J.P. Morgan Asset Management has turned over to CBRE Group Inc. the property management and leasing of five buildings totaling 4.2 MSF in the Houston Center complex on the east side of downtown Houston, CBRE announced yesterday. J.P. Morgan acted on behalf of institutional investors it advises. The five buildings are Class A office buildings 1 Houston Center, 2 Houston Center, Fulbright Tower and 4 Houston Center, as well as retail-based The Shops at Houston Center.

Built between 1974 and 1984, Houston Center helped revitalize the east side downtown area, eventually encouraging the development of other large-scale buildings such as Minute Maid Park, Toyota Center, Discovery Park, Hilton Americas Hotel and Hess Tower.

CBRE provided Commercial Property Executive with additional particulars on the individual buildings. One Houston Center/LyondellBasell Tower, located at 1221 McKinney St., spans 1.1 million square feet across 46 stories. It was built in 1978 and is 93.9 percent leased. The building was renamed LyondellBasell Tower late last month after a lease extension by the Dutch-headquartered multinational chemical company.

Two Houston Center, located at 909 Fannin St., spans just more than 1 million square feet across 40 stories. It was built in 1974 and is 91.7 percent leased. Fulbright Tower — formerly Three Houston Center — is located at 1301 McKinney St. and spans 1.25 million square feet across 51 stories. It was built in 1982 and is 86.8 percent leased. The named tenant is Fulbright & Jaworski L.L.P., one of the 50 largest law firms in the country. The final office building, Four Houston Center, is located at 1221 Lamar Ave. and spans 674,000 square feet across 16 stories. It was built in 1983 and is 91.5 percent leased.

The retail component, The Shops at Houston Center — formerly known as Park Shops — is located at 1200 McKinney St. It spans 200,000 square feet. The Shops was built in 1982 and heavily renovated in 2003; it now stands at 80.4 percent leased. As is typical of downtown, service-center retail, it has no large anchors, instead mostly convenience and lunch-oriented tenants.

According to just-released figures from the Greater Houston Partnership, the city led Texas in job growth last year, accounting for one of every three jobs created in the state. The 10-county Houston area added 75,800 jobs, a 3.0 percent increase in metro-area employment over the previous year.

Kings Crossing Shopping Center has found a new owner, as the grocery-anchored retail property in Fairfield, Conn., has just been picked up by TIAA-CREF from the previous owner, HH East Parcel L.L.C., an entity led by Summit Development. CBRE Group Inc. represented the seller and procured the buyer.

The property’s purchase price was $57.5 million, according to LoopNet.

Kings Crossing, which features a Whole Foods anchor store in its 80,702 square feet, is located directly next to newly opened the Fairfield train station. The center was developed in 2011 and is 95.5 percent leased to national chains including CVS, Petco and JP Morgan Chase. Since the property was opened so recently, the first lease is not set to expire until 2021.

“Kings Crossing is the newest center in the high-barrier-to-entry and superior-demographic Fairfield market,” Jeff Dunne, vice chairman with CBRE, said. “TIAA recognized the center’s unique combination of trophy quality construction, credit tenancy and in-fill location, providing stable long-term income.”

The life company has been investing heavily in retail of late. In October, TIAA-CREF partnered with CBL & Associates Properties Inc. on a $1.1 billion joint venture to invest in four shopping malls across the Midwest.

Additionally, grocery-anchored retail has been a target for many investors in recent quarters. Last week, Kentucky’s Springhurst Towne Center sold for $78 million to a client of Savills. Regency Centers made its first foray into the New York market with a $73 million buy on Long Island in mid-January. And Blackstone nabbed quite a bit of retail real estate in December when it ponied up $473 million for 3.9 million square feet of shopping centers, most of which were anchored by Publix grocery stores.

Image courtesy Flickr user laverrue

It’s good to buy when opportunity presents itself and, capitalizing on one of those opportunities, a consortium including affiliates of Starwood Capital Group, the LeFrak Organization and Invesco Ltd. have purchased a beachfront, mixed-use property in Miami’s South Beach, including a hotel formerly known as the Gansevoort.

While the terms of the deal were not disclosed, the partners announced a $100 million renovation project for the property, which already includes 334 hotel rooms, 255 condo units across 294,000 square feet and 90,000 square feet of retail space. The hotel rooms will be renamed The Perry South Beach until its re-launch in 2013, when a new brand will be unveiled after the renovation. The partners also anticipate improvements to the condos, which will put the units on the market in late 2012.

