Rosemont Adds Kirkwood Tower to Houston Office Holdings
- Dec 11, 2014
Rosemont Realty, L.L.C., a Santa Fe, N.M.-based commercial real estate investment company, has expanded its Houston holdings to nearly 2.5 million square feet with the addition of Kirkwood Tower, a 15-story Class A office tower in the city’s Energy Corridor.
Rosemont purchased the 285,682-square-foot property, also known as Kirkwood Tower III, with its new joint venture partner Central Properties from a JV between Denver-based Amstar and Dallas-based Frontier Realty.
The price was not disclosed. When Amstar and Frontier Realty bought Kirkwood Tower at 11757 Katy Freeway in July 2012, the price was also not released.
Kirkwood Tower was built in 1984 and had major upgrades between 2008 and 2010 and 2012 through 2013. It’s located in the heart of the city’s Energy Corridor submarket, providing access to global energy giants such as BP, Conoco-Philips, Dow Chemical and Shell, according to a Rosemont release. The building is 92 percent occupied with tenants including Texon L.P., Skyline Executive Suites, Ltd., KCA Deutag, L.L.C., First Solar Inc., Greene’s Energy Group, L.L.C. and Mac Haik Holding Co. Inc.
“The addition of Kirkwood continues our overall strategy of expanding in key markets where we have a substantial presence,” Michael Mahony, Rosemont CEO, said in the release. “Adding Kirkwood to our portfolio bolsters our existing footprint in Houston, where we have the support and infrastructure in place to provide first class, full-service asset and property management, and leasing services.”
The company has holdings of approximately 16.1 million square feet of commercial office space. It owns 13 office properties in Houston, including Kirkwood Atrium 11, located next to Kirkwood Tower. Rosemont has acquired more than 30 million square feet of commercial space in the United States, deployed more than $775 million of investor equity, and completed transaction worth more than $2.4 billion. The firm, founded in 1991, focuses on stabilized, high-quality assets in secondary markets with strong growth.
“Kirkwood represented the kind of opportunity that was right for Rosemont and our joint venture partner,” Don Henry, Rosemont’s Chief Investment Officer, said in the statement. “Kirkwood meets our investment criteria; it is a high-quality, Class A, institutionally-maintained building strategically located in a well-performing submarket.”
Houston’s office investment sales activity included 26 sales transactions and a total sales volume of approximately $633.2 million in the third quarter, according to Colliers International’s Houston Office Market Research & Forecast Report for the third quarter of 2014. Two of those deals were in the Katy Freeway submarket – 8 West Centre, a 227,045-square-foot building that sold for $76 million, and Two Westlake Park, a 454,843-square-foot building that was purchased for $120 million, the report stated.
A recent Real Capital Analytics report stated the average price per square foot for office properties in Houston to date in the fourth quarter was $180, up from $175 per square foot in the third quarter.
Houston’s office leasing activity reached 2.5 million square feet in the third quarter with transactions including renewals, expansions, subleases, and pre-leases in buildings currently under construction. Suburban Class A space posted the largest gain, with 631,776 square feet of positive net absorption, the majority of which occurred in The Woodlands, Katy Freeway, and West Loop/Galleria submarkets, according to the Colliers International report.
New development is booming in Houston, driven by the large expansion in the oil and gas industry due to the rise of fracking in the U.S., Lisa Bridges, director of market research, Houston, Colliers International, told Commercial Property Executive. More than 17.3 million square feet of new office space is under development in Houston, she said. The report projected 5.3 million square feet to be completed by the end of this month. More than 1.2 million square feet delivered in the third quarter, bringing the 2014 year-to-date delivered inventory to 4.5 million square feet.