Tower Sold for Redevelopment in Downtown Houston

HOUSTON – (Realty News Report) – A redevelopment is in the offing for a 17-story downtown building, 1111 Fannin, which just been acquired by Triten Real Estate Partners and Taconic Capital Advisors.

“1111 Fannin represents one of the best redevelopment opportunities in downtown Houston,” says Scott Arnoldy, Managing Partner at Triten Real Estate Partners, a Texas-based firm “We have selected HPA Architecture out of Chicago to help us conceptualize the possibilities of the building. HPA has worked on notable creative office developments and re-developments across the country including HQ buildings for two of the big five tech companies nationally. We look forward to working with HPA to design an experience that will meet the rapidly changing needs of the market,”

JP Morgan has been the sole tenant of the 1111 Fannin building for decades and its lease expires in September of 2021.

The 428,629-SF was marketed by JLL Capital Markets.

In the real estate community, the initial whisper number placed the anticipated sales price around $49 per SF. The ownership of the building has been controlled by Greystone’s special serving unit and the Arnoldy’s final sales price was not disclosed. (Sales price disclosure is not required by antiquated Texas law.)

Sales Price – Below $20 Million?

Investment sales have been slow in Houston, following the pandemic, and the sales price for 1111 Fannin may have been below $20 million.

Arnoldy said: “… importantly our basis will allow us to offer a completely unique experience at a dramatic discount to current market rents. It’s also an attractive option for any user looking to control their own environment.”

Also important is the redundant power in the tower. It has several large generators, a requirement for the bank which demands unwavering electricity.

The building has 31,500-SF floor plates.

The JLL Capital Markets team representing the seller was led by Senior Managing Director Dan Miller, Senior Director Martin Hogan and Analyst Ethan Goldberg.

The sale of the Houston building will give appraisers a contemporary comparable sale in an uncertain market that has changed significantly in 2020. Investors know distressed properties could be hitting the market more frequently as the economic downturn drags on.  The Houston office market, suffering through the double whammy of Covid and tough times in the energy industry, has high vacancy rates.

The 1111 Fannin building, built in 1971 at the corner of Fannin and Dallas, has the advantage of a trove of nearby amenities. It’s across the street from Midway’s GreenStreet mixed-use development, which has an upscale Life Time fitness center, and the 225-room Hotel Alessandra, In addition, it’s one block from the 200,000-SF Shops at Houston Center – and a few blocks from other hotels, multifamily and the world-class Discovery Green park.

The existing tenant at 1111 Fannin, JPMorgan Chase, is moving to another downtown building a few blocks away. Earlier year, it was announced JPMorgan Chase leased 250,000 SF of space in Hines’ 75-story, 600 Travis Street building. The transaction was one of the biggest leases in downtown Houston in years. But thee bank’s departure left a big hole at 1111 Fannin.

Now it’s up to Arnoldy and partners to fill the vacant hole and inspire some new energy as downtown Houston recovers in 2021 from the downer of the Covid era.

Dec. 1, 2020 Realty News Report Copyright 2020

Caption: The 1111 Fannin building. Photo: By Ralph Bivins, Realty News Report.

File: Tower Sold for Redevelopment

File: (2) JLL. Dan Miller.Marty Hogan. JP Morgan Chase. Downtown Tower Sold for Redevelopment 12-1-20

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