, has purchased a 0.43-acre tract at 5410 Laird St., Houston, from Little Gear LLC. Chris Dray of NewQuest Properties represented the landlord in the direct deal.
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Quail Corner, LLC, sold 7.61 acres of retail property at 2120 Texas Parkway in Missouri Center, Texas, to JTRE Holdings, LLC, which plans to redevelop the shopping center. Buyer representatives were Brian Ashby and Sydney Dixon with CBRE Houston.
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Phenix Salon Suites has obtained a new lease for 6,950 SF at 947 Gessner in Houston. Brian Ashby and Sydney Dixon with CBRE Houston represented the tenant. Brooks Shanklin with Edge Realty Partners represented the landlord, Blex Exchange, LP.
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Real Estate Transactions Elsewhere in Texas
NAI Partners Austin recently arranged a 2.78-acre land purchase for Spark Root Development & Construction at 8534 S. Congress Ave. in Austin. NAI Partners’ Troy Martin represented the buyer. Joe Willie McAllister of McAllister & Association represented the seller.
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NAI Partners San Antonio recently arranged the sale of more than 350 acres across two transactions. In the first, NAI Partners’ Brett Lum represented the seller in a 93.244-acre sale for SA Round Rock, LLC, at Green Valley Road in Cibolo, Texas. In the second, Partners’ Brett Lum and Carlos Marquez represented the buyer in a 260.22-acre sale for Oelkers at Country Road 445 in Hallettsville, Texas.
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Angela Chen, an associate in the retail division at Henry S. Miller Brokerage, and Jim Turano, an executive in the Office division, represented Walnut Hill McArthur, LLC, in the purchase of a 19,952 SF, one-story office building at 1320 West Walnut Hill in Irving. Tyler Maner and Tim Terrell with Stream Realty represented the seller, Walnut Hill Property, LP. The buyer is an acupuncturist and plans to convert the building into a comprehensive and integrative alternative medical center.
HOUSTON, Feb. 12, 2020,/PRNewswire/ — A joint venture of Patrinely Group, USAA Real Estate, and CDC Houston, today announced the start of construction on Hewlett Packard Enterprise’s (HPE) new campus. Located in Spring, Texas, this development will house the fourth major corporation to choose CityPlace at Springwoods Village, joining HP Inc. (HPI), Southwestern Energy (SWN) and the American Bureau of Shipping (ABS).
Scheduled for completion in spring 2022, the HPE development will consist of two buildings located at the southwest corner of East Mossy Oaks Road and Lake Plaza Drive and include approximately 440,000 square feet of rentable space. The two, 5-story buildings will have a bridge connector at each level for easy accessibility and structured parking for 2,055 cars.
“Breaking ground on HPE’s campus is another major milestone reinforcing CityPlace as the most important and vibrant, 18-hour mixed-use destination in north Houston,” said Robert Fields, President, and CEO of Patrinely Group, the managing partner of the joint venture. “2019 was a significant year with the opening of ABS headquarters, the HP Inc. campus, Star Cinema Grill, 24 Hour Fitness, and two Class A multi-tenant buildings, CityPlace 1 and 1401 Lake Plaza Drive.”
Within the HPE campus, amenities will include a fitness center, café, kitchen and pharmacy, laboratory and office space, and a large central courtyard with a multi-use basketball pavilion, fitness/yoga lawn, water feature, outdoor tables, seating and games, and a large green space lawn. Adjacent to HPE’s main conference center will be a green roof terrace. The development is planned to achieve LEED Silver certification.
A primary location for core research and development, the HPE Houston site will support customer engagement, sales operations, supply chain, and other global functions for the company including finance, HR, and marketing.
Antonio Neri, President, and CEO of Hewlett Packard Enterprise stated, “We are very excited to be breaking ground in CityPlace for our new Houston office. This bright and vibrant workspace we’re constructing will excite our team members with world-class amenities, and features design elements that bring our teams closer together to further inspire innovation and our culture.”
