Granite Properties Buys Houston Office Complex for $78M
- Feb 04, 2019
Granite Properties has increased its Houston footprint by approximately 824,000 square feet. The company acquired Eldridge Place, a three-tower office complex in the city’s Energy Corridor, from TIER REIT in a transaction valued at $78.4 million.
Located at 737, 757 and 777 N. Eldridge Parkway, the property encompasses One and Two Eldridge Place, built in 1984 and 1986, respectively, and Three Eldridge Place, which opened in 2009. The towers, standing between 12 and 14 stories tall, range in size from roughly 239,400 to 305,900 square feet.
According to Yardi Matrix, Eldridge Place last traded for $103 million in 2006, when it consisted of just One and Two Eldridge. The drastic drop in the sale price 13 years later has less to do with the complex being only 70.4 percent leased or Three Eldridge’s impending full-building vacancy, and more to do with the complex having been significantly damaged by of 2017’s Hurricane Harvey. The building was fully repaired and reopened in April 2018.
All three structures are LEED Gold certified, undergoing a $20.6 million capital improvement program scheduled to reach completion at the end of 2019. Granite relied on internal representation in the transaction, while TIER REIT turned to HFF’s Jeff Hollinden and Martin Hogan.
“With the continued recovery of the Houston economy and Houston’s solid job growth, we’re working to expand our Houston portfolio with high-quality assets in great locations, like Eldridge Place,” Scott Martin, executive managing director with Granite Properties, said in a prepared statement.
Hovering over Houston
The Eldridge Place deal increases Granite’s Class A office portfolio in Houston to approximately 2.3 million square feet. While the year-over-year office sales volume in the metro dropped a notable 44.9 percent in 2018, the investment community’s attraction has not waned, according to a report by Transwestern, and the numbers will soon again serve as evidence of the commitment.
“Investor interest remains elevated given the strong fundamentals and rapid growth of the market,” per the Transwestern report. “That said, the current spread between bid and ask has investors waiting for this delta to reduce before moving forward. Activity should pick back up in 2019 as both off-market and on-market transactions pique investor interest as they look to expand their portfolios.”
Images courtesy of Granite Properties