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Dec. 17, 2012

Houston Office Market Heats Up as 3 Buildings Change Hands; Invesco Emerges as Williams Tower Buyer

By Georgiana Mihaila, Associate Editor

With Houston having already set an annual record in office sales, December closings will certainly stand as confirmation, as investors seem to be herding local properties at an unusual pace.

3555 Timmons, a 225,895-square-foot, Class A office building in Houston’s Greenway Plaza submarket, recently traded hands for an undisclosed amount. Buyer Unilev Capital Corp. acquired the 14-story building from Great Point Investors L.L.C., with Holliday Fenoglio Fowler L.P. arranging the deal.

The 272,361-square-foot Westchase Park also experienced a change in ownership, with Clarion Partners recently acquiring the Class A office building along with seven acres of adjacent land. Westchase Park, completed in 2009, is one of the newest office properties in the Westchase submarket and has been awarded a LEED Gold designation for core and shell and a LEED Platinum designation for certain tenant improvements. The property is currently 98.3 percent occupied.

KBS Strategic Opportunity REIT also added a Houston office property to its portfolio; in its sixth investment of the year, KBS acquired 1800 West Loop South, a 400,101-square-foot, 21-story office tower located in the West Loop/Galleria submarket for the reported amount of $68.5 million. Although the 1982-built property underwent a renovation process in 2005, the new owner plans additional building improvements and modernizations, including an upgrade of the lobby and elevators.

The biggest local office deal is yet to come, Invesco Real Estate has reportedly agreed to pay Hines approximately $420 million for the 1.5 million-square-foot Williams Tower. If the deal closes, it would be Hines’ second major deal of the year, following the company’s August sale of the 1.8 million-square-foot One and Two Shell Plaza for $550 million. The 64-story Williams Tower, located at 2800 Post Oak Blvd. in the Galleria/West Loop submarket, is currently 96.5 percent leased, according to CoStar Group Inc. The tenant roster includes Hines itself, Transco Energy, Rowan Cos., Quanta Services and Citigroup.

While the $420 million price tag the LEED Gold-certified building could trade for would mark the top price in total dollars ever paid for a Houston office property outside the central business district, it would still fall short of some early expectations that it could trade for as much as $475 million.

Image: Williams Tower via Wikimedia Commons
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