HOUSTON – (Realty News Report) – A major redevelopment is planned for the 17-story downtown office building at 1111 Fannin after its recent acquisition by Triten Real Estate Partners and Taconic Capital Advisors.
“1111 Fannin represents one of the best redevelopment opportunities in downtown Houston,” said Scott Arnoldy, Managing Partner at Triten Real Estate Partners, a Texas-based firm. “We have selected HPA Architecture of Chicago to help us conceptualize the building’s potential. HPA has experience with notable creative office developments and redevelopments nationwide, including headquarters work for major technology companies. We look forward to working with HPA to design an environment that responds to the rapidly changing needs of the market.”
For decades JP Morgan was the sole tenant at 1111 Fannin; its lease expires in September 2021.
The building totals 428,629 square feet and was marketed by JLL Capital Markets.
Within the real estate community, early speculation placed the expected sales price around $49 per square foot. Ownership had previously been controlled by Greystone’s special servicing unit. Triten’s final purchase price was not disclosed, as disclosure is not required under current Texas law.
Sales Price – Possibly Below $20 Million
Investment sales in Houston slowed after the pandemic, and the sale price for 1111 Fannin may have been below $20 million.
Arnoldy noted: “…importantly our basis will allow us to offer a completely unique experience at a dramatic discount to current market rents. It’s also an attractive option for any user looking to control their own environment.”
One valuable asset of the tower is its redundant power infrastructure, including multiple large generators—a necessity for a bank tenant that requires uninterrupted electricity.
The building features roughly 31,500-square-foot floor plates.
The JLL Capital Markets team representing the seller was led by Senior Managing Director Dan Miller, Senior Director Martin Hogan and Analyst Ethan Goldberg.
The sale of this Houston building will provide appraisers with a contemporary comparable transaction in a market that shifted dramatically in 2020. Investors are aware that distressed properties could appear more frequently as the economic downturn continues. The Houston office market has been hit hard by the twin impacts of COVID-19 and persistent weakness in the energy sector, producing elevated vacancy levels.
Located at the corner of Fannin and Dallas streets and built in 1971, 1111 Fannin benefits from a variety of nearby amenities. It sits across from Midway’s GreenStreet mixed-use development, which includes an upscale Life Time fitness center, and is adjacent to the 225-room Hotel Alessandra. The building is also one block from the 200,000-square-foot Shops at Houston Center and within a few blocks of additional hotels, multifamily housing and the notable Discovery Green park.
JPMorgan Chase is relocating to another downtown building a few blocks away. Earlier in the year the bank leased 250,000 square feet in Hines’ new 75-story office tower at 600 Travis Street, one of the largest downtown leases in years. That move, however, created a substantial vacancy at 1111 Fannin.
Now it falls to Arnoldy and his partners to fill that vacancy and to inject new momentum into downtown Houston as the market works to recover from the setbacks of the COVID era.
Dec. 1, 2020 Realty News Report Copyright 2020
Caption: The 1111 Fannin building. Photo: By Ralph Bivins, Realty News Report.
File: Tower Sold for Redevelopment
File: (2) JLL. Dan Miller. Marty Hogan. JP Morgan Chase. Downtown Tower Sold for Redevelopment 12-1-20