Pickard Chilton is the design architect; Kirksey is the executive architect; REES is the interior architect; D.E. Harvey Builders is the general contractor. Ronnie Deyo, John Roberts and Beau Bellow of JLL represented HPE. Dennis Tarro of Patrinely Group, and Chrissy Wilson and Russell Hodges of JLL represented the Landlord.
“With today’s announcement, it is clear that major employers are recognizing the benefits of Springwoods Village’s location and its high quality, walkable, mixed-use environment as we continue to create an unparalleled new employment hub,” said Warren Wilson, Executive Vice President of CDC Houston, the master developer of Springwoods Village.
CityPlace is a 60-acre, fully-integrated, mixed-use development providing the growing area along the Grand Parkway corridor near the ExxonMobil campus with a new destination of choice, integrating working, shopping and living. When fully developed, the project will include a full-service Houston CityPlace Marriott, 8 million square feet of Class A office space with 500,000 square feet of integrated retail space and additional luxury multifamily projects. The development’s five to 10-story Class A office buildings will offer parking at a ratio of up to 4.5 cars per 1,000 rentable square feet, with spaces located in all structured parking. CityPlace is the commercial center of Springwoods Village, a 2,000-acre master-planned community. For more information about CityPlace at Springwoods Village visit www.cityplacespringwoods.com
Springwoods Village is a 2,000-acre sustainable master-planned community coming to life in Spring, just south of the Woodlands and 20 miles north of downtown Houston. The community is a new model of sustainability and greener living for the Houston region, preserving its natural ecosystems, building energy smart homes, and reducing dependence on the car by providing a walkable mix of retail, dining, offices and public amenities. The community is home to ExxonMobil, HP Inc., ABS, and Southwestern Energy corporate campuses, several residential communities, a Kroger-anchored retail center, 290 acres of green spaces, including a 150-acre Nature Preserve, and more. When completed the sustainable residential and commercial community will provide diverse housing options, civic facilities, outdoor recreation and the 60-acre CityPlace with office space, shopping, dining and lodging in a walkable environment.
Commercial property values in Houston should trend upward in 2020, as the region’s positive job growth will increase demand for development opportunities, according to Houston-based valuation firm Deal Sikes. Bisnow/Catie Dixon Matthew Deal and Mark Sikes DATACENTER INVESTMENT CONFERENCE & EXPO (DICE) SOUTH 2020 APRIL 9, 2020 | REGISTER NOW FEATURED SPEAKER ROMELIA FLORES Distinguished Engineer & Master Inventor, IBM “Houston’s commercial real estate values will be on a solid upswing in 2019,” Deal Sikes principal Matthew Deal said. “With Houston expected to gain population significantly in the next decade, the long-term forecast must include rising property prices that will be very impressive over the long haul.” The firm said rising land prices have pushed industrial development farther away from the center of the city, and outer suburban land prices have increased accordingly. But that hasn’t stopped development: More than 15M SF of warehouse and industrial space is under construction in the greater Houston area, the firm said. Meanwhile, property values in the urban core remain strong, as developers and builders locate buildings for redevelopment, or seek sites that are appropriate for new construction. “Multifamily construction is strong in Houston and researchers report more than 25,000 units are now under construction, although the pace is expected to be slightly more moderate in 2020 as the new inventory is absorbed,” principal Mark Sikes said. “Investor demand is good and multifamily valuations have not yet peaked in most submarkets.” Though newer office buildings and Class-A towers under construction are leasing briskly, Houston’s office market is its most sluggish sector, according to the firm. The energy industry — a juggernaut in Houston’s leasing arena — is in the midst of a downturn, which is hurting growth. The healthcare sector is faring better. The firm identified the Texas Medical Center as a source of growth for Houston, pointing to the expansion of several hospitals and research facilities. “Although there are a few exceptions, the real estate market in Houston is headed for another good year,” Sikes said. “The region’s economy is healthy and although the energy industry is in a lackluster period, the overall economic outlook is outstanding.”
