HOUSTON – (Realty News Report) – Investors have acquired an office building in West Houston’s Energy Corridor, one of the region’s most recognized and active submarkets.
“The tide is turning rapidly in the Energy Corridor; demand is growing significantly from both tenants and investors alike,” said Rick Goings, Senior Director of JLL Capital Markets, which represented the seller, USAA Real Estate. “At 94 percent leased, the sale of Park Ten Plaza represents the first stabilized multi-tenant office sale in the Energy Corridor in two years. The depth of the buyer pool is robust for this investment profile.”
Houston-based Fuller Realty Partners and ICP Funds purchased the asset. JLL also assisted the new owners in securing a loan through East West Bank.
Park Ten Plaza is a 158,000-square-foot Class A office building located at 15115 Park Row in the Energy Corridor.
The property sits within Park 10, a 550-acre, master-planned business center developed along the interstate by Wolff Companies, a Houston developer led by David Wolff. Wolff, who has a long history of developing and marketing land in Houston, is credited with coining the name “Energy Corridor.”
With a reputation that extends to the Middle East and other global markets, the Energy Corridor has long housed the offices of hundreds of energy-related companies, including Exxon, Shell and BP.
More than a decade ago, office occupancy in the Energy Corridor exceeded 95 percent, prompting developers to deliver significant new office projects. However, a sharp decline in energy prices—marked by a notorious OPEC meeting held on Thanksgiving Day 2014—set the market on a downward trajectory. Houston energy firms reduced staff and downsized office footprints as oil prices fell.
By the first quarter of 2022, office availability in the Energy Corridor had climbed above 30 percent, according to Houston real estate experts. More than 6 million square feet of office space stood vacant, with an additional roughly 1.5 million square feet offered as sublease, per a year-end CBRE report.
Oil prices have since rebounded. West Texas Intermediate crude traded near $102 per barrel on Friday; by contrast, in April 2020 prices briefly plunged below zero for a single day.
While some observers in Houston argue that energy companies will not expand their office footprints regardless of oil prices, Realty News Report forecasts that $100-per-barrel oil will help restore positive momentum to Houston’s office market. In a commentary published April 15, 2022, Realty News Report suggested the Houston office market had reached its bottom and was beginning to recover.
Another sign of improving market sentiment: a never-occupied Energy Corridor office building, completed in 2015 and vacant since construction, was sold to a Los Angeles commercial real estate firm. BH Properties plans to renovate the 128,000-square-foot Mason Creek II and make it available to tenants for the first time after seven years of vacancy.
April 22, 2022 Realty News Report. Copyright 2022.
JLL deal participants: The JLL Capital Markets investment sales team representing seller USAA was led by Senior Director Rick Goings, Managing Directors Kevin McConn and Marty Hogan, and Analyst Jack Moody. On behalf of the borrower, Managing Director Cameron Cureton and Senior Managing Director Wally Reid led the JLL Debt Advisory team.
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Image: Courtesy JLL
File: Energy Corridor Building Sold. USAA