Hertz Investment Group sold a three-building Class-A office complex totaling 806K SF to a newly formed joint venture, taking a haircut from its 2018 purchase price.
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Houston-based Meneses Holdings partnered with Irving, Texas-based Dominus Commercial to acquire the 1970s and 1980s-era Brookhollow Central complex near the intersection of Highway 290 and the 610 Loop.
Los Angeles-based Hertz acquired the property in 2018 for about $70.5M, or $87 per SF. Hertz sold the property June 10 in a deal valued at $58.4M, according to a filing with the Tel Aviv Stock Exchange. The joint venture owners declined to comment on the purchase price, which comes out to about $72 per SF.
This is the first office investment for Meneses Holdings, which has a 1,200-unit multifamily portfolio, President and CEO JC Meneses said.
Brookhollow Central I, II and II are on a 10-acre site at 2800, 2900 and 2950 N. Loop W in Northwest Houston. The complex is about 74% occupied, and the owners plan to spend about $2M on renovations, including a tenant lounge, additional food services and a coffee bar, Dominus Commercial President and CEO Stephen LaMure said.
LaMure said the joint venture partners are aligned on the philosophy of contrarian investing. Meneses Holdings has historically bought Class-C multifamily properties, renovated them and sold them, Meneses said, but he believes Brookhollow Central will be a long-term hold.
“We started to diversify, and office space has always been attractive for us,” Meneses said. “Now, coming off the pandemic, we're in a safe spot and the opportunity is great.”
Despite elevated levels of office vacancy since the onset of the pandemic, LaMure said he expects the office market to bounce back because of limited new construction and continuous population growth in Texas.
Plus, Brookhollow Central has been extremely well-maintained and saw more than 400K SF of leasing activity in the past three years, he said.
“It’s a really iconic building in Houston,” LaMure said. “Everybody knows that building, everybody’s seen that building.”
They were especially attracted to the complex’s location, which is about five miles north of the Galleria and just outside Houston’s Inner Loop. While Houston has an overall availability rate of 25.9% in its office market, the North Loop/Highway 290 submarket has a 17.7% availability rate, according to CBRE’s second-quarter report.
“The location is really good for the employees that are coming from the north and west of the Houston area,” LaMure said. “It’s an extra 15 to 20 minutes in traffic to get down to The Galleria.”
The new owners have already seen significant interest in the buildings, he said. Stream Realty Partners’ Brian Strait and Parker Noble will continue to lead leasing at the complex, according to a press release. Available spaces range from 1,895 SF to 101K SF.
Hertz Investment Group did not immediately respond to a request for comment.
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