The Return of Spec: Myers Crow & Saviers Begins 135 KSF Office Project in Houston’s Energy Corridor
With nary a tenant commitment on the table, Myers Crow & Saviers Ltd. prepares to kick off construction of Mason Creek Office Center, a 135,000-square-foot building in Houston’s Energy Corridor in Katy, Tex. Ground is scheduled to break on the speculative project in the third quarter.
It’s not every developer that has the confidence to erect an office building without a single lease agreement in place, but this is not Myers Crow & Saviers’ first time at the rodeo. Mason Creek will be the 11th spec office project in suburban Houston for the real estate firm, which has had a presence in the city for 13 years. “We have been through several economic cycles and we understand Houston pretty well,” Mark Saviers, a principal with Myers Crow & Saviers, told Commercial Property Executive. “And we believe that the supply and demand dynamics are compelling for this building at that location at this time.”
This building: a two-story, premier asset that will have a high capacity to power call center or data center operations and will qualify for LEED certification by the U.S. Green Building Council. That location: an 11-acre site in the master-planned, covenant-restricted Mason Creek Corporate Park within easy access of I-10/Katy Freeway and within close proximity of a portion of the Grand Parkway that is currently under construction.
This time is the right time. As noted in a report by commercial real estate services firm Colliers International, expansion in the energy sector has triggered a significant increase in demand for office space, and large segments of premier accommodations are particularly coveted, yet hard to find. “At this moment there are no blocks of space over 70,000 square feet available in that area,” Saviers noted. The vacancy rate for Class A space in Katy dropped from 10.5 percent in the first quarter of 2011 to 9.7 percent in the first quarter of 2012, as per the report.
Accommodations, location, timing. Together, these factors provide Myers Crow & Saviers with a degree of certainty. “There are a lot of companies in that submarket that would like to be more efficient — use that kind of building, put people in that kind of workspace and put them out closer to where they live,” said Saviers. “The dynamics of the Grand Parkway and Highway 99, that’s part of what has made this location compelling right now. You’re going to be driving cars on [the Grand Parkway expansion] at the end of 2013 and that makes this location compelling for suburban commuters. Houston is a big city so that’s one of the big advantages to being out in that location. And Katy is where a lot of residential growth has occurred, so we’re going to be in a position to give companies an ability to put a location there, to be very efficient and to be closer to the labor pool and cut off the commute.”
Myers Crow & Saviers Ltd. has tapped Moody Rambin Interests to oversee leasing and management of Mason Creek. The developer has set its sights on securing a single tenant to occupy the facility, or a company that will stake a claim to a majority of the space. And the target audience is, of course, the booming energy industry, as well as the engineering and possibly the healthcare sectors, “It’s all about productivity; employers are looking for productivity,” Saviers asserted. “They want good technology features in a building — fiber optics, power, backup generators — and they want a Class A building at a Class B-plus or A-minus price and that’s what we’re delivering.” Class A Rental rates in Katy increased year-over-year from $27.66 to $30.51 per square-foot, according to the Colliers report.
Mason Creek will be the first major speculative office project to sprout up in the Katy area west of Park Ten. However, other Class A destinations are in the works in the Energy Corridor. Among them are Warmack Investments’ 300,000-square-foot project and The Woodlands Development Co.’s 233,800-square-foot property. Both projects are located in The Woodlands and are 67 percent and 50 percent pre-leased, respectively. Myers Crow & Saviers’ development is on track to reach completion in April 2013.