Crescent Real Estate Equities acquired Hughes Center in 2003 from the Rouse Co. for $233 million. Crescent's senior vice president of leasing Bob Boykin tells GlobeSt.com that signed leases are in hand for more than 60% of the building currently under construction. "We most definitely will be 93% leased" by the time the first space is ready for occupancy in February 2007, he says.
Hughes Center, anchored by the 17-story, 259,000-sf Wells Fargo Tower completed in 1986, is described by local brokers as the premier office park in the region, and its performance backs that up. While the current class A vacancy rate in the Las Vegas Valley is a scant 4.5%. It's about half that at Hughes Center, where approximately 150 companies employ some 3,000 people in the fields of banking, law, real estate, gaming, insurance and finance. Project amenities include seven restaurants, a twin-tower residential complex and two nearby hotels.
The upcoming building, 3883 Howard Hughes Parkway, is being built to satisfy pent-up demand of our existing customer base and a vibrant market in general, Boykin says. "Some of our existing Hughes Center tenants who need expansion space will move into the new building, and we are already backfilling the space they are leaving," he says.
More than half the space that's already been taken in the new building will be occupied by Boyd Gaming, Eschelon Resorts and the Snell & Wilmer law firm. The base monthly lease rates on the preleased space ranges from $3.05 per sf to $3.25 per sf, depending on location and term and the tenant-improvement allowance. The leasing assignment for the latest Hughes Center Tower is in the hands of Tom Stilley, senior vice president of office properties at Colliers International.
The construction of the new building is being funded in large part with a $52.25-million, variable-rate loan from Societe Generale. The loan is due September 2008 but includes two one-year expansion options.
Looking ahead, Crescent has land at Hughes Center to develop another 500,000 sf beyond the current project. Boykin says the building after this one has already been designed. The eight-story, 170,000-sf tower will break ground in 2007 if demand holds up, Boykin says. The starting triple-net lease rate for that building will be $3.25 per sf due to rising construction costs. The per-sf price range for the existing buildings in the development ranges from $2.60 per sf for the lower floors of the older buildings to $3.05 per sf for the upper floors of the newest building.
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