Brookfield Pays $875M for Houston Center

With the assistance of HFF, J.P. Morgan Asset Management sold the 4.2 million-square-foot office and retail complex in downtown Houston, in one of the cities largest-ever office transactions.

Houston Center
Houston Center

In one of Houston’s largest office transactions ever, the 4.2 million-square-foot Houston Center has traded for $875 million. Having relied on HFF to secure a buyer, institutional investors advised by J.P. Morgan Asset Management sold the nine-acre downtown property to Canada’s Brookfield Properties. HFF also arranged acquisition financing on behalf of Brookfield.

Spanning 6.5 blocks, Houston Center is the largest property in the city’s central business district. “The amount of interest we had in this offering is a clear indicator that investors think the time is right to make a major acquisition in Houston,” Jeff Hollinden, senior managing director with HFF, told Commercial Property Executive. “Ultimately the size of the deal was a plus, and it actually resulted in inquiries from investors who have not been active in the Houston market in a very long time.”

Comprised of four office structures and a 200,000-sqaure-foot retail component, Houston Center was developed over a 10-year period ending in 1984. CBRE has been overseeing leasing at the complex, which is presently 71.6 leased. The tenant roster features the likes of LyondellBasell Chemical Co., which sparked the renaming of the complex’s One Houston Center to LyondellBasell Tower with its 358,000-sqaure-foot lease extension in 2012.

HOT AND COLD IN HOUSTON

Hurricane Harvey dampened the Houston office market’s ongoing recovery, but it did nothing to diminish the market’s appeal among investors. “Along with Houston’s brightening economic outlook, investor interest has returned and 2017 is poised to put Houston back on track in terms of historic investment volume,” according to a third quarter report by Avison Young. “Office investment volume through the third quarter this year was up by over 200 percent compared with the same time frame in 2016.”

Other notable transactions in 2017 include Parkway’s sale of a 49 percent interest in Greenway Plaza and Phoenix Tower for $512 million. More recently, Trammell Crow sold the 600,000-square-foot Energy Center IV to Bank of America for $275 million.

Photo courtesy of Mabry Campbell