Houston Office Tower Breaks Ground, Market briefs

In Houston, Stonelake Capital is starting construction on 100 Park Place, one of a handful of new office projects to break ground in recent years.

The project is slated to be a 17-story structure with about 250,000 SF of office space above ground level retail and several layers of parking.

The building will be another phase of a Stonelake Capital development along Westheimer Road near Mid Lane, just west of the Highland Village shopping center and east of the River Oaks District center.

Chrissy Wilson, executive vice president at JLL, which is leasing the new tower, said the initial response from the market has been promising because new office space is a rarity in the Galleria area. Matt Pruitt of JLL is also working on leasing the new building, which is scheduled to be delivered in the first quarter of 2028.

Although most lenders require 50% preleasing on new office developments, Stonelake Capital is starting 100 Park Place as a spec project.

Bank OZK, formerly known as Bank of the Ozarks, is financing the new building. The Arkansas-based bank is also financing a Dallas office tower where Stonelake Capital recently broke ground at 2626 McKinney in the Dallas Uptown district.

The new 100 Park Place building, which has been listed as 4100 Westheimer Road, will stand next to 200 Park Place, a Stonelake Capital project that was completed in 2022.

The new 100 Park Place building, standing 17 stories tall, will be two stories taller than the existing 15-story 200 Park Place.

Hines Global Income Trust purchased 200 Park Place for $145 million in 2022. The building was 100% leased at the time of the sale and the JLL real estate firm itself is one of the tenants

The Current State of Affairs

A number of Houston developers have building plans at the ready, even though construction costs are rising, the cost of steel, copper, and other building materials and the price of diesel fuel have skyrocketed since the Iran war began.

Does it make sense to build new office towers in a city with high office vacancy? Most reports say citywide vacancy is about 25%.

But for companies that want new, top-notch office space with amenities and great restaurants, the market is tight. A recent report from CBRE said the vacancy in Houston’s best “Trophy Class A+” office buildings is 11.7%.

For example, Downtown Houston’s 47-story, 1 million-SF Texas Tower was completed by Hines in December 2021. Today, it is 99% leased.

Only a handful of new office buildings are in the Houston construction pipeline today.

A new 127,000-SF building is in progress in Autry Park near Shepherd Drive and Buffalo Bayou, but it’s 95% pre-leased. And Southern Land is developing about 100,000 SF of office on Kirby Drive, just south of Westheimer. In addition, there are a few buildings in progress that are already leased or custom-built for single companies, including the new Service Corporation Inc. (SCI) headquarters on Allen Parkway.