Commercial real estate brokers working in Houston’s already struggling office market were hit by yet another challenge when the coronavirus pandemic took hold in the city.

But some are viewing it as an opportunity to reconnect with clients.

Like many business professionals in this time of coronavirus, real estate brokers have become well versed in making video calls from their homes.

“Right now, many clients just want to hear a friendly voice or see a friendly face while they’re stuck at home,” said Taylor Wright, a vice president on the occupier advisory team in Colliers International’s Houston office.

Wright said the number of leases being signed has fallen sharply in recent weeks as both tenants and landlords struggle to determine the degree of COVID-19’s impact on their businesses. But deals are still getting done.

One of Wright’s clients recently signed a lease for a significant amount of space, and he has been hired to handle another lease for a client looking to move into a new space. However, most of the deals that are closing are renewals, he said.

With in-person tours of office space off the table thanks to social distancing mandates, Wright said most clients are holding off on making moves. Add to that the financial uncertainty created by the combination of COVID-19, plummeting capital markets and dismal oil prices, and many businesses are focusing on keeping cash in reserve, rather than paying for costly office build-outs.

That said, Wright views the current state of affairs as a chance to check in on clients on a personal level, without having business get in the way.

“Most of the time, we’ll talk about what they’re watching on Netflix and whether they’ve seen something we haven’t,” Wright said. “No one knows what the impact of all of this uncertainty will be. Sometimes, it’s just nice to see how people are doing.”

The blow to Houston’s office market caused by COVID-19 couldn’t have come at a worse time.

With office vacancies hovering around 20 percent, the market had already shifted heavily in favor of tenants. That has left landlords and property owners scrambling to launch costly remodel projects in order to compete with new, high-end buildings coming online. Many of those projects were already underway when COVID-19 hit.

The largest office project underway downtown is Houston-based Hines’ Texas Tower, which is slated to open at 845 Texas Ave. in late 2021. The 47-story, 1.1 million-square-foot tower is already 38 percent preleased. Law firm Vinson & Elkins has agreed to lease 214,000 square feet, Hines will occupy 155,000 square feet, and law firm DLA Piper is taking a 31,000-square-foot floor.

But even with the challenges facing the market, brokers still have a role to play, Wright said.

“The biggest thing a real estate professional can be right now is a resource for clients who just need information in an uncertain business climate,” he said “Being able to provide knowledge of what the terms of a lease are or where the opportunities are can be a huge benefit for clients right now.”

Houston-based Stage Stores Inc. (NYSE: SSI) had its own set of struggles even before the coronavirus pandemic brought much of the retail sector to a halt.

Now, the department store owner is taking steps to significantly scale back operations to reduce costs and preserve liquidity, according to a press release.

The stage has temporarily closed all of its 738 stores as of Friday, March 27. Previously, about 393 stores were closed in compliance with state and local regulations, while the others primarily were located in smaller markets and were operating under reduced hours.

The company operates specialty department stores under the Bealls, Goody’s, Palais Royal, Peebles, and Stage brands as well as the Gordmans off-price brand.

Virtually all employees in stores, field support roles, and distribution centers have been furloughed until further notice. Effective March 29, 87 percent of employees at Stage’s Houston Support Center also will be furloughed. There are 80 key employees who are not subject to the furlough because they perform essential functions, though the release did not specify what or where those roles are. Furloughed employees will not be paid, but they will keep their health and welfare benefits.

Members of the executive leadership team will temporarily have their pay reduced by at least 25 percent effective March 29, and the board of directors members will not be compensated during this period. The end of the pay-cut period has yet to be determined.

In 2018, President and CEO Michael Glazer’s base salary was more than $1.04 million, and his total compensation including stock awards was over $3 million, according to the most recent proxy statement Stage filed with the U.S. Securities and Exchange Commission. The only other named officers in the proxy were Thorsten Weber, executive vice president and chief merchandising officer, and Steven Hunter, formerly executive vice president and COO of Gordmans, who left the company in July 2019, according to a separate filing. Webster received a 2018 base salary of $522,692 and total compensation of more than $1.25 million, and Hunter received a 2018 base salary of $478,461 and total compensation of $872,867. The stage has not yet filed its proxy statement with 2019 compensation.

“With the health and safety of our associates and guests as our top priority, we are taking difficult but necessary actions in a challenging market and in the face of the unprecedented COVID-19 situation,” Glazer said in the March 27 press release. “We are grateful to all of our associates for their dedication and commitment to serving our guests.”

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 propertiesAshley 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.

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