1 Houston Center to Be Renamed LyondellBasell Tower Following 358 KSF Lease Extension

Posted on by
Reply


January 27, 2012
By Barbra Murray, Contributing Editor

A commitment can go a long way and in the case of LydondellBasell Tower, it’s going all the way to the top — the top of the 1 million-square-foot 1 Houston Tower office building in Houston. The plastics and chemical manufacturer has entered into an agreement to extend its 358,100-square-foot lease with Crescent Real Estate Holdings L.L.C., an agreement that will result in 1 Houston Tower being renamed LydondellBasell Tower.

LydondellBasell has called 1 Houston home for approximately 25 years. Carrying the address of 1221 McKinney St, the 46-story high-rise occupies a full city block in the city’s central business district. The building, which first opened its doors in 1978, is one of four office structures encompassing an aggregate 4.2 million square feet of Class A office space at the mixed-use Houston Center complex.

While LydondellBasell may or may not have been able to have its own namesake tower if it had chosen to leave its longtime home at Houston Center, the company did have options for office digs elsewhere in the city. The office vacancy rate in metropolitan Houston in the fourth quarter was 16 percent, according to a report by commercial real estate services firm Grubb & Ellis Co., and there were a few large blocks of space available for occupancy. Options included 370,000 square feet vacated by the Hess Corp. at One Allen Center and a 360,000-square-foot space at BG Group Place.

Financial details of LydondellBasell’s lease with Crescent have not been disclosed, but outside of what was certainly an agreement with favorable terms, the company had other reasons for staying put. “Houston Center is one of the foremost addresses in the Central Business District and we have a long history in this complex,” Kevin Brown, executive vice president with LydondellBasell, noted in a prepared statement.

Share

Related Posts:

  • No Related Posts


Morgan Group Refis Five Multi-Family Properties for $146M

Posted on by
Reply


January 27, 2012
By Nicholas Ziegler, News Editor

The apartments a 2222 Smith St. in Houston.

The Morgan Group, a company focused on development, construction and property management of luxury multi-family properties, has arranged financing of $146 million on behalf of its affiliated investment partnerships. The proceeds were obtained from bank, agency and insurance company loans with terms ranging from five to ten years, collateralized by five apartment properties in Texas, Florida and North Carolina.

“Current loan rates for multifamily projects were extremely attractive,” Mike Morgan, the firm’s chairman & CEO, said. “It appeared to be a good time to lock in terms for stable, core assets. The five apartment properties we refinanced represent more than 1,700 units in our portfolio.”

These properties include: 2222 Smith Apartments and 33Thirty-Three Weslayan Apartments in Houston, financed by BBVA Compass Bank and Northwestern Mutual Life; The Village at Lake Lily in Maitland, Florida, and Arelia James Island Apartments, in Jacksonville, Florida, which were financed by FNMA and Metropolitan Life; and Spectrum South End Apartments in Charlotte, North Carolina, financed by New York Life.

Finding financing for apartment properties is unlikely to prove difficult in the coming year, as the sector just came off an extremely positive 2011. “The multi-family sector continued its marathon-like recovery in 2011, and has entered full expansion mode in virtually every market,” Hessam Nadji, managing director, of research and advisory services for Marcus & Millichap Real Estate Services Inc., said. “Favorable demographics, the release of pent-up demand as young adults debundle from family and roommates, and increased renter demand due to changing attitudes towards homeownership — which has become increasingly difficult in this country — drove more people into renting. Although the private sector created 1.8 million jobs last year, even greater job creation will be needed to sustain the white-hot levels absorption recorded after the recession.”

Share

Related Posts:

  • No Related Posts


JLL Adds to Tenant-Rep Side with Purchase of Australian Firm

Posted on by
Reply
Jones Lang LaSalle Inc. has acquired Sydney-based tenant advisory firm MPS Properties, the company’s Singapore office announced. The purchase, which strengthens Jones Lang LaSalle’s top position in tenant representation in Australia, makes MPS a wholly owned Jones Lang LaSalle company. With the acquisition, JLL reportedly manages transactions across approximately 43 million square feet of Australian office space.

MPS was founded in 1994 by current head Steve Urwin and operates across Australia in both tenant rep and project management. Its team of six tenant-rep advisors and three project managers are being retained under the new structure. MPS’ clients include PricewaterhouseCoopers, Sony Australia and Swiss Re.