Barry Sternlicht, chairman & CEO of Starwood, said that “global interest in the Miami marketplace is close to surpassing an all-time high,” noting that his firm has the opportunity to “create an outstanding destination resort and residences in this outstanding city.”

According to a report by Marcus & Millichap Real Estate Services Inc., Miami saw a 9 percent increase in demand for hotel rooms year-to-date in August of 2011, as compared to the same period a year prior. Additionally, the sector as a whole performed well into the fourth quarter of last year, with Florida as a whole seeing occupancy rise by 4 percent on a 6.7 percent jump in room demand. And, to Sternlicht’s point, not all of the spending has been from domestic sources: “A weak dollar relative to the euro has also boosted international travel to leisure markets such as Miami and Orlando,” the report noted.

As Commercial Property Executive previously reported, a Jones Lang LaSalle Inc. report sees hotel investment volume to hold steady in 2012, reaching the same $30 billion range as last year.

The property was sold by entities controlled by Credit Suisse, which had acquired it through foreclosure in 2010. Jones Lang LaSalle Inc.’s hotels group brokered the transaction for the financial-services company.

In a sale arranged by real estate investment banking firm Savills, one of the firm’s institutional-investor clients picked up the Springhurst Towne Center, an 830,000-square-foot retail complex in Louisville, for $78 million. The seller, a partnership led by D. Talmadge Hocker of the Hocker Group, was represented by Savills.

Springhurst last changed hands in 2009, when Centro Properties took it off its books for $42 million – meaning the purchase price appreciated nearly 86 percent in two years. Market conditions for retail – specifically grocery-anchored retail. “As investors continue to seek out reliable investments, cap rates will continue to fall only for core properties, particularly urban retail, fortress malls and top-ranked grocery-anchored strip centers,” Margaret Caldwell, managing director of Jones Lang LaSalle retail, said. “Average cap rates for strip centers have hovered around 8 percent this year, while strips with grocery stores have been much lower, dropping 50 basis points over the last nine months or so.”

The Louisville area has been on the road to recovery throughout 2011 – albeit slowly. The unemployment rate, which peaked at 11.1 percent in January 2011, dropped to an estimated 8.5 percent by year’s end. According to a report by services firm Cushman & Wakefield Inc., the city will see a drop in retail vacancy overall, especially as space vacated by national tenants is reabsorbed and no new construction sits in the pipeline.

“Talmage Hocker’s performance with this asset was impressive,” John Williams, managing director with Savills, said. “Not only was he able to buy the property when credit markets were frozen, he succeeded in leasing more than 60,000 square feet to new tenants and significantly strengthened the tenant roster and cash flow. “

Springhurst is the area’s largest shopping complex, with sales in excess of $200 million per year. The venue is nearly 100 percent leased to retailers including Target, Dick’s Sporting Goods, Office Max and a Cinemark Cinema.

Artist's rendering of ground-level retail at 530 Fifth Ave. after renovations.

While there have been some predictions for the cooling of the New York City office market, and even some talk of Downtown becoming the new hotspot of development, don’t ever count out Midtown. Near the close of yesterday’s markets, Jamestown Properties and Rockwood Capital announced the $390 million acquisition of 530 Fifth Ave. – also known as the Bank of New York Building – which is soon to undergo a $20 million renovation to bring the property to Class A standards. The purchase’s partnership also included Crown Acquisition and Murray Hill Properties.

“530 Fifth Ave. is considered an iconic building on Fifth Avenue and we look forward to restoring the property to prominence,” Michael Phillips, COO of Jamestown, said. “In addition, Fifth Avenue south of 48th Street has become a hot-bed of retail activity in the last year, and following the renovations at 530 Fifth Avenue, the building will be a stand-out option for retailers.”

A report in the third quarter of 2011 by Jones Lang LaSalle Inc. found that Fifth Avenue was the second-most-expensive street, on average, for domestic asking office rents at $97 per square foot. Similarly, Cushman & Wakefield Inc.’s data showed that the Midtown market, which ended 2010 with a 10.6 percent vacancy rate, saw that number fall to 9.6 percent by the end of 2011. Class A asking rents in the same time period increased from $67.27 to $71.22 per square foot.

The building’s office-leasing efforts will be led by Newmark Knight Frank’s president, David Falk. “When the building is re-introduced with the proposed renovations underway, I believe there will be tremendous interest from tenants that want the Grand Central location but are looking for a building that matches a company’s high-profile brand and image.”