Houston’s office market is bracing for another tough year as the energy industry shrinks in the face of lower oil prices, which dipped this week to their lowest level in more than a year.
“It remains a tenant’s market,” Lucian Bukowski, an executive vice president with CBRE, said. “I see that continuing.”
Oil companies, which have been steadily cutting costs and laying off workers, account for more than 30 percent of the local office market, said Bukowski, who represents companies looking for space. Demand is falling among other industries, as well. Leasing activity last year was down 17 percent from the previous year, CBRE data show.
That all amounts to a harsh reality for landlords carrying empty office space, and there are a lot of them. The vacancy rate for so-called Class A buildings — the newest properties with the most amenities — was 17 percent at the end of last year, the highest it’s been since at least 1992.
Large blocks of empty space fill skyscrapers from the city center to the suburbs. One of the former Anadarko towers in The Woodlands will be vacant by next month. The company was acquired by Occidental last year and employees are being consolidated.
Bob Parsley, co-chairman and principal in the Houston office of Colliers International, which is leasing the building for owner Howard Hughes Corp., said there’s been a strong interest in the tower.
“We were frankly very happy to get this building into the Howard Hughes portfolio because we didn’t have much space to lease,” Parsley said. “That market is tight up there.”
Jobs added – elsewhere
While certain submarkets have done better at controlling inventory, vacancy market-wide ended the year at 19 percent, well above the 10-year average of 15.3 percent, CBRE’s data show. Combined with sublease space, overall vacancy jumped to 22 percent across Houston.
Energy tenants are critical to the local office market. Yet employment in the industry is shrinking.
Houston is expected to gain 42,000 new jobs this year, but it will lose 4,000 in the energy sector, according to the Greater Houston Partnership.
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The energy sector won’t be a significant driver of demand for potentially years, said Patrick Duffy, president of Colliers International in Houston. Growth in 2020 is expected to come from health care, government, accommodation/food services, and construction, yet many of those companies are not big enough to lease the large blocks of space currently on the market.
“A huge medical deal is 100,000 square feet. A big law firm is 60,000, 70,000 square feet. And we need to take down millions of square feet,” Duffy said.
Houston is a roughly 213 million-square-foot office market. It could be a decade before the market returns to equilibrium, meaning anywhere from 11 to 13 percent occupancy, Duffy said.
“That’s assuming we don’t build a lot more and we don’t have a recession,” he said.
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Companies shopping for space today have leverage. Landlords are offering free rent, parking discounts, and generous tenant improvement allowances. Annual per-square-foot asking rents in Class A buildings range from $32.20 in the suburbs to $54.67, according to Colliers.
Bukowski, speaking at a commercial real estate market briefing last week, said landlords generally make money when their buildings are 85 percent to 90 percent leased.
Houston has 82 buildings with at least 100,000 square feet of space available. Twice as many buildings have at least 50,000 square feet up for grabs.
That’s why so many property owners are making improvements. Even Williams Tower, one of the city’s most prestigious office buildings, is undergoing a lobby facelift.
While the major energy players aren’t expanding — and are increasingly looking for ways be more efficient within their buildings — smaller, more entrepreneurial business is growing, said Griff Bandy, a partner with commercial real estate firm NAI Partners.
Bandy recently represented XCL Resources, a private oil, and gas firm, in a lease for 16,328 square feet at M-K-T, a new adaptive reuse project in the Heights. JLL is representing the landlord, a partnership of Radom Capital and Triten Real Estate Partners.
The development includes a collection of industrial buildings that are being repurposed to house offices, shops, restaurants and health, and fitness concepts.
Bandy and others said companies are looking for spaces that will wow potential employees and help retain the ones they have. To that end, new mixed-use developments and downtown towers with an abundance of amenities are winning out.
Colliers data show Houston office buildings constructed after 2005 have an 11 percent vacancy rate.