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.
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.
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.
High Street Logistics Properties purchased the Beltway North Commerce Center, a Class-A, cross-dock industrial distribution center. Courtesy of JLL Beltway North Commerce Center The Beltway North Commerce Center comprises 353K SF and was completed in 2015. In addition, the property is fully leased by Air General, a national cargo handling company, and DB Schenker, a worldwide logistics company. The facility features 32-foot clear heights, 100 dock-high doors, 68 trailer spaces, LED lighting and LEED certification. JLL’s Trent Agnew, Rusty Tamlyn, Charlie Strauss, and Katherine Miller represented the seller, Nuveen Real Estate. The buyer, High Street Logistics Properties, represented itself. PEOPLE Chris Martin joined Levey Group as director of construction. Martin will oversee the construction of the company’s development projects. CBRE promoted Peter Mainguy to senior managing director and market leader for the company’s Houston office. Mainguy will oversee all Advisory Services lines of business and drive strategic initiatives and growth in the Houston market. Josh Ling joined Chamberlain Hrdlicka’s Houston office as an associate with the Tax Planning & Business Transactions group. Cody W. Johnson joined National Signs as CEO. The company is a Houston-based, national provider of signage and architectural accents. Julius Lyons also joined National Signs as vice president of operations. Lyons will oversee all aspects of the company’s engineering, permitting, project management, manufacturing, and installation. The Association of Commercial Real Estate Professionals announced the officers/directors for the 2020 board. Keith Holley of Method Architecture has been named president, while Tyler Ray of WGA Consulting Engineers has been named president-elect. SALES Courtesy of Newport Real Estate Partners The Fountains on the Bayou Newport Real Estate Partners has purchased The Fountains on the Bayou apartment community in the Southbelt/Ellington area, near Hobby Airport. The 460-unit, the 31-building apartment community will undergo significant renovation, maintenance, and rebranding. The asset will be renamed Valencia Grove Apartments. Newport Real Estate Partners’ Matt Wilson and Jack Franco represented the company, while Nitya Capital was the seller. A private investor purchased Miramesa Town Center in Cypress. The property comprises 13K SF and is a fully leased, multi-tenant strip center. JLL’s Ryan West, John Indelli and Ethan Goldberg represented the seller, Read King Commercial Real Estate. Also working on behalf of the new owner, JLL placed the five-year, fixed-rate, balance-sheet loan with a local credit union. JLL’s Michael Johnson and Tolu Akindele represented the owner in that process. MLG Capital purchased a 10-property workforce housing portfolio, comprising a total of 2,769 Class-B units in Houston, Oklahoma City, and Tulsa. Four of the properties are located in Houston. The seller, The RADCO Cos., was represented by CBRE’s Shea Campbell, Colleen Hendrix, and Ashish Cholia. They partnered with Clint Duncan and Matt Phillips in Houston and Brian Donahue in Oklahoma. Lone Star Auto Parts purchased a speculative warehouse at Clay Commerce Park. The 18.5K SF property comprises a building that is one of 11 concrete tilt-wall warehouses within The Warehouses at Clay Commerce Park, a joint venture development of Insite Realty Partners and The Urban Cos. Insite Realty Partners represented the seller, Westfield Commerce Center, while Walzel Properties’ Hua Tian represented the buyer. Morgan Group purchased The Beacon at Buffalo Pointe, a 281-unit, Class-A apartment community near the Texas Medical Center. The four-story, mid-rise property was completed in 2017. JLL procured the buyer, while JLL’s Chris Curry, Todd Marix and Bailey Crowell represented the seller, Allied Orion Group. Sonic Automotive Group purchased a vacant property that previously housed Porsche North Houston. The property comprises 2.27 acres and contains a 14.9K SF structure. The buyer represented itself, while NewQuest’s David Luther and Morgan Hansen represented the seller, indiGO Auto Group. Trammell Crow Residential purchased two parcels of land totaling 14.43 acres to develop 350 units of Class-A, garden-style apartments off Spring Cypress Road in northwest Houston. Dosch Marshall Real Estate was engaged to locate the land and assisted Trammell Crow Residential in purchasing the site. LEASES Courtesy of Parkway San Felipe Plaza at 5847 San Felipe St. in Houston P.O.&G. Resources leased 9.7K SF of office space in San Felipe Plaza. NAI Partners’ Dan Boyles and Michael Mannella represented the tenant. Parkway’s Rima Soroka and Eric Siegrist represented the landlord. FINANCING JLL has arranged a $20M refinancing for Sam Houston Crossing II, a 160K SF office property in northwest Houston. The property comprises a three-story office building and is fully leased to three tenants. JLL’s John Ream and Laura Sellingsloh represented the borrower to secure a five-year, 4% loan with East West Bank.