Two Energy Corridor Office Buildings Sell to Houston-Based Firm

 

By JEFF JEFFREY

HOUSTON – An affiliate of Houston-based Fuller Realty Partners has purchased two Class B office buildings in the Energy Corridor totaling 175,700 square feet of rentable space.

Fuller Parkview purchased the two buildings from LNR Partners, a special servicer of commercial mortgage-backed securities, or CMBSs. JLL Capital Markets’ Rick Goings, Rudy Hubbard and Kevin McConn represented the seller in the transaction, according to a press release from JLL. The properties were sold via a Ten-X Commercial auction that closed within the past 90 days.

The first of the two Class B office buildings, Parkview I, is located at 330 Barker Cypress Road. The four-story building, built in 1987, features 110,480 square feet of rentable space. Parkview II, a three-story building at 333 Cypress Run, features 65,220 square feet of rentable space and was built in 1986. An affiliate of Miami-based LNR has owned the two properties since November 2017, according to the Harris County Appraisal District.

Combined, the two buildings were approximately 11 percent leased at the time of sale, per JLL. The exact purchase price was not disclosed, but the Houston Chronicle reports that the price per square foot was in the mid- to high $30s, totaling somewhere between $6.2 million and $7 million. HCAD valued the two properties at $6 million and $6.67 million, respectively, for 2019.

Fuller plans to improve the properties and ask $12 to $14 per square foot in rent, not including expenses, per the Chronicle. Even with expenses, tenants could expect to pay below $20 per square foot, less than the typical $24-$27 range for similar properties in the area.

“The Energy Corridor has led Houston in leasing activity over the last two quarters, with very large long-term commitments from energy and engineering firms,” JLL’s Goings said in the release. “This portfolio is well-positioned to capitalize on the market’s upswing.”

So far in 2019, five Energy Corridor properties have been sold, including the Parkview I and II portfolio, according to JLL. The other deals were:

• Broadfield at Park Ten
• 1255 Enclave
• Eldridge Place
• 11211 Katy Freeway

Those five deals represent a combined dollar volume of $131 million, and another $270 million in building sales is projected to close before the end of the year, per JLL. That expected total of $401 million in office sales is double the dollar volume from 2018.

A recent report by NAI Partners found that the Energy Corridor has seen a decline in office vacancy rates over the past year. While the area had one of Houston’s highest vacancy rates in May 2018, the rate has fallen by 4.1 percentage points since then thanks to several corporations moving into the area.

One of the largest Energy Corridor leases signed during the past year was Houston-based McDermott International Inc.’s (NYSE: MDR) December 2018 deal to consolidate its headquarters in the Energy Center Five building at 915 N. Eldridge Parkway. The 18-story, 524,323-square-foot building was completed in 2016 and has never been occupied.

Additionally, Missouri-based Olin Corp. announced in April that it will move its Houston office into the Offices at Park Ten building at 16290 Katy Freeway. Olin has leased 54,080 square feet in the building.

However, both firms will vacate space they currently occupy in the Energy Corridor.

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https://www.bizjournals.com/houston/news/2019/06/17/two-energy-corridor-office-buildings-sell-to.html