Cerberus Capital, in partnership with Hines, has agreed to acquire the 600 Travis building, a 75-story office property known as the tallest tower in Texas, reported Real Estate Alert.
The sales price was approximately $627 million. The seller is Prime Asset Management, which is controlled by family of Rafic Hariri, the prime minister of Lebanon, who was assassinated in 2005.
Cerberus, a New York investment firm, is taking a 90 percent stake in the building and Hines will hold a 10 percent share.
The 600 Travis building, known as the JPMorgan Chase Tower, is located in Houston.
Houston’s office market is experiencing a shift in the market as flight to quality increased demand for new developments, according to Cushman & Wakefield. Occupiers are concerned with labor shortages, and the competitive environment in recruiting and retaining talent will continue to drive demand for new product. While new development in an oversaturated market could be a cause for concern, only 12.2 percent of the total inventory was built after 2010 and represents only 2.7 percent of the total available space.
Landlords of older properties are seriously weighing their options for renovation, amenitizing, demolition, reskinning or repurposing properties no longer desirable in their current condition.
Nearly 2.4 million square feet is under construction, with 41.4 percent pre-leased. Park Place, a 200,000-square-foot speculative development in the West Loop/Galleria submarket, broke ground in first quarter 2019. Several developments are scheduled to break ground later this year, including Hewlett Packard Enterprise’s 568,000-square-foot campus in The Woodlands, and TownCentre Two, a 185,000-square-foot building in the Katy Freeway submarket. The co-working trend continues and has been driven by demand as a building amenity for both landlords and tenants. More than 400,000 square feet of co-working space is scheduled to open in 2019. Leasing activity slowed in first quarter 2019, but is expected to pick up throughout 2019. Despite signs of improvement, Houston’s office market could take several years to return to the 10-year average availability of 24 percent.