“The acquisition of MPS … is part of our strategy to increase market share in key countries, including Australia, and to expand our service offering to clients,” said John Forrest, CEO of corporate solutions for JLL in the Asia-Pacific market.

According to mid-year 2011 figures from the Property Council of Australia, total vacancy in Australia’s office markets decreased from 9.6 percent to 9.0 percent in the first half of 2011, the lowest level in two years. The decline reportedly was the result of stronger demand and lower-than-average supply. Net absorption over the period was 2.36 million square feet, or about 18 percent above the average over the previous 20 years.

Ireland unveils insolvency reforms

Posted on by
Reply

Dublin has announced an overhaul of its bankruptcy and personal insolvency laws designed to tackle a growing mortgage debt crisis and curb “bankruptcy tourism” to the UK.

Legislation published on Wednesday would enable people struggling with unsustainable debts to emerge from bankruptcy after three years, rather than the current 12 years.

It would also enable consumers on a case-by-case basis to write down mortgage debt while continuing to live in their homes.

Alan Shatter, Ireland’s justice minister, said including secured mortgage debt in the non-judicial personal insolvency system was an almost “unique” situation among common-law countries.

“The bill will assist those in unexpected difficulties as a result of the current fiscal, economic and employment conditions,” he said.

Between 1997 and 2007, Irish property prices quadrupled – the biggest rise recorded by any European country. The subsequent collapse caused a banking crisis that eventually forced Ireland to accept a bail-out from the European Union and International Monetary Fund in November 2010.

Rising unemployment, which now stands at 14.3 per cent, has put huge pressure on many residential mortgage holders. One in six – about 130,000 people – are either in arrears or have had their mortgages restructured by their lenders.

Irish banks have so far resisted government pressure to provide debt forgiveness to mortgage holders for fear it would undermine their balance sheets. Last year, the Irish Central Bank estimated the four main Irish banks could face total mortgage losses worth €5.8bn in the period to the end of 2013.

Mr Shatter said he believed that the new insolvency rules and bankruptcy provisions would provide a significant incentive for banks to come to realistic arrangements with customers.

Under the personal insolvency arrangements, people with debts ranging between €20,000 and €3m could apply to an insolvency trustee to make a proposal to creditors to forgive all or a portion of their mortgage debts. At least 65 per cent of creditors would have to agree to any proposal made for an arrangement to be agreed. If the banks agreed to the proposal, a person could potentially remain living in their home. If the value of the home rose in the future, the profit from any sale would flow to the bank.

Irish officials believe that financial institutions would be more likely to reach agreement on mortgage debt forgiveness than force an individual into bankruptcy.

“If banks walk away from a deal they will have to foreclose and try and sell a house, which will provide them with less money,” said one official.

House prices in Dublin have fallen by 54 per cent since the peak of the “Celtic Tiger” economy in 2007, plunging hundreds of thousands of mortgage holders into negative equity.

A personal insolvency arrangement would be based on a person’s ability to pay, rather than negative equity on a home. This would remove the threat of moral hazard, according to officials.

Mr Shatter said the reduction in the bankruptcy term from 12 to three years should tackle the growing problem of “bankruptcy tourism” to the UK. Several big Irish property developers have recently been declared bankrupt in the UK, which generally releases people from bankruptcy after one year.

Lucescu Closes Phase Two of $166M Scottsdale Promenade Sale

Posted on by
Reply
In a $66 million deal that completes the second phase of the Scottsdale Promenade sale, Lucescu Realty has sold the Promenade Corporate Center to Excel Trust, a publicly traded REIT. In July of last year, the San Diego-based Excel Trust purchased The Promenade, a 730,000 square-foot shopping center in Scottsdale, Ariz., in a $110 million transaction.Scottsdale Promenade, a 1 million-square-foot, mixed-use project, is one of the largest commercial properties in the Phoenix metropolitan area, located on 84 acres of land. The office component of the space consists of two four-story Class A buildings that total 256,176 square feet.

In July, Mark Lucescu, president of Lucescu Realty, told Commercial Property Executive that the Promenade is “a flagship property” that is outperforming most other mixed-use centers in the area. “If there are a handful of properties like this to invest in Phoenix, this is the one you’d want to buy,” he said. At the time of the transaction, “the property was 100 percent leased [and] had plenty of equity,” he noted.

