Hines REIT Pockets $412M on Sale of Houston’s 1.4 MSF Williams Tower

Hines Real Estate Investment Trust brings its ownership of the landmark Williams Tower in Houston to a lucrative end with the $412 million sale of the 1.4 million-square-foot office property to Invesco Real Estate.

Hines Real Estate Investment Trust Inc. brings its ownership of the landmark Williams Tower in Houston to a lucrative end with the $412 million sale of the 1.4 million-square-foot office property to Invesco Real Estate. 

It’s the right time to sell a Class A office asset in Houston. “The Houston economy is one of the strongest in the world, so buyer interest is very high,” A. Blake Williams, a vice president with Hines, told Commercial Property Executive.

Hines REIT parent company Hines developed the premier 64-story building in 1983, creating what was then the world’s tallest skyscraper outside of a central business district. In 2008, Hines REIT added the property and its adjacent parking facility to its portfolio for $271.4 million. What a difference five years make; now Hines has walked away with a sum that marks $100 more per foot than the amount the company had shelled out to acquire the asset, which is linked via sky-bridge to the popular Hines-developed mixed-use Galleria.

Commercial real estate services firm Jones Lang LaSalle Inc. orchestrated the disposition of the iconic LEED Gold-certified high-rise on Hines REIT’s behalf, and investors from regions around the world–the Middle East, Asia and Europe included–flocked to Williams Tower with pocket books in hand.

“The property, occupancy and overall Houston market are in excellent form,” Williams said. Speaking of occupancy, one of the lead tenants at Williams Tower is Hines, which has called the art deco-style office high-rise home for years and will continue to maintain its 139,000-square-foot headquarters there under a new 10-year lease. Other businesses that have helped bring the occupancy level at the building, designed by renowned architects Philip Johnson and John Burgee, up to 95 percent include Williams Corp., NextiraOne, Ecopetrol America Inc. and drilling services provider Rowan Companies Inc., which renewed and expanded its lease to approximately 112,000 square feet at Williams Tower in 2012.

All signs point to a future of continued strong occupancy at Williams Tower, as well as in the City of Houston. “A big factor spurring demand for office product in Houston is the city’s robust job growth over the past few years, and the forecasted job growth that economists expect to continue over the next 3-5 years,” James J. Tramuto, a managing director with JLL, told CPE. “In addition, rental rates have steadily increased year over year, vacancy rates are continuing to decrease across the city, and the fundamentals just make sense. Bottom line: it seems like this is sustainable, and investors are recognizing that.”