CBRE Investors Nabs 242 KSF Class A Houston Office

CB Richard Ellis Investors acquired the approximately 242,400 square-foot property, at 2603 Augusta Dr. in Houston's popular Galleria submarket, from Behringer Harvard Opportunity REIT I Inc.

August 26, 2011
By Barbra Murray, Contributing Editor

The Class A office building at 2603 Augusta Dr. in Houston’s popular Galleria submarket has just come under new ownership. CB Richard Ellis Investors, acting on behalf of the CBRE Strategic Partners US Value 5 fund, acquired the approximately 242,400 square-foot property from Behringer Harvard Opportunity REIT I Inc.

CBRE Investors did not disclose the financial terms of the transaction. However, according to an SEC filing, Behringer Harvard walked away with net proceeds totaling $6.3 million following the REIT’s $17.1 million paydown on its senior credit facility. Behringer Harvard had owned the asset since 2007.

Developed in 1984, 2603 Augusta consists of a 16-story office tower and an adjacent seven-level parking structure. The tenant roster, only 56 percent full, provides an upside opportunity and the new owner plans to capitalize on that by repositioning the property to attract new occupants. CBRE Investors will submit 2603 Augusta to a capital improvement program that will enhance amenity offerings and provide a new turnkey office option.

In terms of prospects, the building has location on its side. The West Loop/Galleria submarket is one of the tightest in the city. The average overall vacancy rate for Class A properties there is 9.9 percent, compared to 15.2 percent citywide, according to a second quarter report by Colliers International. “The Galleria is one of Houston’s most sought after submarkets, and the western side where 2603 Augusta is located is especially desirable to tenants commuting from nearby residential neighborhoods,” Darla Szalla, principal with CBRE Strategic Partners US, said.