January 7, 2015

Stream Buys 600 Jefferson

Texas Capital Bank is sponsoring the 5th Annual Industrial Real Estate Summit on Jan. 29 (register here).  This full-service commercial bank has assembled the most experienced financial experts to deliver a new level of service excellence to Houston.  Find out more here.

Stream and DRA Advisors closed the acquisition of 600 Jefferson, and plan to convert the 450k SF, Class-B building anchored by United Airlines into Class-A.

Stream's Adam Jackson, Stewart Lyman and Craig McKenna will lease the property. They tell us there's a scarcity of CBD office product at this price point that's as well-located and efficient as 600 Jefferson. It's one of the most easily accessible buildings Downtown, has rectangular floor plates with minimal internal columns, and is right at the gateway to the vibrant Midtown neighborhood. Stream and DRA will extensively renovate the property, currently 92% leased, to elevate it to top-tier status.

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BEYOND (Mercantil) HOU
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Four 2015 Predictions

Houston's real estate experts agree—don't freak out about oil prices. We rounded up some of the industry's biggest names, who say the market will slow, but Houston's not headed into a new recession.

1. Chip Colvill: Shelved developments will maintain strong office market.

Colvill Office Properties president Chip Colvill (fishing with his dad and uncle) thinks our office market will maintain steady growth in 2015, and he's very optimistic that our strong economy will resiliently carry us through any inconsistencies in the energy market. He thinks many proposed office projects will be shelved (some already have been), which will allow the market to catch its breath and balance supply and demand. (Only the best projects with proven pre-leasing demand will happen.)

2. Chip Clarke: Retailers will flock to Houston, and we'll keep adding jobs.

Transwestern president of the Americas Chip Clarke thinks Houston will continue to be the focal and entry point for new retailers coming into the state. He says things will be choppy in the short-term, but mid- and long-term fundamentals are strong, and job growth will still exceed historical averages. The Greater Houston Partnership agrees—its 2015 forecast predicts 125,000 new residents and about 63,000 new jobs in 2015. Last year ended up better than anyone ever imagined—we created almost 121,000 new jobs in the 12 months ending in October.

3. Rand Stephens: Office leasing will slow, but rents will hold steady.

Avison Young managing director Rand Stephens thinks leasing volume and occupancy rates in office and industrial will decline, but not enough to significantly impact rents. Rand suspects concessions like rent abatement and TI allowances will pick up, and sublease space will increase significantly as energy companies that tied up space anticipating future growth look to right-size in the short-term. And while many investors will move to the sidelines, he thinks the smartest ones will take advantage of less competition to find better buying opportunities. Most importantly, Rand's crystal ball shows the Rockets winning the NBA championships and the Texans making it to the playoffs.

4. Randy McCaslin: Hotels are in the sweet spot.

PKF Consulting SVP Randy McCaslin says the hotel market is in its sweet spot with occupancies and rates at record highs. Although 2015 may see slower growth, he thinks it'll remain above long-term averages. Randy forecasts approximately 6,000 new hotel rooms will be delivered to the Houston market through 2017, while numerous demand drivers will help normalize the markets.

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PMRG (8300FM) HOU
Moody Rambin (MasonCreek2) HOU
Bisnow (RawSpace-Crowd)
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Daikin Consolidates in Houston with $417M Development

Daikin Industries, the world's largest manufacturer of heating, cooling and refrigerant products, is planting a big flag in Houston, building one of the largest HVAC manufacturing facilities in the country. The $417M campus is the biggest investment in the firm's 40-year history, and will begin construction in Northwest Houston the next few months and open mid-2016. It'll also expand Daikin's offerings--for the first time, it'll manufacture both ducted and ductless HVAC products for distribution worldwide. Operations will be relocated from across Texas and Tennessee, and the new facility will eventually house about 4,000 employees.

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Join Us for Our First Event of 2015!

Houston's industrial real estate is one of the very best in the nation. Will that momentum continue through 2015? Will another submarket rise to compete with the saturated Northwest submarket? Join us for Bisnow's 5th annual Industrial Real Estate Summit, Jan. 29 at the JW Marriott. We've collected a panel of some of Houston's biggest developers to discuss leasing rates, new investment and future pipelines. Don't miss it (plus our legendary networking hours)--register now and we'll see you there!

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When the Macedonians began conquering Greek city-states, Philip II (the father of Alexander the Great) sent a message to Sparta--"You are advised to submit without further delay, for if I bring my army on your land, I will destroy your farms, slay your people and raze your city." The Spartans responded with one word: "If." Philip never attempted to conquer Sparta. Send your news to Catie Dixon, catie@bisnow.com.