With more than 570,000 square feet of office and retail space, GreenStreet is one of the most interesting developments in downtown Houston. Two weeks ago, Lionstone Investments, a privately-owned, Houston-based real estate investment firm, purchased an interest in the GreenStreet development, which was known as Houston Pavilions when it opened about seven years ago. GreenStreet, which has entertainment venues, restaurants and office tenants including NRG Energy, covers three downtown blocks along Dallas Street. Realty News Report talked to Jane Page, Lionstone Chief Executive Officer, about the firm’s participation in GreenStreet and other plans.
Realty News Report: Two weeks ago, Lionstone Investments announced it was joining forces with Midway to develop the 570,000-square-foot GreenStreet mixed-use development in downtown Houston. Why?
Page: Lionstone is focused on mixed-use properties that provide a differentiated, unique office and retail environment, with high-level amenities. GreenStreet provides that, which is greatly different from much of what currently exists in downtown. GreenStreet is well-positioned to capitalize on the evolution of downtown Houston with the substantial new residential and hotel development.
Realty News Report: How exactly will the partnership work? Is Lionstone buying a stake in GreenStreet and Midway remains the developer?
Page: Midway will remain the development partner and Lionstone Investments will be the capital partner.
Realty News Report: Is Canyon Johnson still involved in the project? With his fame as basketball star, Canyon Johnson’s Magic Johnson was certainly a headline grabber.
Page: Canyon Johnson is no longer involved. The newly capitalized partners, Lionstone Investments and Midway, have a new vision for the potential of the project.
Realty News Report: What is that vision? How has it been affected by the turmoil in the energy sector?
Page: With the potential of the energy sector to weigh on downtown, we are avoiding commodity type office projects. We have to provide a distinctive environment where the nation’s most productive people want to be and work. Today’s tenants are preferring more and more, rather than a traditional big office property. We are very focused on obtaining a product that people will pay more for, even when the market is weak.
Realty News Report: JLL Capital Markets helped facilitate the formation of GreenStreet’s new partnership. With the current economic situation in Houston, was it difficult to find funding?
Page: That’s a question you’ll have to ask JLL.
Realty News Report: How important are the enhancements by The Downtown Management District?
Page: Very important. The improvements being made along Dallas Street and the connections to Discovery Green, stadiums and hotels, and the Convention Center are paramount. The construction of access to Buffalo Bayou and Buffalo Bayou Park, the predominant pedestrian thoroughfare of the city, adjacent to the site make the location unbeatable.
Realty News Report: Can you comment on reports Lionstone and Midway submitted an offer to buy the downtown Post Office on Franklin Street? How important is the 16-acre Post Office site?
Page: We did. We think it is a large enough and important enough site that it can have a substantial impact on the long-term viability of downtown Houston.
Realty News Report: What is the status of the Hotel Alessandra, a 225-room project now under construction at GreenStreet?
Page: We are not involved with the ownership of the hotel, but it is on schedule to be completed prior to the Super Bowl in 2017.
Realty News Report: Lots of new rooms are being added to downtown, including a 1,000-room Marriott Marquis, which has topped out. What is the health of the hotel sector downtown?
Page: We believe the presence of hotels in downtown is vital to its continued growth of the city. Hotels increase the 24/7 presence of people in downtown, and will be very healthy for the CBD.
Realty News Report: How is the decline in energy prices impacting CRE in Houston?
Page: Downtown has remained relatively stable. Thus far, it has had a lower impact on high-quality, well-located assets, and has had a bigger impact on risky investments. We are planning for additional softness in the next two to three years, but with the influx of additional residential, hotels, and mixed-use projects we think downtown will continue to prosper.
Realty News Report: What else does Lionstone have going on in Houston?
Page: In downtown, 712 Main capitalizes on the similar themes of GreenStreet, a unique, differentiated office environment, rich in amenities, location, and walkability. Sugarland Town Square, another mixed-use project, embodies the same principles of mixing retail, office, residential and hotel in a exceptional atmosphere. Despite the current situation, we continue to have confidence in the Houston area.
Realty News Report, is a Texas-based publication edited by Ralph Bivins.
Oct. 4, 2015