1of3Fuller Realty Partners plans to find tenants for Parkview I, a four-story, 110,480-square-foot building at 330 Barker Cypress Road it acquired from LNR Partners in a portfolio transaction.Photo: JLL
LNR Partners, a Miami-based special servicing firm that handles distressed assets such as foreclosures, has sold two Houston properties to local investors. Both properties can be improved.
In one of the transactions, an affiliate of Houston-based Fuller Realty Partners acquired a pair of 1980s-era Energy Corridor office buildings that had housed a large engineering firm. Located south of Interstate 10, the portfolio consists of Parkview I, a vacant four-story, 110,480-square-foot building at 330 Barker Cypress Road, and Parkview II, a three-story, 65,220-square-foot building at 333 Cypress Run. Together, the properties are 11 percent leased.
JLL’s Rick Goings, Rudy Hubbard and Kevin McConn represented LNR Partners in the sale.
In an online auction transaction, Fuller Parkview LLC paid in the mid-to-high $30s per square foot for the buildings, according to the buyer, placing the total price between $6.2 million and $7 million.
“We’re excited about the opportunity to get a building like this at this location at this price per-square-foot,” said Steve Darnall, principal and chief operating officer of Fuller Realty Partners. “I don’t know of any buildings in the submarket that have traded close to this price.”
Fuller plans asking rents in the $12- to $14-per-square foot range, plus expenses. Once expenses are factored in, the rate would be less than $20-per-square foot, compared with the typical range of $24 to $27 per-square-foot for Class B properties in the area.
“We’re going to be able to offer the space at very attractive rental rates compared to the overall market,” Darnall said.
Fuller plans to make improvements to the buildings to attract companies that want to upgrade within the Energy Corridor or from other submarkets.
The deal was the first online auction purchase for the investor, which owns 11 office buildings, nine light industrial flex projects and three land parcels in the Houston area.
“Leasing velocity is a question mark, with the office vacancy in Houston,” Darnall said. “We think this area has good dynamics moving forward in the long-run.”
While office vacancy stood at 23.1 percent in the Energy Corridor in the first quarter, the market is turning a corner, according to JLL. The submarket absorbed nearly 150,000 square feet in the first quarter.
“There’s been a lot of very positive things happening,” said Rick Goings of JLL. “Energy firms are growing their capital budgets and the number of people that they employ, which has led to pulling sublease space off the market, or leasing more space or moving into brighter and shinier buildings from different submarkets.”
Parking at the Parkview buildings could be a draw for companies in the area.
“There’s an abundance of parking for both of these buildings,” Goings said. “For a very dense user like a lot of engineering firms, having an abundant parking ratio is critical.”
In the other local LNR transaction, a partnership of Garver Real Estate has purchased Kempwood Tech Center in northwest Houston for an undisclosed price. The property consists of three flex industrial warehouse buildings at Bingle and Kempwood totaling 113,117 square feet. The buildings sit on 7.18 acres at 2700-2778 Bingle Road.
Charles Strauss and Martin Hogan of HFF represented LNR Partners. Scott Wilkerson of Garver Real Estate handled the acquisition in-house for the buyer, CG7600 LP, which plans to remodel and update the properties. Garver Real Estate, founded by C.M. Garver, owner of BRH Garver Construction, has about 1.5 million square feet of warehouse space in the Houston market.
The buildings, in one of Houston’s largest and best-performing industrial submarkets, have about 72,000 square feet available for lease, including a large portion with heavy power in place.
“It’s an opportunity for a new owner to come in, invest some capital, and get them leased,” Hogan said.