HOUSTON – Clarion Partners, a leading real estate investment manager headquartered in New York, purchased the Westchase Corporate Center, a 184,259 square foot, Class A office building in west Houston for approximately $53 million.
With the building acquisition, Clarion is also gaining the opportunity to build another office building on land now used as a parking lot for Westchase Corporate Center.
JLL Capital Markets represented the seller of Westchase Corporate Center, DRA Advisors. The six-story office building is located on Richmond Avenue, just west of the Sam Houston Tollway. It was built in 1999.
“Westchase Corporate Center provided investors a unique opportunity to purchase a property with a blend of stable cash flow and embedded upside in below-market rents,” said Hubbard. “It offers quality diversified tenancy with an attractive value-add component, and it was designed to allow for a 93,000 square foot, four-level Phase II office building on an existing surface parking lot.”
The price of roughly $290 per square foot indicates an initial annual yield of roughly 7 percent for Clarion, according to the Real Estate Alert newsletter. The building is 98 percent occupied, the newsletter said, but leases on 82 percent of the space are slated to expire within five years. This gives Clarion the opportunity to raise rental rates, which now run about $23.50 per square foot in the Westchase area, Real Estate Alert reported.
The Westchase District has experienced tremendous growth, as Houston’s flourishing population moves westward. Westchase’s office market has been a direct benefactor of this migration, as more corporations are moving closer to their employment base to provide a higher quality of work/life balance.
JLL said the Westchase area has 13.9-million-square-feet (excluding Class C properties) of office space and over 55,000 jobs. Westchase includes 1.8-million-square-feet of retail space in more than 35 shopping centers and more than 50 multifamily properties totaling in excess of 15,000 units and 18 hotels with more than 2,600 rooms.