Houston Real Estate in Changing Times: Q&A with Wade Bowlin of PMRG
HOUSTON – (Realty News Report) – It was a marriage of giants — PMRG, founded in Houston to become one of the America’s largest privately-held commercial real estate firms specializing in project leasing, property management, investment management and development services and Madison Marquette, one of the nation’s leading privately-held commercial real estate investment and operating companies. The firms merged in May. An industry leader in mixed-use and retail development and redevelopment Madison Marquette has a number of signature projects including the $2.5 billion District Wharf in Washington, D.C. in partnership with PN Hoffman. Among the trophy properties of PMRG, which leases, manages and provides investment and development expertise across a diverse real estate portfolio is 3737 Buffalo Speedway and the 40-story multifamily development 2929 Wesleyan near Upper Kirby. PMRG will be rebranded as Madison Marquette later this year. To find out more about the merger – and where Houston’s real estate market appears to be headed – Realty News Report sat down with Wade Bowlin, President of PMRG’s Central Division. Bowlin has more than 30 years of experience in real estate with the last 25 years in the Houston market. He has personally averaged over 60 lease transactions per year for every year he has been in commercial real estate.
Realty News Report: PMRG recently completed a merger with Madison Marquette. How is that impacting your clients and operations?
Wade Bowlin: It has been very positive. Madison Marquette’s expertise is very complementary to our business in that their primary focus is retail and mixed-use. Our asset focus has been office, medical office, industrial and multifamily. As a combined firm we are better positioned to be a leader in all product lines and provide a broader range of services to our clients and partners.
Realty News Report: Houston’s office market has been going through a rough patch. How would you describe the state of affairs in the office sector?
Wade Bowlin: There are DEALS in the market, which is exciting since there were very few large significant lease transactions over the past two years. There is still a lot of sublease and vacancy to back fill, so it will take some time for the market to heal. Some older buildings will have to address the fact they may be obsolete and will have to find another use.
Realty News Report: How long will it take for the Energy Corridor office sector to recover?
Wade Bowlin: I am constantly amazed at how fast that submarket vacates space in a downturn and fills up in good times. With energy companies comprising most of this submarket, there are a lot of large deals as the majors tend to take down space in large chunks. In this past downturn, the energy firms gave back space at a pace not seen since the 1980s. This occurred while we were constructing numerous new buildings. Now that we are seeing an uptick in new deals throughout the city, I expect the new space will lead in the recovery and fill up over the next couple of years and the Class B space will have to fight it out to retain and attract tenants. I could see the new buildings filling faster based on past history as we continue to see a “flight to quality” trend in today’s market.
Realty News Report: What about the downtown office market?
Wade Bowlin: If you look at the current vacancy, it is similar following Enron’s collapse in the early 2000s which resulted in Houston having the largest contiguous block of space in the United States. Prognosticators said it would take 20 years to backfill, but the space was completely leased within 18 months with Chevron’s expansion and relocation to the CBD. With new multi-family, retail and rail, the downtown dynamics are so good that someone will likely move into the CBD from another submarket or city and fill the vacancy sooner than we expect. Clearly, the newer buildings are doing just fine with the flight to quality Houston has been experiencing.
Realty News Report: PMRG recently completed a 40-story multifamily rental development at 2929 Weslayan. How is the lease-up going with that tower?
Wade Bowlin: Very well. We are currently 92% and have stayed near capacity for the past two years. 2929 Weslayan delivered product that had never been seen and has achieved the highest rates in the city.
Realty News Report: Do you have plans to start any additional multifamily developments?
Wade Bowlin: Our latest multifamily development just broke ground in Houston’s Midtown district. 3300 Main will include 328 units and 14,967 square feet of ground-floor retail in a luxury high-rise tower on a 1.16-acre site. Additionally, we recently completed The Confluence, a high-rise apartment tower in Denver, Colorado, and we have several other projects in the pipeline.
Realty News Report: What’s the outlook for the overall Houston market for the next year?
Wade Bowlin: I believe we will continue to see growth in all markets and sectors. Job growth should be strong. Trophy and Class A buildings will lead in the recovery and outperform the broader market as the flight to quality trend persists. As a result, vacancy will continue to drop in the Class A+ sector as absorption growth strengthens over the next year. It would be nice to see new construction pause long enough to backfill some of the existing space; however, the flight to quality will have some owners of older buildings looking for other uses.
Realty News Report: Any other comments?
Wade Bowlin: Houston is such a great city located in the middle of the country with diversity not seen in any other city. If we can figure out mass transit, I could see a large influx of new companies.