Granite Properties has a handful of projects going into production between now and January and then the investment firm will be done with development for a while.
Granite Properties director of development David Cunningham (right, with Frontier Equity’s Geoff Westcott) says the projects in the works will deliver in 2016, and Granite plans to take a year to stabilize and re-evaluate the market. “We’re concerned about where we are in the cycle,” he said at Bisnow’s 2016 forecast event Tuesday. He tells us rising building costs are making development prohibitive, noting that the biggest expense is often labor. In his 35 years working in this market, he’s never seen this much rapid and consistent rent growth, he says. He’s concerned about the real rent growth and if it’s sustainable. He doesn't want to kill the golden goose, he says. Among Granite's current projects: the 160k SF Class-A Granite Place I (rendered below) at Southlake Town Square, next to the Hilton Southlake Town Square (delivery set for next October). Granite is also exploring redevelopment with the $70M FactorySix03 in West End building project.
Granite, which has a $2B portfolio of 10M SF, has worked to lower its debt—David says the historical average is about 35%, but now the entire portfolio has only 15% debt level. The focus is on quality real estate in good locations with low debt; and providing quality service, he says. Price is not the key measure of a project, he says. It’s not unusual for office users to pay a 10% to 15% premium on rents to provide employees offices with amenities nearby. Good example: the $80M amenity addition of the Hilton at Granite Park, he says. Granite will take advantage of the existing amenities from neighbors, too. The Southlake project, for instance, is by Southlake Town Square.
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