According to NAI Horizon, the Phoenix office market, though in the doldrums through most of 2011, is starting to see some upward moves. A three-year run of continued unemployment, coupled with a flight to quality – which left many properties empty – left the market battered. But the fourth quarter of 2011 saw the office-vacancy rate drop 40 basis points from the previous quarter, finally resting at 20.7 percent. Rental rates, at year’s end, sat at $20.29 per square foot on average.

The center’s retail component is anchored by Lowe’s, PetSmart and Trader Joe’s.

Will 3 WTC Be 80 Stories, or Just Seven? Yes!

Posted on by
Reply
A spate of media reports over the past two or three days have speculated about whether Silverstein Properties Inc. will build the 3 World Trade Center tower to its planned 80-story height, or will cap it at seven, and what this indicates, or doesn’t, about the Class A office market in Downtown Manhattan.Here’s the deal: The original master development plan agreed to in August 2010 specifically stated that the construction of the 3 WTC tower, as opposed to its retail-oriented podium, would be conditioned on the extent of office pre-leasing. In a statement released Tuesday, presumably to clarify the situation, Silverstein Properties president & CEO Larry Silverstein said, “We are 100 percent committed and determined to build 3 World Trade Center to the top as quickly as possible. We agreed to a plan in 2010 that requires us to pre-lease 10 floors of office space before moving forward with the full tower.””We are currently speaking with a number of potential tenants and remain fully optimistic that we will sign a lease in time to complete the tower as scheduled in 2015. That agreement, which anticipated the completion of the podium in 2013, in no way prevents us from moving full steam ahead as soon as we secure a tenant.”In plain English, the development agreement provided substantial flexibility down the road, so that the pace of building could be adjusted to demand for space. While Silverstein, obviously, would like to push the tower to its planned height, the leasing environment may prove to be the roadblock that impedes his progress.

Amid the hubbub, progress continues on several fronts at the World Trade Center site. As of this week, the steel skeleton of 1 WTC has reached 90 floors (of 104) and is now the tallest building in Lower Manhattan. The tower will top off in late spring, according to a Port Authority of New York & New Jersey spokesperson, and is slated for completion in 2013. The plan for 2 WTC is to build to street level and erect the tower (100 percent conventionally financed) later. The initial phase will be completed this year.

At 3 WTC, the concrete core is at the fourth floor. Steel will start to arrive in May, and the building will rise at least to the 7th floor initially.

Four WTC is up to the 61st floor and will top out this spring.

Finally, the transportation hub that’s being built around the interim facility that opened in 2003 is heading for completion in 2014.

Noble Energy Signs 497 KSF Office Lease in Houston

Posted on by
Reply

Approximately eight months after Trammell Crow Co. and Principal Real Estate Investors snapped up the former Hewlett-Packard headquarters in Houston, the joint venture has secured a commitment from Noble Energy Inc. to occupy the 497,000-square-foot office building in its entirety.

“When we purchased the property from Hewlett-Packard, we saw it as a very high quality property in a good location that would be attractive to large corporate users,” Jim Casey, a senior managing director with TCC, told Commercial Property Executive. “It’s a big building and we had aspirations of finding a large tenant or a couple of tenants that would fill it.”

Mission accomplished.

Carrying the address of 20555 State Highway 249, the 10-story tower first opened its doors in 1998 as Compaq Computer Corp.’s corporate headquarters, and later served as HP’s home. The partners are presently submitting the property to a major capital renovation program that will add more shine to the Class A structure, as well as LEED Certification by the U.S. Green Building Council.

Noble will consolidate its offices currently located around the city, including the company’s corporate headquarters 15 miles away at 100 Glenborough Dr., under one roof at 20555 State in the summer of 2013, making the upgraded campus its new global headquarters. And there is plenty of room for Noble’s growth at the site, as TCC and Principal’s acquisition of the asset last year included an adjacent 3.5-acre parcel of developable land.

Noble’s commitment takes one of Houston’s largest vacant office buildings off the market, thereby going a long way to bring down the city’s office vacancy rate, which stood at 15 percent at the close of the fourth quarter, as per a report by commercial real estate firm CBRE Group Inc., which represented TCC and Principal in the lease transaction. Grubb & Ellis Co. represented the tenant.

