The $4-plus/gallon of gas threshold hit this summer has pushed the real estate industry in unforeseen ways -- fundamentally altering how it behaves and its understanding of markets. It is changing the way brokers market property, how brokerages charge clients, how managers budget improvements, how tenants decide where to locate, how local governments are approaching development and transportation issues, how consumers decide where to spend money, how logistics firms manage their distribution centers, how landlords calculate their expense pass-throughs, and how lenders fund construction projects and acquisitions. It has investors adjusting their acquisition criteria and has asset managers recalculating cash flows. And these are just a few of the ways. CoStar Advisor surveyed readers across the country this week to gauge if and how high gas and diesel prices are impacting commercial real estate. As a measure of how pervasive the topic is in their typical workday, we received more responses to the question than to any other we have previously asked. The impact has been both practical and psychological -- showing up across the board. It's most obvious at the micro level where everyone has felt the pinch of $1 more a gallon over last summer's prices. It's commonplace now for the cost of a tank of gas to top $100 and it's not uncommon to go through that every two or three days. "Gas prices are killing me," said Charles Paxton, president of Carolina Homes & Land Realty in Harrisburg, NC. "I spent $600 last month and barely left town. I must travel to see the site and meet the clients but I am now forced to transact as much as possible over the phone. I am now telling buyers to pay me an advance towards earned commission if they want more than I can provide over the phone. This is not going over well but I can't continue to go broke on a sale that may never take place."
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But the high gas prices are also menacing at the macroeconomics level. "Oil prices (more so than gas alone) are impacting world economies and financial markets in dramatic fashion," said Carl Trotto, vice president of acquisitions for Esplanade Capital in New York. Trotto joined the company this year from Cushman & Wakefield where as a capital markets professional he structured and executed commercial real estate transactions. Energy prices "are exacerbating the present concern in the financial markets," Trotto explained. "This negatively impacts real estate valuations as it does valuations of all assets. In fact, the impact on real estate is arguably more dire than for other asset classes because of the leverage (and tax incentive of leverage) associated with real estate finance. "At the microeconomic level, oil prices (and higher inflation to be sure) are causing firms in a variety of industries to forestall expansion and/or retrench existing operations. Both of these impacts have obvious repercussions for the buying, selling, and leasing of real estate," Trotto added. In short, said Edward L. Miller, managing director and principal of Colliers Arnold Commercial Real Estate Services in Tampa, FL, "high gas prices suppress the optimism essential to investor confidence."
Geographically UndesirableOn the housing front, the rising cost of gas is wiping out any of the savings that homeowners found in the outlying areas of cities across the country. "Gas prices have killed the tertiary new home market as the "drive until you qualify" buyer is no longer in existence," said Dave Miller, vice president/national accounts and commercial sales manager for Chicago Title in Phoenix. "As the price of gas continues to rise the affordability differential of living in suburbs and bedroom communities is diminished," said Michael Beach a director at Captec Financial Group in Southern California. "We see population growth stronger nearer the city center and, if prices continue to rise, a likely drastic reduction in urban sprawl. Likewise, we expect reduced traffic at regional malls and outlet centers in markets where there are alternative places to shop." "It's viewed as a big negative for the outlying markets here in Phoenix," said Jason Weber, director of acquisition for Cole Cos., which is focused on land acquisition and commercial development. "Many of the areas that boomed two to three years ago are 40 to 50 miles from downtown Phoenix. The cost of gas will definitely negatively affect demand for housing in these areas, because the cost of people's commute has essentially doubled."
Journey to the CenterThe dynamic of gas price cost to distance is turning residential investors' attention toward closer in markets. "Savvy multifamily investors are looking for deals nearby -- or preferably next to -- bus stops or other public transit locales," said Alex J. Beachum with Income Property Organization in Bloomfield Hills, MI. "Their logic is that as prices continue to climb, more and more tenants will turn to this form of transportation to alleviate the burden of gas prices. And a complex with immediate access to such transportation will be alluring to these conservation-minded tenants." "From a land development and building perspective, the price of gas absolutely is affecting the market," said Richard MacDonough, vice president of Fraser Forbes Land Sales in McLean, VA. "I am seeing profound interest in core area development projects - inside the Beltway in both Baltimore and [Washington] DC. That is particularly the case with sites near Metro stations and major transit hubs where commuters can share transportation. "Denser sites close in create efficiencies for builders, reduce construction costs, allowing the developers to have a profitable deal but keeping home prices within reach of most buyers," MacDonough added. "A lot of our developer clients are creating new ways to reach out to this market, and I see government looking for ways to make projects like this work."
