HOUSTON – (Realty News Report) – Younan Properties, a Los Angeles–based investor focused on Houston real estate, has acquired a 10-story office building on Westheimer Road, marking its second recent purchase in the city.
“This is our second large acquisition in the Houston market in less than two months. We are highly active in the Houston market due to the current market cycle and upside potential during the recovery,” says Younan Properties Chairman Zaya S. Younan.
Younan acquired the 232,000-square-foot Royal Oaks Centre office building in the Westchase District of west Houston. The property, at 11490 Westheimer at Woodland Park Drive, had been owned by California-based Hertz Investment Group since 2017.
Danny Miller, head of Houston-based HDM Realty Advisors, represented Hertz in the transaction.
Earlier this year, Younan also purchased Two Westlake Park, a vacant 17-story, 455,000-square-foot office tower in the Energy Corridor. Bloomberg News reported the sale price of Two Westlake at $19.25 million. Younan previously owned the Two Westlake building and sold it to KBS Realty Advisors in 2011 for $80 million. The recent repurchase, after a decade and at a significantly lower price, presents an apparent bargain despite the building currently being vacant.
Office investment activity in Houston slowed considerably in 2020, and while foreclosures remain uncommon today, the market faces elevated vacancy and limited availability of distressed assets. Madison Marquette reported first-quarter office vacancy at 22.7 percent, and roughly 4 million square feet of space became vacant last year. Still, there is not a widespread increase in distressed properties on the market for investors to buy.
Buyers of Houston office assets are likely to face strong competition and will often need to invest substantially in upgrades to attract tenants. At the same time, there is no certainty that property values will rebound quickly.
“There will be opportunities for investments, but people must be careful not to catch a falling knife,” says Andrew Pappas, managing director of Partners Capital and a shareholder in NAI Partners real estate.
April 26, 2021 Realty News Report Copyright 2021
For more about Texas real estate, see the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins.
File: Younan Buys Another Office Building in Houston