HOUSTON – A dozen investment groups, including foreign buyers, submitted bids this week to buy the 1000 Main building in downtown Houston – a transaction that may become the biggest deal ever in the Bayou City.
Foreign buyers, including players from Europe, the Far East, the Middle East and Canada submitted offers to purchase the 36-story building, said Bernard Branca, senior vice president in CBRE’s Houston office.
Branca is marketing the 837,000-square-foot building, which was formerly known as Reliant Energy Plaza. Demand for the property has been exceptionally high, Branca said Tuesday evening where he spoke at the CBRE annual forecast event at the Houston Country Club.
The 1000 Main tower is expected to fetch more than $440 million or $526 per square foot – an all-time record or a per square foot price for Houston. The deal will close in 2014.
The existing all-time record price is the sale of the Hess Tower, which is located in downtown Houston near Discovery Green park. The H&R REIT bought the Hess Tower in 2011 for $442.5 million or $524 per square foot – the high-water mark on a per square foot basis.
But lately, the inventory of big trophy buildings has been thin because so many deals have happened in the recent years. There just aren’t many major properties for sale. Houston has become a highly desirable investment market. The Urban Land Institute just ranked Houston as the No. 1 market in the nation for realty investment and the city has added 119,400 jobs over the last 12 months. So investment buyers – foreign and domestic – have been scouring Houston for opportunities, moving away from their myopic focus on the East and West coasts.
These market conditions make 1000 Main a hot item.
The 1000 Main building, owned by an Invesco Real Estate partnership, is more than 99 percent leased. Rental rates have been rising in Houston’s Class A properties and some buildings are asking $50 per square foot rents – a high point that some thought would never be seen in Houston.
The 1000 Main building was developed by Richard Everett of Century Development and opened in 2003. The Invesco partnership bought the building in 2012 for $355 million. The building is located on the Main Street Square METRO stop on a block bordered by Main, McKinney, Travis and Lamar.
In 2002, when Everett was developing the building, he told me he wanted the tower to be a catalyst for a turnaround of Main Street. At the time, Main Street was not a top-tier business location. But in recent years, with the light rail and opening of many restaurants and clubs, Main Street has become highly popular.
Hines developed the massive BG Group Place tower on Main Street recently and it is nearly 100 percent leased. Hines is following that up with 609 Main at Texas – a 48-story tower that is expected to be rated Class AA+ when it opens in 2016. In addition, the JW Marriott hotel, a four-star property, just opened on Main.
With the significant Main Street upswing, it is now apparent that Everett’s goal to make 1000 Main a catalyst to invigorate Main Street was successful. Now, the foreign investors want a piece of the Main Street action.
By Ralph Bivins, Editor, RealtyNewsReport