DensityWe heard from several others that municipalities across the country, which have seemingly dragged their feet on addressing development and transportation issues, are now being forced into action. "In our town (Fairfield, CT), the Plan and Zoning Commission is already looking at implementing aspects of the model "smart code" (higher densities and pedestrian-friendly mandates). This would have never happened a few years ago as NIMBY or "just say no to development" activists would have shot it down," said Stuart Baldwin, principal of American Capital LLC. "The long-range effect will favor close-in redevelopment, particularly around existing or planned public transportation," said Mark Squires, a realtor with Coldwell Banker Commercial NRT in Maitland, FL. "Transit Oriented Development (TOD) is big and getting bigger. TOD needs the various cities and counties to loosen their development codes in the areas of height, density, FAR, etc., and in many cases we're seeing that here in Florida despite some citizen opposition. "The trend here is really against massive outlying sprawl and new subdivisions, strip centers, etc., and toward close-in population concentrations, where people can work, play, live, shop, etc. in a small, dense area, but with required parks and green space. This trend, of course, has been existing for several years, but the high gas prices are accelerating it," Squires added.
End of Drive BysEven the broker tenant relationship is changing as both sides deal with the rising price of commuting across metropolitan areas and as they alter their expectations and needs. "In my daily routine, the price of gas only comes up when discussing properties to visit that require a drive to get to. I find investors are using brokers, attorneys, accountants, etc. to gather more information before making a site visit. I have even had potential buyers make offers without visiting the property," said Stephen Fuerst of Centrus Group Inc. in Akron, OH. From a brokerage standpoint, Graig Griffin, principal of Coldwell Banker Commercial KGA in St. George, UT, is seeing some definite trends. "Agents are being much more judicious about showing property in peripheral areas, doing a better job of prequalification before getting in the car with clients. This is even more true of residential agents and most will not tour a buyer without an exclusive representation agreement," Griffin said. "Agents are carpooling more for market tours and site visits. In my office, it is now common to here "I am headed to X area - does anyone else need to head that direction?"
PositioningGriffin also is seeing a host of changes from the tenant. "Market positioning is becoming much more crucial with delivery-based firms exploring traffic modeling/drive time analysis," he said. "As typical, businesses are willing to pay more for locations that service their client base better, shoring up in-fill prices for land and occupancy for space. And companies with a high cost of product or raw material transportation are seeking rail-served property more often." Brian S. Brennan, director, real estate acquisitions for Allianz of America in Westport, CT, is seeing the same phenomenon. "When comparing rail cost versus truck cost, the distance traveled by the goods via rail is shrinking for the rail option to be preferable to truck," Brennan said. "The rule of thumb used to be 400 miles or longer made rail a viable option. Now with the cost of diesel, the cost competitive distance for rail may be as low as 200 miles." It is also impacting where overseas goods are unloaded, Brennan noted. "Container ships now take "all water" routes to the East Coast of the U.S. rather than offload on the West Coast and truck the containers on land," he said. "Eastern seaports are seeing container volume rise while Western seaports are seeing volume shrink." Hence industrial tenants, particularly logistics firms, are rethinking where their distribution points should be. "Super regional distribution centers (800,000 square feet to 2 million square feet) built in rural locations are now less cost effective and some logistics are being re-engineered to put product in smaller buildings closer to population centers, Brennan said. Mark Killough, senior vice president of Hartz Mountain Industries Inc. in Secaucus, NJ, noted the same trend. "I believe that if gas prices stay at the current level, companies will have to reexamine their logistics models," Killough said "The large distribution center servicing a 500-mile radius may not be as efficient with the increase in trucking costs. It may warrant having smaller and more distribution centers to service the same territory." "The price of gas affects the distribution businesses and the contracting service businesses," said Michael E. Nelson, senior associate of CB Richard Ellis in Stamford, CT. "The distribution businesses located in large warehouses with multiple loading docks in heavy industrial zones usually cannot make a move to improve their location closer to the markets they serve. However, the smaller contractors, like cablevision trucks or home audio businesses that need to reach into large residential zones can move closer to these markets if they watch the opportunities closely. Up until now it hasn't been a factor, but it may surface in the next two quarters."