Retail development and leasing will be handled by Jamestown and Crown, which will likely prove to be a fruitful initiative. According to Cushman, Upper Fifth Avenue saw a fourth-quarter 2011 average ground-floor asking rent of $2,338 per square foot, a 12 percent increase from the previous quarter. Lower Fifth Avenue, where the acquisition is located, increased 50 percent in the same timeframe to a record $865 per square foot.

Capitalizing on what will likely be a strong year for retail, Clarion Partners has acquired a 187,000-square-foot shopping center in Covington, Wash., for $31 million. The purchase was made on behalf of one of the firm’s clients.

“Covington is a highly desirable, family-oriented town with strong employment and household growth,” Stephen Latimer, a managing director at Clarion, said. “With its outstanding list of tenants and attractive location, the center is well positioned to take advantage of the expanding retail sales and improving economic fundamentals anticipated for the area.”

According to a third-quarter 2011 report by services firm Marcus & Millichap Real Estate Services Inc., Latimer’s sentiments are correct. Leasing velocity has been increasing rapidly in the entire Seattle-Tacoma market, with core areas leading the way but with suburban locations also seeing the benefits of growth. “In the past 12 months,” the report noted, “institutional and high-net-worth buyers resumed multi-tenant acquisitions, targeted core-anchored centers.” The area’s addition of 48,000 jobs through 2011 – led by the tech sector – increased payrolls by an average of 2.9 percent.

The shopping center is 98 percent leased, and Home Depot serves as the anchor tenant. Other tenants include Bank of America, Verizon Wireless, UPS, International House of Pancakes, and Remax, as well as numerous local businesses. Annual income averages over $90,000 within five miles of the property. In addition to the center, Covington is home to a number of national retailers, and acts as a retail hub for the surrounding region. New construction in the area is generally limited by high design standards and a lack of developable land parcels.

Capitalizing on the increased need for both office and retail space, Hines has partnered with DLF Ltd. to begin construction on One Horizon Center, which will be located southwest of New Delhi in Gurgaon. The project will include a 25-story office tower with 800,000 square feet of space, as well as 65,000 square feet of retail.

“Along with DLF, we are proud to celebrate the start of construction of One Horizon Center,” Hines CEO Jeffrey Hines said. “India is an important market for us with huge potential, as we see growing demand among discerning clients. We have invested significant time to study and understand the needs of the market, and we are committed to extending our international best practices to this development.”

According to a report by Cushman & Wakefield Inc., demand for quality real estate in India is going to see strong upswings. “Retailer expansion in India is a result of a combination of strong economic growth driven primarily by internal consumption backed by quality retail supply being provided in major cities across India,” Jaideep Wahi, director of retail services for India, said. “Growth in the luxury sector has been a rising trend. 2012 will provide a conducive environment for further retail expansion in India, with continued economic growth and new shopping centre supply in the top ten cities.”

Additionally, a report by Jones Lang LaSalle Inc. pegs India’s GDP growth at 7.7 percent for 2012, “as generally vibrant consumer spending should help to offset slowing exports and investment spending.”

One Horizon Center marks Hines’ first project in India and is scheduled for completion in 2013. The structure is being built to LEED sustainability criteria that includes a dual-paned glass façade.

A spate of media reports over the past two or three days have speculated about whether Silverstein Properties Inc. will build the 3 World Trade Center tower to its planned 80-story height, or will cap it at seven, and what this indicates, or doesn’t, about the Class A office market in Downtown Manhattan.

Here’s the deal: The original master development plan agreed to in August 2010 specifically stated that the construction of the 3 WTC tower, as opposed to its retail-oriented podium, would be conditioned on the extent of office pre-leasing. In a statement released Tuesday, presumably to clarify the situation, Silverstein Properties president & CEO Larry Silverstein said, “We are 100 percent committed and determined to build 3 World Trade Center to the top as quickly as possible. We agreed to a plan in 2010 that requires us to pre-lease 10 floors of office space before moving forward with the full tower.”

”We are currently speaking with a number of potential tenants and remain fully optimistic that we will sign a lease in time to complete the tower as scheduled in 2015. That agreement, which anticipated the completion of the podium in 2013, in no way prevents us from moving full steam ahead as soon as we secure a tenant.”

In plain English, the development agreement provided substantial flexibility down the road, so that the pace of building could be adjusted to demand for space. While Silverstein, obviously, would like to push the tower to its planned height, the leasing environment may prove to be the roadblock that impedes his progress.

