Lender To Foreclose On Vacant Post Oak Office Building
The owners of 3000 Post Oak Blvd., the 442K SF Class-A office building left vacant by Bechtel Energy's departure, plan to turn the building over to their lender through foreclosure.
The owners were unable to find a path forward for the Galleria-area building after $80M of debt matured and their only tenant left, Ed Glickman, executive chairman of Korea-based AIP Asset Management, told Bisnow. Glickman said the building’s owners are a consortium of Asian investors, including AIP.
The building, constructed in 1979 and once known as Bechtel Tower, was the headquarters of the oil, gas and chemicals company until it moved out in late 2024 to a downsized space in Westchase's CityWestPlace.
“There was no user that came forth for the building as an office building, and we could find no interest in a conversion to either residential or hotel,” Glickman said. “We exhausted possible repositioning opportunities.”
The lender, JPMorgan Chase, plans to foreclose on the building at the Harris County foreclosure auction on Tuesday, according to a public filing. JPMorgan issued three CMBS loans totaling $80M in 2020.
The building will be handed over through the loan’s special servicer, LNR Partners, and the owners are fully cooperating with the plan, Glickman said.
LNR Partners and JPMorgan Chase didn’t respond to requests for comment.
The owners hoped someone would be interested in converting the building, but residential rents wouldn’t support the investment required, Glickman said. Built nearly 50 years ago and last renovated in 2014, the building would also need “a substantial amount of reinvestment” to reposition it for modern office tenants.
“Given the high level of vacancy in the Houston market and the unwillingness of tenants to pay the rents that would economically make the repositioning feasible, there was no opportunity for us as the former owners to go forward with the building,” Glickman said. “And we tried.”
Houston had a 27.7% office vacancy rate in the first quarter, with much of that vacancy in older product. Office buildings delivered since 2015 had a vacancy rate of 15.2% and a direct vacancy rate of 10.2%, according to Colliers.
Tenants want smaller spaces in newer buildings, Glickman said. Bechtel went from leasing all of 3000 Post Oak Blvd. to the entirety of CityWestPlace Building 3. The 205K SF building was built in 1997 and remodeled in 2015, according to Harris Central Appraisal District records.
The 19-story 3000 Post Oak Blvd. is part of a three-building office complex called the Lakes on Post Oak, about a block south of The Galleria. A partnership led by Houston-based Braun Enterprises acquired 3040 Post Oak Blvd. last year, and personal injury law firm Arnold & Itkin filed to complete a $12.9M renovation of its penthouse office there.
3000 Post Oak was AIP Asset Management’s only Houston investment, and it has no further Houston investment plans for the time being, Glickman said.
“It's a nice building, and hopefully somebody will decide to convert it,” he said. “We did a full feasibility study of the conversion, but as recently as last week, I got my last rejection. So it's not for lack of trying.”
Also in Houston’s Galleria area, the 508K SF office building at 1 Riverway Drive faced potential foreclosure before securing a CMBS loan modification last year. It was about 51% occupied at the time.
