HOUSTON – (Realty News Report) – Dallas-based Dart Interests has hired Hiffman National to manage Republic Square, a 300,000-SF office building on 35 wooded acres at 13501 Katy Freeway in Houston’s Energy Corridor.
Republic Square, formerly the headquarters of Exxon Chemical, was acquired and announced in 2014 by Dart affiliated entities including a unit formerly called Third Palm Capital. The price was upwards of $70 million.
Dart, Third Palm, and a Knock-Out Development Plan
When Dart bought the property, it wasn’t the three-story, circa 1994, office building that generated excitement – it was the land. The property, bordered by Memorial Drive on the south, the Katy Freeway on the north and Terry Hershey Park on the east, the land was loaded with potential. It features tall trees, a lake and trails.
With the surging growth of surrounding energy firms, the site seemed perfect for mixed-use high-rise development years ago.
Dart’s original redevelopment plan envisioned a mixed-use project with 2.6 million SF of office space, 100,000 SF of retail and restaurant space, two hotels and 800 multifamily units.
Then, there was a brutal oil crash – which began with a notorious Thanksgiving Day OPEC meeting in 2014, altering the entire landscape in the Energy Corridor where office occupancy had soared over 95 percent during the fracking revolution. The free fall in oil prices that followed crushed the Energy Corridor office market. New buildings that were erected to meet rapid expansion brought on by fracking became liabilities that sat vacant and unneeded.
Then Hurricane Harvey hit in 2017 dumping over 50 inches of rain on the Houston area and causing catastrophic flooding. Some parts of the Energy Corridor were inundated and unreachable for days.
A Comeback Coming?
Houston’s office vacancy remains high, but brokers report more leasing activity in the first half of 2022. Positive absorption has been reported by some office market researchers and Houston’s sublease office space inventory is around 7.8 million SF, a major improvement over the 11 million SF of sublease supply in 2016.
Plus, West Texas Intermediate crude has been hovering around $100 a barrel and Houston’s job growth has been strong. So, a degree of optimism has been rekindled, despite inflation and the clouds on the economy’s horizon.
Republic Square’s office leasing, which is now being handled by Lee & Associates – Houston, has gained significant momentum this year, said Jim Tainter, senior vice president – Sun Belt region for Hiffman National.
“Dart Interests has an incredible track record of transforming residential, commercial and hospitality environments nationwide into investment-grade properties through the unique lens of their visionary leadership,” said Tainter, formerly an executive with NAI Partners in Houston. “In Houston, where vacancies are approaching 27 percent for office buildings, landlords are prioritizing nicely refurbished space with amenities and hospitality-level service that makes tenants’ employees want to come to work every day.” Dart Interests has adopted this strategy Tainter said.
Dart is not alone. Across Houston, hundreds of millions have been spent on upgrading office properties to remain competitive.
Dart Interests, a national real estate investment and development firm with more than $1 billion in residential, commercial and resort properties in New York, California, Florida, North Carolina, South Carolina, Washington, D.C., and Texas, already partners with Chicago-based Hiffman National on the management of three industrial buildings at Maple Centre in the Inland Empire in Corona, Calif.
“Hiffman National understands Dart’s vision for developing institutional investment-quality commercial properties,” said Jon Herbster, vice president of Dart Interests. “Their proven client-service approach offers our properties a competitive advantage. They bring a like-minded, collaborative asset management approach to our project leasing teams to help attract and satisfy our tenant base, which in turn allows our assets to stand out in the markets in which we operate.”
Years ago, Elkus Manfredi Architects worked on the development plan for Republic Square. Dart Interests retains a long-term vision. The 35 acres, located 20 miles west of downtown Houston, won’t remain a park-like property forever.
When the next up-cycle emerges, Exxon Chemical’s residency will be forgotten and Republic Square could be the topic of conversation in the Energy Corridor, and beyond.
July 25, 2022 Realty News Report Copyright 2022
File: Republic Square’s New Management
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