Downtown Tower Pitched For Demo, Redevelopment: The Houston Deal Sheet

Houston is selling a 27-story office building at 611 Walker St. as the city moves its public works department to the former Continental Airlines headquarters at 1600 Smith St.

Cushman & Wakefield’s Tim Relyea was tapped to market 611 Walker as an opportunity to demolish and redevelop the block into what could become an architectural statement for Houston.

“There has not been a site like this available in the last half a century,” Relyea said in a statement.

The site, which also has a parking garage, is near the geographic center of Downtown Houston, catty-corner to Hermann Square. The 767K SF office tower, known as the Bob Lanier Building, was built in the late 1960s.

Relyea worked with Jon Pickard of Pickard Chilton to create a rendering example of a high-rise that could be created if the site finds the right buyer. Other options include a new hotel or residential tower.

“We are extremely excited about the opportunity to offer a major corporation, services firm or investor the opportunity to occupy or invest in what will be the most prominent location in our great city,” Houston Public Works Director Randall Macchi said in a statement. “When the City purchased 1600 Smith, we recognized that it could create a win-win opportunity by making this property available at a time when Houston is once again accelerating.”

Top-tier office buildings can achieve full occupancy at premium rental rates in Houston, even in a challenging office environment, Relyea said, citing Texas Tower as an example. He said a new building at 611 Walker could “be uniquely positioned to attract a major U.S. or regional corporate headquarters, national law firm, Big Four accounting firm, investment bank or a combination of these users.”

SALES

ExchangeRight Essential Income REIT bought the Dow Texas Innovation Center from Brixton Capital. The 664K SF, four-building research and development campus on Abner Jackson Parkway in Lake Jackson is fully triple net leased to Dow Chemical Co.

The sale was completed through an UPREIT and debt-assumption transaction. By exchanging the proceeds into shares of ExchangeRight, Brixton deferred taxes, remains invested in real estate and positioned the investment for long-term growth, Brixton principal Corey Eagle said in a statement. 

CBRE is the campus’s third-party property manager.

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Newman Kelly’s Logan Kelly represented a private investor in the acquisition of two medical office buildings totaling 25K SF in Humble. The seller was represented by David Cummings and Andrew Estrada of Dorado Development Co.

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Miami-based Simi Capital entered Texas with the acquisition of a three-property small-bay industrial portfolio totaling 359K SF in Northwest Houston. The transaction was completed in a joint venture with Decker Capital. 

The portfolio includes 5829 W. Sam Houston Parkway N. and 600 Sam St. in Houston, and 18307 W. Little York Road in Katy.

Sapphire Industrial Lending provided debt financing for the acquisition. Chaim Friedman led the financing for Sapphire.

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KBUSA Properties, the investment arm of Kingsley Beverages USA, purchased two Houston manufacturing buildings totaling 63K SF. The 100% leased properties are at 14406 and 14420 Wagg Way Road. Jason Tangen and Barrett Gibson of Colliers represented KBUSA.

LEASES

EōS Fitness leased 40K SF at 1234 Interstate 45 N. to open its first location in Willis. NewQuest represented the tenant, while Jarrett Adame with First Hartford Realty Corp. represented the landlord.

CONSTRUCTION AND DEVELOPMENT

Lovett Homes plans to build six freestanding homes in a half-acre gated community at 2614-2618 and 2704-2708 Mid Lane, near the River Oaks District and Highland Village. Lovett Homes acquired the property in March and anticipates breaking ground in November.

The homes will have two and a half floors, with four bedrooms and five to six bathrooms. Select homes will have a first-floor office or bedroom. Others will include three-car garages. Early buyers will have opportunities to customize their residence. 

FINANCING

Lone Star Funds secured $110M in refinancing for 1879 at the Grid and Arc at the Grid, two multifamily properties totaling 731 units on a 192-acre mixed-use development in Stafford. TPG Real Estate Credit provided the debt for the properties, built in 2019 and 2020, respectively.

Walker & Dunlop’s Capital Markets Institutional Advisory team, led by Dustin Stolly, Aaron Appel, Keith Kurland, Jonathan Schwartz, Adam Schwartz, Sean Reimer, Michael Ianno and Edward Leboyer, arranged the floating-rate, interest-only loan.