THE LEGENDS OF REAL ESTATE AWARDS 2016 – Ralph Bivins, editor of Realty News Report, has selected the most significant people, projects, deals and ideas of the Houston real estate market for 2016. These aren’t necessarily the largest or the first. But the deals point to future trends, potential gold mines, noble visions and notable accomplishments.
LEGEND: DEAL OF THE YEAR – Parkway Inc., James R. Heistand, President and CEO. Surging vacancies and a bubble of sublease office space have pressured the owners of Houston office buildings over the last couple of years as falling oil prices hammered the office market. Two of the big publicly traded owners of Houston office space – Cousins Properties and Parkway Properties came up with a $2 billion solution. Cousins bought Parkway Properties and all their combined Houston office buildings were placed in a new firm, Parkway Inc., which trades on the New York Stock Exchange.
Parkway Inc. is a pure-Houston play. Every building Parkway owns is in Houston – Houston only. With a portfolio of 8.7 million square feet of office space, Parkway says it’s the biggest owner of Houston office space, ahead of Brookfield, which controls 6 million million square feet. The new Parkway owns major Houston office projects: Greenway Plaza, Post Oak Central, San Felipe Plaza, Phoenix Tower and CityWest Place.
At first, maybe investors weren’t too keen on a stock that essentially consisted of a bunch of Houston office buildings. Houston office space was much maligned. Energy companies were shedding excess office space. Layoffs and bankruptcies created dark headlines. While other parts of the Houston real estate market were holding up nicely, the office sector was getting whacked by the free fall in oil prices. After the merger closed in October, the Parkway stock slid to a low of $16.39 share by early November.
But things have been looking up lately. Oil prices have climbed back above $50 a barrel and the Trump administration has signaled that oil companies will be getting more favorable treatment – all good things for the Houston office market. Parkway stock traded above $22 a share in early 2017, up 35 percent from that low point in November.
Maybe Parkway’s buildings will just be liquidated when the market comes back and sales prices are higher. But maybe having a Houston-only office REIT could be the basis for a strong real estate company of the future. At least it’s an interesting barometer for Houston’s Class A office market.
Coming tomorrow: Realty News Report’s Legends of Real Estate Award for Redevelopment of the Year.
Jan. 3, 2017 Realty News Report Copyright 2017