Passing on CostsAnother area where the price of gas affects real estate decisions is related to raw material prices that are oil-based derivatives, CoStar Advisor readers told us. "Prices for asphalt roof tiles and other asphalt applications in construction projects are rising at an unbelievable pace," said Tyson Strauser an investment analyst with Longhorn Capital in Dallas. "Though concrete prices have also risen, asphalt is up nearly 50% since January because it is an oil-based product." "Construction costs are skyrocketing," said Jennifer Britt Starbuck, an asset manager for Pitcairn Properties in Jenkintown, PA. "We've received notices from suppliers for steel, drywall, carpeting indicating 10% to 30% price increases in the next 90 days. Some of this is the result of transportation cost increases (everything is shipped by truck). Some is the result of increased manufacturing costs for petroleum-based products (carpeting). Another example of the latter is asphalt - we've been getting pricing in for asphalt repairs at nearly 40% higher than the same scope last year." The result of these increased construction costs is that landlords will see lower returns, Starbuck added. "A typical standard tenant build-out is generally the landlord's responsibility in most markets, regardless of cost. In many of the markets we operate in, spaces that could be retrofitted for $25.00/square foot last year are running $30/square foot this year. And projects that can be deferred (like sealcoating or asphalt repairs) may be pushed off in the hopes of increased supply in 2009 driving prices back down." It is also driving up building expenses. "The issue that is affecting our decisions is not gas but heating oil," said Neal Lorberbaum, principal of Peryn Realty LLC in Westport, CT. "The price of oil has almost doubled in the last 12 months. Since it is a large component of the operating expense here in the Northeast, the increase in cost is amplified when considering the value of an asset depending on the prevailing cap rates."
Smaller LoansThe rising property costs are not going un-noticed by lenders either. "A few months ago I would have been able to get larger loan amounts and higher loan to values for restaurant startups," said Daniel Cabrera, senior account executive of Empire Commercial Funding Group LLC in Albuquerque, NM. "Now besides both of those being lower today, more collateral is required to back the loan because of higher default rates. All these are directly related to the cost of fuel." "Lenders have stated that as a direct result of gas prices being higher, they are experiencing more defaults," Cabrera said. "For the obvious reasons: Revenues are down and costs are up. The cost of supplies i.e. food etc to make the meals is higher. Prices for meals have to be raised. However the amount of disposable income of the consumer is lower because they're spending more of it on fuel etc. Additionally costs such as getting to the restaurant have to be factored in now when before it would have been ignored. Therefore the restaurateurs are being hit on both sides." "I was discussing lending criteria as it relates to property value and gas prices," Corey Schwartz, president of Serinova Financial LLC in Phoenix said. "We concluded that the cost of gas is probably not coming down and that property values in the outlying areas of the city are going to be adversely impacted by the cost of gas. Our lending criteria have been adjusted to reflect this."
To see how gas prices have hurt retailers, see Nearly 4,500 Store Closings ... And Counting ..., by Sasha M. Pardy, senior news editor.
For more informaion see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com
Thursday, July 10, 2008
Wednesday, July 9, 2008
CB Richard Ellis Buys Enclave of $37.3 Million
Behringer Harvard REIT I Inc. sold the Enclave on the Lake office building to CB Richard Ellis Realty Trust for $37.3 million.
The fully leased, 171,000-square-foot office building is located at 1255 Enclave Parkway in Houston's Energy Corridor area. The six-story facility is occupied by SBM Atlantia Inc., a subsidiary of SBM Offshore Inc.