Amid the hubbub, progress continues on several fronts at the World Trade Center site. As of this week, the steel skeleton of 1 WTC has reached 90 floors (of 104) and is now the tallest building in Lower Manhattan. The tower will top off in late spring, according to a Port Authority of New York & New Jersey spokesperson, and is slated for completion in 2013. The plan for 2 WTC is to build to street level and erect the tower (100 percent conventionally financed) later. The initial phase will be completed this year.

At 3 WTC, the concrete core is at the fourth floor. Steel will start to arrive in May, and the building will rise at least to the 7th floor initially.

Four WTC is up to the 61st floor and will top out this spring.

Finally, the transportation hub that’s being built around the interim facility that opened in 2003 is heading for completion in 2014.

Regency Centers has just made its first foray into New York with a $72.5 million purchase of Lake Grove Commons with its co-investment partner, First Washington Realty Inc. The property, located on Long Island, is a Class A retail center anchored by the county’s only Whole Foods. The property was purchased from Blumenfeld Development Group.

Scott Porter, senior manager of acquisitions for Regency, called the location “a strong foundation” for his firm’s entry into one of the top retail markets in the nation. “With an infill location, market-dominant anchors and affluent consumer base, Lake Grove Commons complements Regency’s premier portfolio and will allow us to pursue assets with similar qualities in the Greater New York area,” he said.

Retail, specifically grocery-anchored retail, continues to be on investors’ radar. “As investors continue to seek out reliable investments, cap rates will continue to fall only for core properties, particularly urban retail, fortress malls and top-ranked grocery-anchored strip centers,” Margaret Caldwell, a managing director for Jones Lang LaSalle’s retail group, said in a 2011 year-end report. “Average cap rates for strip centers have hovered around 8 percent this year, while strips with grocery stores have been much lower, dropping 50 basis points over the last nine months or so.”

In September of last year, Regency purchased the 187,529-square-foot, H-E-B-anchored Tech Ridge Center in Austin.

It appears that Vestar is on a roll. The real estate company has secured yet another major property management assignment, its third in approximately 60 days. Coventry Real Estate Partners just tapped Vestar to manage Christown Spectrum Mall, a 1.1 million-square-foot, super-regional retail destination in Phoenix.

Vestar takes over the management duties from co-owner DDR, which had overseen the operational responsibility for the asset on behalf of its joint venture partnership with Coventry. “At Christown, our plans are to enhance the already successful leasing efforts that have been made,” Pat McGinley, vice president of property management at Vestar, told Commercial Property Executive. “Taking the project from 92 percent leased to 100 percent leased will be our challenge.”

Christown, occupying 86 acres within close proximity of a light rail system, first opened its doors in 1961 and took on the title of the first-air conditioned enclosed mall in Phoenix. Coventry and DDR acquired Christown in 2004, and in 2009, the team completed a redevelopment project that transformed it into a combination of indoor mall and power center. Today, the property is leased to a bevy of national and regional retailers, including anchor tenants Costco, JC Penney, PetSmart, Ross Dress for Less, Target and Walmart.

“We have an interior mall component with a host of very successful national tenants and our role is to work on that tenant mix to bring more national and regional tenants to that interior mall portion, and also enhance the success of those tenants over there,” McGinley noted. To that end, Vestar, as is its practice when taking on management assignments, has recruited a local team to provide the type of leasing insight that is best obtained through local brokers with in-depth knowledge. Vestar has chosen commercial real estate services Strategic Retail Group for the task.

Vestar brings its own experience in the Phoenix area to the table as well. The company also manages the 1.2 million-square-foot Desert Ridge Marketplace in Phoenix, and the 1.3 million-square-foot Tempe Marketplace, both of which Vestar developed. “We’re going to build on the successes that we already have with the more than 12 million square feet of local shopping centers that we manage and lease,” he said. “We’re going to utilize the successes that we’ve seen there and bring them to Christown, and what that’s going to do is reenergize the community awareness of the project and reenergize the community to shop there, which therefore, leads tenants to want to locate there. We’re enhancing the tenant mix, enhancing the good things that are already there.”

The Christown contract comes on the heels of two other major assignments for Vestar. Earlier this month, Coventry Real Estate Partners chose the company to spearhead the management of the 1.1 million-square-foot Buena Park Downtown retail complex in Buena Park, Calif. Additionally in November, Vestar became property manager at Westgate City Center, a 400,000-square-foot mixed-use property in Glendale, Ariz.

The fact that Vestar is high on property owners’ radar of late has much to do with experience, groundwork and, well, timing. As McGinley explains it, “We believe that the inroads and relationships we’ve built with institutional owners is coming to fruition more recently because of the increase in property transactions requiring management and leasing changes.” In other words, more work is likely on the horizon.