MetroNational Office Project on Hold, but President Jason Johnson Not Worried About Memorial City’s Future
By JEFF JEFFREY
HOUSTON – Houston-based MetroNational’s plans to build a nine-story office tower in Memorial City are on hold as a result of the ongoing Covid-19 coronavirus pandemic. But company President Jason Johnson said there are reasons to remain optimistic about the prospects for new office buildings in Houston — at least in certain parts of the city.
Johnson told the Houston Business Journal that Memorial City in west Houston is ideally positioned to bounce back on the office front, once the pandemic recedes.
And he’s prepared to put his money where his mouth is.
Johnson expects MetroNational’s planned nine-story office tower at 9753 Katy Freeway to move ahead once the building environment returns to a less volatile state. Construction crews broke ground on the project earlier this year, only to put it on hold once Covid-19 hit.
“Regarding the office component, we’re taking a pause on that one so we can see what the office environment looks like in the coming months,” Johnson said. “We made that decision because we all agreed that to come out of the ground with a project costing millions at a time when we don’t know what the environment is going to look like was not a prudent decision.”
One of the concerns with moving ahead with an office project was that no one knows whether Covid-19 will change how companies use offices in the future, Johnson said.
“Everyone has gotten comfortable staying home and doing what is best for their family,” Johnson said. “If you want camaraderie and collaboration among your staff, people are going to need to come into the office. But we might see people coming into the office one time a week or three times a week. We just don’t know.”
The office tower is part of Houston-based MetroNational’s latest mixed-use development, which is anchored by a 25-story luxury multifamily tower known as The McKinley.
The office building was designed as a 190,000-square-foot Class A building space, with 21,000-square-foot floor plates.
Building plans include retail and restaurant space on the first floor. Additional features will include a two-level lobby with public Wi-Fi, seating and conference rooms as well as a second-level skybridge connecting to a gated, elevated parking garage.
Houston-based Kirksey Architecture designed the building. Permits issued by the city of Houston say that Houston’s Anslow Bryant was to serve as general contractor.
While the office project might be on ice for the moment, Johnson said Memorial City’s office market is better prepared than most parts of the city for a return to pre-Covid-19 levels of leasing activity.
“I’m really pleased with what Texas is doing, in general, and what Houston, in particular, is doing with bringing new companies to town,” Johnson said. “We have always felt that by being a dense urban core that is outside of the (central business district), we benefit from having all of the restaurants and retail and things people want with a much shorter commute. As companies start wanting to have employees return to work when it’s safe to do so, it’s a lot easier for them to do that if they have a 20-minute commute versus a 45-minute commute.”
Even before the outbreak of Covid-19, the Katy Freeway area of Houston was among the strongest markets in the city for office leasing.
During the first quarter of 2020, CBRE reported that the area boasted a vacancy rate of just 9.7%. That rose to 12.8% during the second quarter, according to CBRE’s latest report, which captured the initial impact of Covid-19.
Compare that to the citywide average vacancy rate of 21.4%, CBRE reported earlier this month.
“Because of our location, we benefit from being in an area that is in close proximity to everything employees might need to do during the day, whether it’s shopping or getting food or obtaining medical treatment,” Johnson said. “The commute from places like Katy, Jersey City and Sugar Land is much easier. And the schools are great. These are all the kinds of things companies looking for office space want.”
MetroNational is also looking for ways to improve the convenience of office life that might not have existed prior to Covid-19 or that might not have been nearly as ubiquitous, Johnson said.
“We’re looking into all sorts of technology to make deliveries easier or video conferencing easier,” Johnson said. “If there are things our tenants want to get done from a tech standpoint, we’re looking into those as well. We’re doing the best we can to get out in front of that for all of our asset types.”
Meanwhile, the multifamily component of The McKinley project remains on schedule, Johnson said.
MetroNational recently topped out construction on the 25-story, 332,231-square-foot residential tower at 9757 Katy Freeway.
The building’s leasing office is scheduled to open during the second quarter of 2021, Johnson said.
The tower will offer 278 one-, two- and three-bedroom apartment units. The building’s top two floors will be dedicated to deluxe penthouse units. Anslow Bryant is serving as general contractor. The project’s fee developer is Houston-based Slate Real Estate Partners.
Elsewhere in Memorial City, construction crews recently began demolition work on the building that was once home to Memorial City Mall’s Sears location.
Johnson said MetroNational is still in the planning stages of determining what will be developed in its place.
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