HOUSTON – A partnership of Stream Realty Partners and DRA Advisors has purchased the 20-story 600 Jefferson office tower in downtown Houston.
The 450,000-square-foot building, purchased from Brookfield Office Properties for an undisclosed price, will be upgraded with renovations to push the Class B building toward Class A status.
United Airlines is the anchor tenant in the building, which is 91.4 percent leased.
Covering an entire city block, the 600 Jefferson tower is bordered by Jefferson Street on the north, St Joseph Parkway on the south, Smith Street on the west, and Louisiana Street on the east.
“We will be investing a significant amount of capital into the building during the first nine months of ownership,” said Paul Coonrod, managing director and partner with Stream Realty.
The upgrades will include renovating the exterior façade and lobby, upgrading finishes to Class A consistency and changing the building’s address.
Stream and DRA recently partnered to purchase and redevelop another building in Houston at 2323 South Shepherd Dr. in the River Oaks area. That 14-story building was recently sold to Principal Financial Group.
The 600 Jefferson building, constructed in 1972, was designed by Neuhaus & Taylor. It was part of the original Cullen Center master-planned urban project developed by the Hugh Roy Cullen organization. At one time, the 600 Jefferson building was known as Continental Center II, before the merger Continental Airlines and United. The airline also has nearby offices at 1600 Smith.
The overall vacancy rate in downtown Houston is less than 10 percent – one of the best rates in the country – and rents have been rising sharply. Some Class A buildings are quoting rents in excess of $40 per square foot, a record high. The strong downtown market prompted Hines to break ground earlier this year on a 1 million square foot building on Main Street at Texas Avenue, but that building will not be completed until late in 2016.
The purchase price of 600 Jefferson was $69 million, Brookfield reported.
By Ralph Bivins, Editor, RealtyNewsReport