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Although the firm hasn’t had a year this slow in Houston office leasing since it opened in 2006, that hasn’t stopped Stream Realty from seizing 2016. With 38 deals totaling over 1M SF so far in 2016, Stream is using its wide variety of market expertise to shift the firm’s focus in the down market.
We snapped a cross-section of Stream's Houston office: partner/managing director Paul Coonrod specializes in office leasing; VP Jeremy Lumbreras focuses on industrial leasing; retail specialist senior associate Court Richardson; and managing director Jon Farris is the resident oil and gas tenant rep.
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Jon (a NAOIP Hall of Fame inductee) and Jeremy discussed how growth on Houston’s east side is driving demand. The petrochemical boom in tandem with expansion projects at the Port of Houston have created a hot market in the area, especially for rail-served property. In 2007, vacancy in the area was around 20%, now it’s below 4%. That’s why Stream is flexing its development muscle in 2016 with Bay Area Business Park Phase 2, four buildings totaling 825k SF. The project is being spearheaded by Stream Houston offices’ managing partners Kyle Valentine and Justin Robinson (pictured: they bookend PrinREI director Casey Miller), and is already 70% pre-leased ahead of its September delivery.
While other markets are slowing, retail is heating up. Court (who may have the nation’s worst March Madness bracket) says retailers are still trying to catch up with Houston’s post-recession population boom. Much of the retail market is being driven by the grocery wars as supermarkets make a push to serve new population bases. Target’s recent announcement of two new stores in the Houston area is a good sign that retailers see the Houston market as a strong area.
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On the office side, Paul is seeing minimal movement. A lot of big tenants signed long leases between 2010-2013, and most others are waiting on the sidelines to see how things settle. With over 50% of Houston’s office buildings around 40 years old, there’s a flight to quality happening across Houston. Paul doesn’t see the down market affecting Class-A office assets much; that’s why Stream is renovating 600 Jefferson, converting it to a Class-A building.
With a collaborative open office environment, Stream prides itself on doing things differently, immersing new hires in an intense learning environment with rapid growth. That mentality has been vital in this market. Instead of seeing this as a slow time, Stream sees this as the time to double-down on client service, using the downturn as an opportunity to expose mediocre performance. Something's working—Stream had eight CoStar power brokers this year, the most of any Houston shop.
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