The timing was just right for securing a sizeable occupant in a market where the availability of premier accommodations with over 400,000 square feet of contiguous space is limited. “There hadn’t been any new development projects in the last couple of years,” Casey said. “There have been buildings that delivered a couple of years ago, but no one’s started anything new. So we thought it was a good window to land a big tenant and we wanted to move faster than what it would take to build a whole new building.”

It remains unclear if the Noble lease is represents a shift in the Houston office market; conditions are improving but only time will tell. “I don’t know that this marks a trend indicating that there will be more large leases or not, but we think that there will be continued expansion of companies in the energy sector here and then maybe other industries as well.”

Marcus & Millichap: Rental Market to Hit New Levels in 2012

Posted on by
Reply
The reports on multi-family’s continued surge keep coming in, and the latest comes from Marcus & Millichap Real Estate Investment Services Inc. In the company’s 2012 National Apartment Report, the multi-family sector takes center stage amid a supporting cast that includes customers of prime renter age, the larger investment picture and, of course, jobs.“The multifamily sector continued its marathon-like recovery in 2011, and has entered full expansion mode in virtually every market,” Hessam Nadji, managing director of research and advisory services for M&M, said. “Favorable demographics, the release of pent-up demand as young adults de-bundle from family and roommates and increased renter demand due to changing attitudes towards homeownership – which has become increasingly difficult in this country – drove more people into renting.  Although the private sector created 1.8 million jobs last year, even greater job creation will be needed to sustain the white-hot levels absorption recorded after the recession.”The report tracked 44 markets across the country in its National Apartment Index, and noted that all locales are set to post effective rent growth in 2012. U.S. apartment vacancy is set to decline 40 basis points to 5 percent by year’s end, which will be coupled with a 4.8 percent increase in rent.

As Commercial Property Executive previously reported, a majority of survey respondents feel that multi-family is poised to be the main leader in the CRE space for 2012. In fact, a Morgan Stanley analyst went as far to call 2012 “the year of the landlord” due to rising rents and falling supply.

The performance of a given metro was strongly tied to the local economy. Markets with strong showings in the technology, financial and hospitality industries made the biggest positive moves in the report’s index. Seattle, at the eighth position, and Las Vegas, at number 36, each rose seven points from the 2011 index. San Jose and San Francisco occupy the top and number-two spots, respectively, followed by New York City at number three.

Barring any unforeseen shocks to the global financial markets, an array of lenders will continue to finance multifamily developments and acquisitions in 2012 against a backdrop of historically low interest rates, according to William Hughes, senior vice president & managing director of Marcus & Millichap Capital Corp. “Fundamentals and a favorable spread against Treasurys will promote multifamily development this year. Fannie Mae and Freddie Mac will remain the chief suppliers of apartment loans in an increasingly crowded field of providers.”

“In fact, monetary policy – both domestically and worldwide – should keep interest rates low for several years to come,” added Hughes. “Expect life companies and commercial banks to grow market share by pursuing assets with good credit features and stabilized revenue.”

Total apartment completions will reach nearly 85,000 units. Household formations are forecast to increase by 29 percent to an annual average of 1.4 million through 2015, aided by rising immigration and 2.1 million echo boomers entering the prime renter-age cohort.

American Campus Communities Takes $208M in Student Housing

Posted on by
Reply
American Campus Communities Inc. has just expanded its portfolio by nearly 2,000 beds with the acquisition of 26 West Apartments in Austin and the purchase of a controlling stake in The Varsity in College Park, Md. The total asset value of the premier properties is $208 million.In Austin, American Campus shelled out $86.2 million to snap up 26 West, a 1,026-bed apartment community sited on five acres just one block from the University of Texas. The building also offers a 1,000-space parking facility and at the time of the closing of the transaction, recorded a residential occupancy level of 98 percent. While the property is only five years old, American Campus plans to take the asset to a higher level with the investment of $2.8 million in capital improvements and amenity enhancements.

American Campus also added The Varsity, a top-of-the-line student housing community across from the University of Maryland, to its holdings with the acquisition of a 79.5 percent interest in the entity that owns the property. The purchase price of the controlling interest was based on a total asset valuation of $121.5 million. The Varsity made its debut less than a year ago in August 2011, featuring 901 beds and 23,000 square feet of student-oriented retail offerings.

