HOUSTON – (Realty News Report) – The 1801 Smith tower in downtown Houston has been sold, ending a long period of inactivity in the capital markets.
The 20-story office building was acquired by John Quinlan, an attorney and investor who also owns the neighboring 500 Jefferson building.
The seller was DRA Advisors. The 458,000-square-foot office tower, originally completed in 1972, was formerly known as 600 Jefferson.
Quinlan paid about $45 per square foot, roughly $20.6 million, for the property.
Known variously as 600 Jefferson or 1801 Smith, the tower has struggled with vacancy for several years. Tenants left as downtown Houston evolved — the Cullen Center Bank & Trust departed long ago, back when Smith Street served as Continental Airlines’ headquarters and the “Crooked E” monument stood in front of the Enron building.
At one time the property was called Continental Center II. That legacy era faded further in 2019 when United Airlines, which occupied about 43,000 square feet, moved out. After United’s departure, the tower’s occupancy slipped below 40 percent and continued to decline.
The situation worsened when the Houston Fire Department vacated the building on April 1, 2021, reducing occupancy to approximately 15 percent. The fire department relocated across the street to Quinlan’s 500 Jefferson property.
The pandemic has compounded leasing challenges for office buildings, making it difficult to attract new tenants. A recent $11 million renovation significantly improved 1801 Smith’s appearance and lobby areas, but overall market conditions have remained weak across Houston’s office sector.
According to a recent report from NAI Partners, Houston’s citywide office vacancy rate stood at 23.9 percent in February, up from 21.8 percent a year earlier. Given the soft market and the building’s modest acquisition price, 1801 Smith can compete by offering lower rental rates to prospective tenants.
Located in the southern portion of downtown, the 1801 Smith tower was originally part of the Cullen Center, a 12-acre urban office development announced in 1959 by Hugh Roy Cullen.
April 3, 2021 Realty News Report Copyright 2021
Caption: The 1801 Smith tower in Downtown Houston has been sold. Photo credit: Ralph Bivins, Realty News Report Copyright 2021.
File: Downtown Houston Tower Sold for $20.6 Million
For more on Houston development, see the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins.