Friday, September 26, 2008

Behringer Harvard buys One Briar Lake Plaza

Behringer Harvard has added One Briar Lake Plaza to its local collection of office properties.
The Dallas-based real estate company, through Behringer Harvard REIT I Inc., recently purchased the 20-story, Class A office building in West Houston from Crescent Real Estate Equities LLC, which is owned by Morgan Stanley. Terms of the deal were not disclosed.
Robert Williamson and Jeff Hollinden of Holliday Fenoglio Fowler LP represented Crescent in the sale.
One Briar Lake Plaza is located at 2000 W. Sam Houston Parkway S. The 502,000-square-foot building, constructed in 2000, received only minor damage to windows and landscaping during Hurricane Ike.
Following the local acquisition, Behringer Harvard REIT I owns an interest in 74 properties in the United States with approximately 25.6 million square feet of space. For more information see: or or

Thursday, September 25, 2008

Samco buys Dollar General stores and leases

Samco Properties purchased 24 stores leased to Dollar General from Capital Growth Properties for $20 million, or approximately $86.50 per square foot. The 24 retail buildings total 231,635 square feet and are currently leased to Dollar General, a chain of variety stores. They sold at an estimated cap rate of 7.93%. The stores are all in strong demographic locations throughout Texas and Alabama. Doug Passon and Brandon Duff of Marcus & Millichap represented Samco. Tim Speck, first vice president, and Andrew Clark represented Capital Growth for more info see: or

Tuesday, September 23, 2008

1800 West Loop South signs leases

TRANSWESTERN LEASES TOP TWO FLOORS OF OFFICE TOWERHOUSTON — Houston-based Transwestern has leased the top two floors of 1800 West Loop South, a 399,777-square-foot office tower located in Houston’s Uptown Galleria submarket. Advertising agency Fogarty Klein Monroe will use the space, which totals 39,506 square feet, as its Houston office. The lease brings occupancy in the tower up to 95 percent. Michelle Wogan and Monte Calvert of Transwestern represented the landlord, 1800 West Loop South Ltd. Kevin Gardner of CresaPartners’ Houston office represented Fogarty Klein Monroe. The tenant is working with the Houston office of architect PageSoutherlandPage to design the office’s interior.

THE WOODLANDS GRILL OPENS FOURTH LOCATIONALLEN, TEXAS — The Woodlands Grill has held the grand opening for its fourth location at 932 Garden Park Dr. in Allen. The new restaurant is situated within Watters Creek at Montgomery Farm, a 1.15 million-square-foot, mixed-use development. The restaurant seats 220, and also contains an outdoor dining patio and a semi-private dining area for special events. The design of the restaurant is inspired by Frank Lloyd Wright’s famous Fallingwater House. For more information see ; or

Friday, September 19, 2008

Continental renews lease, decides to stay downtown

Continental Airlines Inc. has renewed its lease on the majority of the firm’s downtown office space, marking a large corporate commitment to the Central Business District.
The transaction also puts to rest rumors that Continental planned on taking flight to less expensive office space near George Bush Intercontinental Airport in light of the high fuel costs challenging the airline industry.
Continental was said to be looking for a more cost-efficient alternative to the downtown headquarters site the Houston-based carrier has occupied for the past nine years.
After considering other options, however, the airline decided to stay put and renew a lease for approximately 450,000 square feet of space in Continental Center I at 1600 Smith, according to sources close to the deal. For more information see: or or

Thursday, September 18, 2008

Storm effects Port of Houston & Galveston Port Closed

After receiving clearance from the U.S. Coast Guard, the Port of Houston has opened on a limited basis.
Pending restoration of electrical power, most facilities were to resume operations Thursday and all port employees have been asked to return to work.
The Houston Ship Channel has been opened with restrictions, while a review is under way to identify the amount of federal funds required to restore the waterway to its full depth and width.
Based on preliminary estimates, damages to Texas and Louisiana Gulf ports as a result of Hurricane Ike and other storms so far this year is expected to exceed $1 billion.
Meanwhile, the situation at the Port of Galveston is far worse due to the massive damage from Ike’s storm surge that washed across the north side of the island and smashed through oil rig repair facilities on Pelican Island. Facilities and pier inspections are expected to be completed by Sept. 19 while port staff try to provide limited access for tenants and customers.
At this point, the earliest target date for resumption of limited cargo operations in Galveston is Sept. 21. Port officials are in the process of trying to set up temporary offices on the mainland.

Wednesday, September 17, 2008

Commercial Real Estate taking a DIVE

The ongoing credit crunch and slow economic growth are starting to have a negative impact on the commercial real estate sector. Problems in the financial services sector also are affecting commercial real estate, according to the National Association of Realtors (NAR).
“Although capital remains available for residential loans, the credit crunch is pronounced in commercial lending,” Lawrence Yun, NAR’s chief economist notes in the trade association’s latest outlook report for the commercial real estate. “Combined with a slowing economy, the lack of credit is curtailing activity in the commercial real estate sectors. As a result, there’s been a slowdown in the net absorption of space, which is leading to higher vacancies and more modest rent growth.”
The NAR forecast analyzes quarterly data in the office, industrial, retail and multifamily markets, based on historic data provided by Torto Wheaton Research.
In the office sector, deterioration in the job market has slowed demand for office space. “Job cuts since the beginning of the year will bring more vacant office space to the market,” Yun says. “Office rent growth will slow greatly as a result.”
Office vacancy rates are expected to go up to 14.4% in the second quarter of 2009, from 12.9% in the second quarter of this year. Annual rent growth in the office sector is expected to hit 3.2% this year, contracting 0.4% in 2009. In comparison, in 2007, rent growth was up 8.0%.
NAR forecasts net absorption of office space in 57 markets it tracks will come in at 14.7 million sq. ft. this year and 10.9 million sq. ft. in 2009, compared with 57.3 million sq. ft. last year.
The group expects the industrial sector to fare better, however, largely on the strength of strong exports. While the economic slowdown has caused a decline in warehouse demand, a drop in the value of the dollar continues to favor American exporters.
Industrial vacancy rates are likely to hit 10.8% in the second quarter of 2009, up from 9.9% in the second quarter of this year. Annual rent growth is forecast at 1.1% this year and 1.0% in 2009, down from 3.6% for 2007. And net absorption of industrial space in 58 markets the association tracks, is projected to come in at a negative 16.7 million sq. ft. in 2008, rising to 35 million sq. ft. in 2009, compared with about 120 million sq. ft. for 2007.
The retail sector is feeling the impact of a slowdown in consumer spending, as consumers are squeezed by rising food and energy prices. Consequently, NAR expects vacancy rates on retail properties to rise to 10.4% by the second quarter of 2009, up from 9.7% in the second quarter of this year. Rents in the sector are projected to grow 1.2% in 2008, and then decline 0.9% in 2009, compared with a 3.2% increase last year. Net absorption of retail space in 53 retail markets NAR tracks is expected to shrink by 2.6 million sq. ft. this year, from more than 11 million sq. ft. absorbed last year.
One property type that is seeing positive fallout from ongoing economic problems is the multifamily sector bolstered by prospective homebuyers who are waiting on the sidelines and continuing to rent. This means rents will rise at a respectable pace of 3.9% in 2008, and 4% next year.
However, the NAR forecasts that vacancy rates in the multifamily sector will rise to 5.9% in the second quarter of 2009, from 5.4% in the second quarter of this year. Average rent will go up 3.9% in 2008 and 4.0% in 2009, compared with a 3.1% rise in 2007. For more information see ; or

Wednesday, September 10, 2008

GSL buyers Glazier Food Company Headquaters

The owners of Glazier Foods Company, a Houston based foodservice distributor, have sold their 286,000 square foot Class A headquarters and distribution facility in a triple-net sale/leaseback deal with GSL Welcome Group, LLC of Houston, Texas, which includes a $14 million expansion. GSL Fund 21 GF Sub E, LLC, closed on the property on June 16, 2008.
Glazier Foods Company, founded in Houston in 1936, is a family-owned leader in the food industry. The company constructed its state-of-the art headquarters and distribution facility in 2005 and plans a 160,000 square foot expansion of the freezer/dry storage areas that will bring the total square footage of the facility to 446,000 square feet.
"GSL is excited to join with Glazier Foods Company in the expansion of an already modern facility." said GSL President Welcome Wilson, Jr. "GSL's acquisition portfolio is comprised of companies that want to increase returns, manage facility risk and create capital to invest in their businesses by having GSL Welcome purchase their existing facilities and lease them back to the company. This type of arrangement can boost the company bottom line."
GE Capital provided financing for the acquisition and funding for the $14,000,000 expansion of the facility. Construction has already begun and is expected to be completed within 12 months. In the 3rd quarter of 2007, Glazier Foods Company selected Yancey-Hausman Commercial Real Estate Services to market the sale of the owner's 33 ± acre distribution facility that is located at 11303 Antoine Drive, just north of the North Sam Houston Parkway in Houston, Texas.
"Jackie Ritchie and I conducted an extensive national bid process resulting in numerous industrial REITS making offers on the property." said Yancey-Hausman Senior Vice President Pat Pollan. "This was a great opportunity for GSL to acquire a high quality asset in an excellent location with long term, stable cash flow and excellent prospects for long-term value appreciation." For more information see: or

Tuesday, September 9, 2008

Lasco/Hicks works up plans for new Galleria-area office tower

Specifics about a proposed office tower in the Galleria area are slowing leaking out while the developer strives to keep all of the particulars under wraps.
Lasco/Hicks Ventures Ltd. is working on a 400,000-square-foot office building to be constructed on three acres on Post Oak near Richmond, according to a source familiar with the deal.
Information about the project was also included on a general direct-mail piece from Houston-based Michael Berry Properties, which is not involved in the project. The mailing advertises a 26-story office building to be constructed at 3100 Post Oak that will have a ground-floor restaurant overlooking the waters of the Lakes on Post Oak office complex.
Executives with Lasco/Hicks could not be reached for comment.
The site is adjacent to a six-acre parcel acquired earlier this year by a development firm from Dubai (see “Dubai tower looms on horizon,” Feb. 15, 2008).
Deyaar Development, a builder of commercial and residential towers in the Middle East, has not announced plans for its Galleria site.
A source says those details probably won’t be forthcoming because Deyaar agreed not to develop anything on the prime corner until after Lasco/Hicks builds its building.
Lasco/Hicks is a partnership between two Houston firms: Lasco Development Corp. and Hicks Ventures, which was established last year by Patrick Hicks.
Hicks was an executive with Houston-based MetroNational Corp. prior to forming his own firm.
Lasco Development, which has been in business for more than 20 years, specializes in retail development. The firm is involved with the Riverstone Shopping Center and The Shops at Riverstone in Missouri City.
Lasco/Hicks could be in position to develop the first Class A office building to be built in the Galleria area in the last 25 years. However a few other developers have the same idea (see “Office buildings on and off,” Aug. 29, 2008).
Real estate professionals say more office space is needed in the Galleria area to keep up with demand. Second-quarter 2008 information compiled by Grubb & Ellis Co. shows that roughly 90 percent of all office space in the area is occupied. For more information see or

Monday, September 8, 2008


Hines has arranged the lease of a full floor at Phoenix Tower, a 34-story, 629,000-square-foot office tower located at 3200 Southwest Freeway in Houston. Express Energy Services Operating will occupy 25,113 square feet of space within the tower. Paula Bruns of Hines represented building ownership, FSP Phoenix Tower LP, which is an affiliate of Franklin Street Properties Corp. David Anderson of Fritsche Anderson Realty Partners represented the tenant. Hines, in its role as property leasing manager, has been involved with a capital improvements program for the building that includes the installation of energy-efficient, exterior glass panels; a renovation of the building’s common areas and entrances; the addition of a conference facility; and the addition of a Jack Nicklaus-designed putting green on top of the building’s parking garage.For more information see: or

Thursday, September 4, 2008

Bad News still in Lending Markets

Construction loans outstanding backed by major commercial property types continued to expand, growing to $295 billion at the end of the second quarter, according to a report from Foresight Analytics, but the pace of growth is slowing.
Based on an analysis of data from the FDIC, relating to commercial bank and thrift construction lending activity, Oakland, Calif.-based Foresight Analytics reports that construction loans outstanding backed by industrial, retail, office and hotel properties rose 5% in the second quarter of 2008, compared with the first quarter of the year.
However, the pace of growth is slowing. And Foresight Analytics expects the pace to decline further during the course of the year.
“Commercial construction — if it is not quite grinding to a halt — is getting pretty close in the credit crunch. The broader credit crunch is having an impact and making lenders more reticent to make construction loans. Also developers are more cautious as well,” says Matt Anderson, a partner with Foresight Analytics.
Foresight expects to see the growth in lending on commercial real estate projects tapering off, with essentially no growth for the second half of the year. And there could even be a decline going into 2009. This means that there are a couple of lean years ahead for developers.
Taking into account single-family construction loans as well, construction loans outstanding contracted 0.7% to $627 billion during the second quarter, the first such decline since the second quarter of 1994, according to Foresight Analytics.
Loans on construction backed by condo projects were down about 1% in the second quarter, from $ 41.3 billion outstanding at the end of the first quarter. However, construction loans backed by apartment properties continued to grow, gaining roughly 2.5% to end the second quarter to $46.6 billion.
There is more optimism among developers about the condo and apartment sectors than about the single-family residential sector, according to Anderson. Even then, condo loans outstanding have contracted since “it is more of an all-or-nothing type category.”
This means that unlike single-family communities, a developer has to complete an entire condominium project to get it ready for occupancy. In the case of a single-family community, developers could end up building only the number of units for which they have orders.
The “all or nothing” nature of condo construction has also caused delinquencies on loans backed by these projects to balloon to 16.5% at the end of the second quarter, from 4.2% at the end of the second quarter of 2007. Delinquencies had reached 13.7% at the end of the first quarter.
In the apartment sector, demand for apartments has increased as result of problems in the housing market, causing rent growth to hold steady. Indeed, delinquencies on construction loans backed by apartment properties are still at a low 2.9%, though still up from 2.4% at the end of the first quarter.
“There are some indications that rent growth is slowing down. So we wouldn’t be surprised to see construction volume in the apartment sector beginning to slow down as well,” notes Anderson.
Delinquencies on commercial-property backed construction loans stood at 4.1% at the end of the second quarter, up from 3.6% at the end of the first quarter. Even then, fundamentals are still pretty good in the sector, according to Anderson.
While vacancy rates in most product types are up across a number of markets, they are not anywhere near the post 2001 levels, following the bursting of the technology bubble and the 9/11 terrorist attacks.
Including single-family construction loans outstanding, the overall delinquency rate on construction loans stood at 8.1% at the end of the second quarter, a level not seen since 1994.
“The contrast in this cycle versus the early 1990s cycle is that most of the problems back then were in the commercial sector. It was commercial real estate that was way overbuilt, whereas this time it is residential that is way overbuilt,” says Anderson.
At the end of the day, construction lending on commercial projects is still in a relatively healthy environment. “There’s a hesitancy that is driving the general pullback. A lot of independent people are still waiting to see what happens with the general economy. We are not technically in a recession yet by most measures, but there are a lot of problems in the economy and demand has certainly slowed down,” says Anderson.
He expects that after the economy gets back on track by the end of 2009 or early 2010, and the credit crisis has eased, more financing is likely to be available. Lending on commercial property construction activity also is likely to expand at that point. For more information see: or