HOUSTON – (Realty News Report) – A vacant Energy Corridor office building, which was completed in 2015 and has never been occupied, has been sold to a Los Angeles commercial real estate firm.
The buyer, BH Properties, will make some improvements to the Mason Creek II, and open it to tenants for the first time.
Groundbreaking in June 2014 When Oil Peaked at $108 a Barrel
Groundbreaking for the building, located in the Energy Corridor area of West Houston, was held in June, 2014. Within days of the groundbreaking, West Texas Intermediate crude hit a high watermark of $107.95 a barrel on June 20, 2014.
Then, things went south for oil. The price decline was exacerbated at the infamous Thanksgiving Day 2014 OPEC meeting where Saudi Arabia failed to take action to support oil prices.
By the time the Mason Creek II office building opened in 2015, oil had dropped to $40 a barrel amid international energy market pressures.
Houston’s energy companies went into retreat, shedding employees and office space as the oil prices fell.
Oil Prices Fell, Then Office Vacancy Surged in Houston
Ten years ago, while the Shale Revolution was surging via fracking extraction methods, the office market in Houston’s Energy Corridor was exceptionally strong. Office occupancy was near 99 percent. Developers descended on the Energy Corridor to build new office buildings. But the construction enthusiasm vanished when oil prices crashed.
Today, the Energy Corridor office market has some of the highest vacancy rates in Texas and an office availability rate of 33.4 percent, according to a fourth quarter report by CBRE. Over 6 million SF of office space is vacant in the Energy Corridor and another 1.5 million SF is available as sublease.
The Energy Corridor: Known around the World as Biggest Collection of Oil-Related Office Space
The 127,955-SF Mason Creek II building located at 21700 Merchants Way near Interstate 10, which maintained a world-wide reputation as the largest concentration of energy firm’s offices.
The building had been envisioned as a single-tenant building, but with Covid recasting the needs of office tenants, opening the building to smaller tenants as a multi-tenant option is a better strategy, says Scott Henry, BH Properties managing director of acquisitions.
“We are starting to see increasing levels of activity in the market from companies who had previously delayed decisions on their space needs as a result of the pandemic,” said Henry. “With the Katy office market continuing to outperform most of Houston’s office submarkets, we feel very good about this speculative investment. We plan to amenitize the building with a well-designed tenant lounge and conference center to help attract tenants.”
Jeff Hollinden with JLL Capital Markets represented the seller on the transaction. BH has engaged Houston-based Bob Cromwell and Kevin Nolan with Moody Rambin to handle leasing.
In 2014, Myers, Crow & Saviers, Ltd. developed Mason Creek Office Center II in the Energy Corridor, west of Houston.
And Phase One of the Mason Creek Office Project? (Warren Buffett Was There)
The Phase One Mason Creek building was leased by Geico. With a ribbon cutting officiated by investor Warren Buffett, building one opened a couple of months before the groundbreaking for the Phase Two building.
Jan. 24, 2022 Realty News Report Copyright 2022
Image: Courtesy BH Properties
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File: Never-Occupied Building Opening
File: Geico. Never-Occupied Building Opening in Energy Corridor. BH Properties. Warren Buffett.