The building was constructed in 1999 on a 6.7-acre wooded site in The Enclave Office Park, an 878-acre development consisting of Class A office buildings in a campus setting.
The Behringer Harvard REIT acquired a 36 percent interest in Enclave on the Lake along with tenants-in-common investors in April 2004. The REIT reports an overall yield during the holding period of 80 percent and an annualized cash-on-cash return of approximately 19 percent that represents a leveraged internal rate of return of more than 17 percent.
Following the disposition of Enclave on the Lake, the Dallas-based Behringer Harvard REIT I Inc. portfolio owns interests in 73 properties with approximately 25 million square feet.
CB Richard Ellis Realty Trust is sponsored by Los Angeles-based CB Richard Ellis Investors, an indirect wholly owned subsidiary of CB Richard Ellis Group Inc.
Jeff Torto, senior director of acquisitions for CBRE Investors, said Enclave on the Lake was an attractive investment because vacancy rates in Houston and the Energy Corridor are at record lows and rental rates are steady.
"The Houston office market is considered a 'Blue Chip' market by CBRE Investors' Research Group," Torto said. "While the national economy has decelerated, Houston continues to expand and is significantly outperforming the nation as a whole." for more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com
The fully leased, 171,000-square-foot office building is located at 1255 Enclave Parkway in Houston's Energy Corridor area. The six-story facility is occupied by SBM Atlantia Inc., a subsidiary of SBM Offshore Inc.
The building was constructed in 1999 on a 6.7-acre wooded site in The Enclave Office Park, an 878-acre development consisting of Class A office buildings in a campus setting.
The Behringer Harvard REIT acquired a 36 percent interest in Enclave on the Lake along with tenants-in-common investors in April 2004. The REIT reports an overall yield during the holding period of 80 percent and an annualized cash-on-cash return of approximately 19 percent that represents a leveraged internal rate of return of more than 17 percent.
Following the disposition of Enclave on the Lake, the Dallas-based Behringer Harvard REIT I Inc. portfolio owns interests in 73 properties with approximately 25 million square feet.
CB Richard Ellis Realty Trust is sponsored by Los Angeles-based CB Richard Ellis Investors, an indirect wholly owned subsidiary of CB Richard Ellis Group Inc.
Jeff Torto, senior director of acquisitions for CBRE Investors, said Enclave on the Lake was an attractive investment because vacancy rates in Houston and the Energy Corridor are at record lows and rental rates are steady.
"The Houston office market is considered a 'Blue Chip' market by CBRE Investors' Research Group," Torto said. "While the national economy has decelerated, Houston continues to expand and is significantly outperforming the nation as a whole." for more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com
Starbuucks Cutting back hundreds of Stores
The announcement that coffee giant Starbucks plans to close 600 locations--500 more than its CEO Howard Schultz had talked about earlier this year--is unwelcome news for frappuccino lovers, but it’s likely to upset real estate owners and investors even more.
For years, Starbucks has served as a mini-anchor for smaller strip centers. The presence of a Starbucks could turn an otherwise ordinary center into a preferred investment vehicle for many buyers because of the coffee giant's ability to pay premium rents and at the same time provide heavy foot traffic. As recently as 2007, Starbucks-anchored properties garnered cap rates up to 100 basis points below the national average. Now that the Seattle-based chain is grappling with problems, however, it might begin to lose ground to rival Dunkin’ Donuts as the go-to anchor for multi-tenanted strips.
“At this point, Starbucks has not published a list of the stores they are closing, they will just let the landlords know 30 days in advance, so you really don’t know whether your Starbucks is closing or not,” says Bernie Haddigan, national director of the retail group with the national brokerage firm Marcus & Millichap Real Estate Investment Services. “And if you were to lose a Starbucks, it would be significant, because they pay premium rents in most markets and it’s going to be hard to replace those rents.”
