July 9, 2015

Grand Oaks Business Park Expands

Dmac Construction & Development has fully leased all the buildings in Grand Oaks Business Park, so it's kicking off another.

President Lance McIntyre tells us the new development is a 30k SF tilt-wall. The firm completed Phase 2 of the park last year and took this site photo recently with its drone. It's now full, and tenant demand is still strong, so Lance says it's breaking ground this week on the next building. The team is trying something a little different; Lance tells us office demand has been high, so Dmac's creating small suites on the street side of the building dedicated to tenants that want under 2k SF and no warehouse space. Three more buildings are on the site plan in Grand Oaks, which would bring it to 150k SF.

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Dmac has a number of other developments working—it's close to delivering a 30k SF sports facility in Katy. (Rain's being a pest, Lance says, but it should finish by month's end.) That building sits next to the mall on Kingsland Boulevard and will house Elite Volleyball Club. Dmac and Three Square Design—which is handling all of Dmac's latest projects—got creative with the tilt-wall panels with vertical and horizontal windows. (The team's been calling them "crazy windows" and went through 100 versions before selecting these.) 

Dmac also just completed a 108k SF office/warehouse build-to-suit for Ellen Lighting off the Beltway and Stafford. It's an all-in-one building with a showroom, retail, office and warehouse. (Lance says the flexibility in design and texture in tilt-wall made it ideal to blend the functions together.) The facility is concrete tilt-wall with a glass curtain wall, wood pattern panels and a two-story portal entry. The lobby includes the owner's high-end light fixtures, a coffee bar and a floating staircase.

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Large Industrial Building Coming to IAH

Huntington Industrial Partners and Cypressbrook Development Co are teaming up to develop a 168k SF cross-dock warehouse/distribution facility. Dubbed the Volta Distribution Building, the facility is half a mile from Bush Intercontinental in Humble. Seeberger Architecture designed the building, which includes 130-foot truck courts and 39k SF of outside storage. EE Reed is the GC; Volta is slated to deliver this December. The biggest challenge to the project has been weather, Perry Seeberger tells us—it's rained almost every day since groundbreaking.

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Allied Orion Brings Multifamily to Pearland

Allied Orion broke ground on Southfork Lake, a 328-unit apartment community in Manvel. Besides the usual fitness and pool amenities, Southfork Lake has a pond and walking track, an air conditioned pet care center and the area's largest dog park (6k SF with separate areas for large and small dogs). It's the first project the firm has built in the Pearland area. The project is designed by Steinberg Design Collaborative and is slated to open in summer 2016. It's zoned to the new Shadow Creek Ranch High School, which will open soon.

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Q2 Office Stats a Mixed Bag

Houston's office market posted 537k SF of positive direct net absorption in Q2, but new supply outpaced demand for the fourth consecutive quarter. YTD direct absorption is 562k SF, well below the 2.5M SF absorbed in the first half of 2014. PMRG's quarterly report shows that Class-A led the way, with 688k SF of occupancy gains, mostly in the Katy Freeway/Energy Corridor and FM 1960/SH 249 submarkets. (That's largely driven by companies like Noble Energy, Sasol and GE Energy upgrading their office space, leases that were inked in new construction before the oil slump, director of research Ariel Guerrero says.) However, nearly 2.1M SF of construction deliveries still pushed Class-A occupancy down 110 bps to 87.1%. That's still better than Class-B, which experienced 177k SF of losses, declining occupancy to 84.8%. That's largely thanks to Exxon, which left behind 332k SF at 13501 Katy Fwy.

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That's a trend Ariel's seen over the past three quarters: corporate office users (Exxon, Shell, Halliburton, Southwestern Energy, etc) have vacated roughly 2.5M SF of leased space as they moved into new corporate-owned projects. (That bumps them off the record--PMRG doesn't include corporate-owned projects in its competitive data.) The Galleria was a surprisingly ugly spot on the report—it posted 365k SF of negative absorption in Q2. That's mostly Class-A, and Ariel says it's largely attributable to Telecheck First Data vacating 119k SF at Galleria Place I (pictured) and GE Energy moving out of 145k SF at Park Towers. There's a silver lining, though. Although maintaining this level of absorption would push us below our 20-year historical average (2.5M SF a year), it'd just bring us back to our long-term occupancy norm. For the past three years, the Class-A office market has been exceptionally tight. There's a high volume of leases expiring from 2017 to 2019, Ariel tells us, plus pent-up demand from tenants delaying office decisions now, so he expects leasing activity to return to increased levels over the next two years.

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Mel Blanc insisted on chewing real carrots to provide the chomping sounds when he voiced Bugs Bunny. Send your news to Catie Dixon, catie@bisnow.com.