The student housing market, unlike most sectors of commercial real estate, remained strong during the debilitating economic downturn, and demand is on track to increase further. “Student housing demand tends not to be impacted by the broader macroeconomic conditions, and the expected growth enrollment is a positive for the industry,” William Talbot, executive vice president of investments, told Commercial Property Executive. “Each individual university market has its own unique supply and demand characteristics. Most enrollments tend to be stable and have slow-moving trend lines.”

Of course, as is the case with any commercial real estate sector, failure is an option in student housing. “Oversupply is the greatest risk to each individual market,” he added.

American Campus has done its homework and identified the appropriate markets for expansion of its portfolio. The REIT will deliver 11 properties, representing approximately $385 million in total development, in time for occupancy for the fall semester this year. The group of assets ranges in size and locations and includes the 978-bed University Pointe at College Station near the University of Portland in Oregon, at a project cost of $87.8 million and Casa de Oro, a $14.6 million, 365-bed student housing community near Arizona State University in Glendale.

“We look at opportunities nationally,” Talbot noted. “Today, we are developing properties from Oregon to New York.” American Campus is keeping mum on the specifics of its target markets for future pursuits; however, the REIT certainly has the money for additional acquisitions and construction. The company relies on a handful of sources to fund its endeavors, including cash on hand, credit facility borrowings and proceeds raised under the ATM program, under which the company sold approximately 1.9 million shares of common stock for net proceeds of roughly $74.1 million in the fourth quarter of 2011.

Vestar to Manage 1.1 MSF Phoenix Mall

Posted on by
Reply
It appears that Vestar is on a roll. The real estate company has secured yet another major property management assignment, its third in approximately 60 days. Coventry Real Estate Partners just tapped Vestar to manage Christown Spectrum Mall, a 1.1 million-square-foot, super-regional retail destination in Phoenix.Vestar takes over the management duties from co-owner DDR, which had overseen the operational responsibility for the asset on behalf of its joint venture partnership with Coventry. “At Christown, our plans are to enhance the already successful leasing efforts that have been made,” Pat McGinley, vice president of property management at Vestar, told Commercial Property Executive. “Taking the project from 92 percent leased to 100 percent leased will be our challenge.”

Christown, occupying 86 acres within close proximity of a light rail system, first opened its doors in 1961 and took on the title of the first-air conditioned enclosed mall in Phoenix. Coventry and DDR acquired Christown in 2004, and in 2009, the team completed a redevelopment project that transformed it into a combination of indoor mall and power center. Today, the property is leased to a bevy of national and regional retailers, including anchor tenants Costco, JC Penney, PetSmart, Ross Dress for Less, Target and Walmart.

“We have an interior mall component with a host of very successful national tenants and our role is to work on that tenant mix to bring more national and regional tenants to that interior mall portion, and also enhance the success of those tenants over there,” McGinley noted. To that end, Vestar, as is its practice when taking on management assignments, has recruited a local team to provide the type of leasing insight that is best obtained through local brokers with in-depth knowledge. Vestar has chosen commercial real estate services Strategic Retail Group for the task.

Vestar brings its own experience in the Phoenix area to the table as well. The company also manages the 1.2 million-square-foot Desert Ridge Marketplace in Phoenix, and the 1.3 million-square-foot Tempe Marketplace, both of which Vestar developed. “We’re going to build on the successes that we already have with the more than 12 million square feet of local shopping centers that we manage and lease,” he said. “We’re going to utilize the successes that we’ve seen there and bring them to Christown, and what that’s going to do is reenergize the community awareness of the project and reenergize the community to shop there, which therefore, leads tenants to want to locate there. We’re enhancing the tenant mix, enhancing the good things that are already there.”

The Christown contract comes on the heels of two other major assignments for Vestar. Earlier this month, Coventry Real Estate Partners chose the company to spearhead the management of the 1.1 million-square-foot Buena Park Downtown retail complex in Buena Park, Calif. Additionally in November, Vestar became property manager at Westgate City Center, a 400,000-square-foot mixed-use property in Glendale, Ariz.

The fact that Vestar is high on property owners’ radar of late has much to do with experience, groundwork and, well, timing. As McGinley explains it, “We believe that the inroads and relationships we’ve built with institutional owners is coming to fruition more recently because of the increase in property transactions requiring management and leasing changes.” In other words, more work is likely on the horizon.