The chain’s July 1 announcement that it plans to close 600 U.S. stores came after a disappointing second quarter. For the three months ended March 30, Starbucks reported a 28 percent decrease in net earnings, to $108.7 million, and what it described as a “mid single-digit decline in comparable store sales.” The weak results were due to a combination of a turbulent economic climate and an overly aggressive expansion strategy, according to Wall Street analysts, most of whom lauded the store closure move.Currently, Starbucks’ biggest competitor is Starbucks itself, says Morningstar analyst John Owens, who notes that new locations in close proximity to existing stores cannibalized sales.
The 600 closings represent only 8 percent of Starbucks’ 7,257 company-operated U.S. stores and 5 percent of its total 11,434 U.S. stores, Owens adds. The closings will take place through the remainder of fiscal year 2008 and first half of fiscal 2009. In addition, the chain will limit its new store openings in the U.S. to fewer than 200 this year. Previously, it planned to open about 250 new locations a year through 2011.
But the bitter medicine philosophy will prove of little comfort to owners who will have to replace Starbucks’ spaces, according to Haddigan. He notes that the chain often pays 30 percent to 40 percent above the market average in net rent. To find another anchor willing to pay the same amount in the current real estate market would prove difficult. That means it will be hard for an owner to sell a center that relies on a Starbucks as well, since lenders could prove unwilling to finance a transaction on a property that might be about to lose its anchor tenant.
“It’s not like my phone has been ringing off the hook with people saying they don’t want to buy those properties, but it’s not good, it jeopardizes the credit of the deal and it erodes confidence in the small shop strip centers,” says Chad Firsel, executive vice president with NAI Hiffman, an Oakbrook Terrace, Ill.-based commercial real estate services firm.
Firsel estimates that in view of the store closure announcement, cap rates on Starbucks-anchored centers will rise anywhere from 75 basis points to 100 basis points, to a range of 7.25 percent to 7.5 percent. That comes at a time when investment sales volume for centers in the $1.5 million to $5 million range is already 50 percent down compared to last year, according to Haddigan. “In the short run, if you’ve got a marginal Starbucks, it’s probably not going to trade,” he notes.
Haddigan adds that for the time being, he would stick with Dunkin’ Donuts-anchored properties. The Canton, Mass.-based chain has proven that it can withstand economic downturns with its more affordable selection of coffee and pastries, plus it pays rents that are more in-line with the market average, making it easier to replace if a given location does close.
At the end of 2007, Dunkin’ Donuts operated 5,769 franchises in the U.S. and was planning an aggressive expansion into Western states, including Indiana, Arizona and Texas.
“The fact that Dunkin’ is moving west of the Mississippi is going to have a much greater impact on Starbucks’ future success,” says Keith Politte, senior vice president with the corporate solutions division of Colliers International, a Boston-based real estate services firm. “I think you will see more of an impact a couple of years from now.”
--Elaine Misonzhnik
For more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com
For years, Starbucks has served as a mini-anchor for smaller strip centers. The presence of a Starbucks could turn an otherwise ordinary center into a preferred investment vehicle for many buyers because of the coffee giant's ability to pay premium rents and at the same time provide heavy foot traffic. As recently as 2007, Starbucks-anchored properties garnered cap rates up to 100 basis points below the national average. Now that the Seattle-based chain is grappling with problems, however, it might begin to lose ground to rival Dunkin’ Donuts as the go-to anchor for multi-tenanted strips.
“At this point, Starbucks has not published a list of the stores they are closing, they will just let the landlords know 30 days in advance, so you really don’t know whether your Starbucks is closing or not,” says Bernie Haddigan, national director of the retail group with the national brokerage firm Marcus & Millichap Real Estate Investment Services. “And if you were to lose a Starbucks, it would be significant, because they pay premium rents in most markets and it’s going to be hard to replace those rents.”
The chain’s July 1 announcement that it plans to close 600 U.S. stores came after a disappointing second quarter. For the three months ended March 30, Starbucks reported a 28 percent decrease in net earnings, to $108.7 million, and what it described as a “mid single-digit decline in comparable store sales.” The weak results were due to a combination of a turbulent economic climate and an overly aggressive expansion strategy, according to Wall Street analysts, most of whom lauded the store closure move.Currently, Starbucks’ biggest competitor is Starbucks itself, says Morningstar analyst John Owens, who notes that new locations in close proximity to existing stores cannibalized sales.
The 600 closings represent only 8 percent of Starbucks’ 7,257 company-operated U.S. stores and 5 percent of its total 11,434 U.S. stores, Owens adds. The closings will take place through the remainder of fiscal year 2008 and first half of fiscal 2009. In addition, the chain will limit its new store openings in the U.S. to fewer than 200 this year. Previously, it planned to open about 250 new locations a year through 2011.
But the bitter medicine philosophy will prove of little comfort to owners who will have to replace Starbucks’ spaces, according to Haddigan. He notes that the chain often pays 30 percent to 40 percent above the market average in net rent. To find another anchor willing to pay the same amount in the current real estate market would prove difficult. That means it will be hard for an owner to sell a center that relies on a Starbucks as well, since lenders could prove unwilling to finance a transaction on a property that might be about to lose its anchor tenant.
“It’s not like my phone has been ringing off the hook with people saying they don’t want to buy those properties, but it’s not good, it jeopardizes the credit of the deal and it erodes confidence in the small shop strip centers,” says Chad Firsel, executive vice president with NAI Hiffman, an Oakbrook Terrace, Ill.-based commercial real estate services firm.
Firsel estimates that in view of the store closure announcement, cap rates on Starbucks-anchored centers will rise anywhere from 75 basis points to 100 basis points, to a range of 7.25 percent to 7.5 percent. That comes at a time when investment sales volume for centers in the $1.5 million to $5 million range is already 50 percent down compared to last year, according to Haddigan. “In the short run, if you’ve got a marginal Starbucks, it’s probably not going to trade,” he notes.
Haddigan adds that for the time being, he would stick with Dunkin’ Donuts-anchored properties. The Canton, Mass.-based chain has proven that it can withstand economic downturns with its more affordable selection of coffee and pastries, plus it pays rents that are more in-line with the market average, making it easier to replace if a given location does close.
At the end of 2007, Dunkin’ Donuts operated 5,769 franchises in the U.S. and was planning an aggressive expansion into Western states, including Indiana, Arizona and Texas.
“The fact that Dunkin’ is moving west of the Mississippi is going to have a much greater impact on Starbucks’ future success,” says Keith Politte, senior vice president with the corporate solutions division of Colliers International, a Boston-based real estate services firm. “I think you will see more of an impact a couple of years from now.”
--Elaine Misonzhnik
For more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com
Tuesday, July 8, 2008
Glazier Foods Co. has sold its 286,000 sq. ft. headquarters
Glazier Foods Co. has sold its 286,000 sq. ft. headquarters and distribution center in Houston to an investment group that plans a $14 million expansion to the property. As part of the deal, the food service distributor has leased the entire space back from the new owner. The purchase price was undisclosed.Glazier Foods was founded in Houston in 1936 and is a family-owned distributor. The buyer, GSL Welcome Group, is a Houston-based real estate development company with a portfolio of more than 75 single-tenant properties in the Houston area. Glazier’s new landlord closed the purchase through its GSL Fund 21 GF Sub E.Construction has already begun to add 160,000 sq. ft. to the distribution center over the next year, which will bring the property’s overall size to 446,000 sq. ft. and increase the size of Glazier Food’s freezer and dry storage areas. GE Capital provided financing for the acquisition and funding for the $14 million expansion.Glazier Foods retained Yancey-Hausman Commercial Real Estate Services to market its 33-acre distribution facility in the third quarter last year. Jackie Ritchie, a senior associate at Yancey-Hausman, and Pat Pollan, senior vice president at the firm, conducted a national bid process that attracted offers from several industrial REITs, according to the brokers. “This was a great opportunity for GSL to acquire a high-quality asset in an excellent location with a long-term, stable cash flow and excellent prospects for appreciation,” Pollan says.Yancey-Hausman is a full-service commercial real estate company providing services for office, industrial, retail and land projects. Established in 1971, the firm currently has more than 60 employees in Houston and Austin. For more infromation see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com
Monday, July 7, 2008
Shell Oil to sell 1935 Bellaire Technology Site
Shell Oil Co.'s decision to shutter its 70-year-old Bellaire Technology Center and shift the jobs to an expanded campus in West Houston will open up a prime piece of Inner-Loop real estate.
The Bellaire Technology Center land, which is made up of three individual parcels located at 3737 Bellaire Blvd. between Stella Link and Buffalo Speedway, will be marketed for redevelopment once Shell demolishes the structures on the site and prepares it for sale, which could be as late as 2012.
Shell will relocate 480 Bellaire employees to its Westhollow Technology Center near Westheimer and State Highway 6 over the next two years, with the final consolidation scheduled for completion by 2011. Another 170 Bellaire employees will move to the company's Woodcreek site north of Interstate 10 near Beltway 8.
Shell owns 5.5 acres of the 9.7-acre Bellaire site, and leases the rest from the Perrin White family. White, a Houston real estate investor, declined to comment on the land.
Shell started operating at the site in the late 1930s, and over the years constructed eight buildings with a total of 315,000 square feet of space.
Even with two separate owners, the three parcels are expected to be jointly marketed for redevelopment once the land is cleared, according to Jeri Ballard, director of corporate real estate for Shell.
The campus is across the street from a residential neighborhood, and is not far from the Texas Medical Center. Ballard does not know what the cleared land might be worth.
"The value will be totally driven by the use," she says.
And the future use will be dictated by the City of Southside Place, which, unlike Houston, has zoning regulations.
City leaders will have a keen interest in future development as they seek to regain economic losses from Shell's departure. The municipality will experience a dip in property tax revenue after the relocation, and businesses will no longer have access to 650 Shell employees who shop and eat in the area.
"I think commercial (development) is certainly what Southside Place wants there," Ballard says.
David Moss, city manager of Southside Place, agrees, saying that once Shell moves out, "property taxes will be the key issue."
He says the campus and surrounding area has been designated for a variety of uses, including office and professional, research and development, special services and medium-density residential.
The city has not yet talked in depth with Shell about the transition, but, Moss says, "we would like to do that. We have had a great relationship with them over the years."
Out west
Shell's 480 Bellaire employees will join the existing 1,300 employees at the Westhollow Technology Center, which will be renamed Shell Technology Center-Americas.
The project will move the operations of Shell Exploration and Production Technology from Bellaire to Westhollow, which opened in 1975.
Shell said in 2006 that it planned to close the Bellaire facility, but the move to Westhollow was just announced last week.
The project will bring together the upstream exploration and production research of the Bellaire Technology Center with the downstream research -- refining, manufacturing, fuel blending -- done at Westhollow.
Westhollow is located on 200 acres with 43 buildings encompassing more than 1 million square feet of laboratory and office space.
The modernization project will add 150,000 square feet of new space spread out among a laboratory building, a multipurpose facility and a shipping and receiving building. for more information see www.houstonrealtyadavisors.com or www.houstonrealtyadvisor.net
The Bellaire Technology Center land, which is made up of three individual parcels located at 3737 Bellaire Blvd. between Stella Link and Buffalo Speedway, will be marketed for redevelopment once Shell demolishes the structures on the site and prepares it for sale, which could be as late as 2012.
Shell will relocate 480 Bellaire employees to its Westhollow Technology Center near Westheimer and State Highway 6 over the next two years, with the final consolidation scheduled for completion by 2011. Another 170 Bellaire employees will move to the company's Woodcreek site north of Interstate 10 near Beltway 8.
Shell owns 5.5 acres of the 9.7-acre Bellaire site, and leases the rest from the Perrin White family. White, a Houston real estate investor, declined to comment on the land.
Shell started operating at the site in the late 1930s, and over the years constructed eight buildings with a total of 315,000 square feet of space.
Even with two separate owners, the three parcels are expected to be jointly marketed for redevelopment once the land is cleared, according to Jeri Ballard, director of corporate real estate for Shell.
The campus is across the street from a residential neighborhood, and is not far from the Texas Medical Center. Ballard does not know what the cleared land might be worth.
"The value will be totally driven by the use," she says.
And the future use will be dictated by the City of Southside Place, which, unlike Houston, has zoning regulations.
City leaders will have a keen interest in future development as they seek to regain economic losses from Shell's departure. The municipality will experience a dip in property tax revenue after the relocation, and businesses will no longer have access to 650 Shell employees who shop and eat in the area.
"I think commercial (development) is certainly what Southside Place wants there," Ballard says.
David Moss, city manager of Southside Place, agrees, saying that once Shell moves out, "property taxes will be the key issue."
He says the campus and surrounding area has been designated for a variety of uses, including office and professional, research and development, special services and medium-density residential.
The city has not yet talked in depth with Shell about the transition, but, Moss says, "we would like to do that. We have had a great relationship with them over the years."
Out west
Shell's 480 Bellaire employees will join the existing 1,300 employees at the Westhollow Technology Center, which will be renamed Shell Technology Center-Americas.
The project will move the operations of Shell Exploration and Production Technology from Bellaire to Westhollow, which opened in 1975.
Shell said in 2006 that it planned to close the Bellaire facility, but the move to Westhollow was just announced last week.
The project will bring together the upstream exploration and production research of the Bellaire Technology Center with the downstream research -- refining, manufacturing, fuel blending -- done at Westhollow.
Westhollow is located on 200 acres with 43 buildings encompassing more than 1 million square feet of laboratory and office space.
The modernization project will add 150,000 square feet of new space spread out among a laboratory building, a multipurpose facility and a shipping and receiving building. for more information see www.houstonrealtyadavisors.com or www.houstonrealtyadvisor.net
WACHOVIA PROVIDES $23.53 MILLION FOR OFFICE BUILDING CONSTRUCTION
THE WOODLANDS, TEXAS — Wachovia Bank N.A. has provided $23.53 million in construction financing for Sierra Pines, a 180,000-square-foot, speculative office building located in The Woodlands. Situated on 35.5 acres at 1601 Sawdust Rd., the Class A office building is scheduled for completion in January 2009. It is the first phase of a three-building, 540,000-square-foot office development. Holliday Fenoglio Fowler’s Matt Kafka and Adam Jackson originated the loan on behalf of Stream Realty Partners LP. The property is leasing at a rate of $18 per square foot triple-net. For more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com
Thursday, July 3, 2008
Glazier Sells Headquarters
Glazier Foods Sells Heaquarters Jun 26, 2008 - The Houston Business Journal
Glazier Foods Co. has sold its 286,000-square-foot, Northwest Houston headquarters and distribution facility to GSL Welcome Group LLC.
Financial terms of the deal were not disclosed.
Glazier, a Houston-based food service distributor, will continue to lease the 33-acre facility from GSL and will be responsible for improvement and maintenance of the facility.
Houston-based GSL, a real estate development company, will fund a $14 million expansion to the property in addition to the purchase price of the building. The 160,000-square-foot expansion increases the facility's freezer and dry storage areas.
Design for the addition is under way and construction is expected to be completed within 12 months.
The broker for the deal was Yancey-Hausman Commercial Real Estate Services. Fro more information see: www.houstonrealtyadvisors.net or www.houstonrealtyadvisors.com or www.edayres.com
Glazier Foods Co. has sold its 286,000-square-foot, Northwest Houston headquarters and distribution facility to GSL Welcome Group LLC.
Financial terms of the deal were not disclosed.
Glazier, a Houston-based food service distributor, will continue to lease the 33-acre facility from GSL and will be responsible for improvement and maintenance of the facility.
Houston-based GSL, a real estate development company, will fund a $14 million expansion to the property in addition to the purchase price of the building. The 160,000-square-foot expansion increases the facility's freezer and dry storage areas.
Design for the addition is under way and construction is expected to be completed within 12 months.
The broker for the deal was Yancey-Hausman Commercial Real Estate Services. Fro more information see: www.houstonrealtyadvisors.net or www.houstonrealtyadvisors.com or www.edayres.com
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