[IMGCAP(1)]HOUSTON-Cameron Management, with other private local backing, has pocketed the deed to the Minute Maid Building, a 350,899-sf value-add in the heart of the Galleria submarket. The single-tenant, class B office building, situated on 6.2 acres, is assessed at $38.2 million.
Dougal Cameron, CEO of the Houston-based investment group, says Coca-Cola Co.'s Minute Maid division will stay in half of the 12-story building at 2000 St. James Place through 2009, possibly into late 2010, until a build-to-suit can be finished. Street talk has Minute Maid in talks to move to an office development at Sugar Land Town Square.
As part of the Galleria sale-leaseback, Cameron says Minute Maid has 75 days to reduce its headquarters office to roughly 150,000 sf so the remaining space can be freed up for marketing. The 29-year-old building, supported by 1,230 parking spaces in two attached garages, represents the largest contiguous block of available office space in its submarket. It's also the first time sinceAtlanta-based Coca-Cola bought it in January 1988 that the building's space has been available to lease.
Cameron says there are some single-tenant deals in the market so he's allotting about four months to hook one before digging into his usual strategy to multi-tenant and push the space to smaller users. He tells GlobeSt.com that $11 million has been set aside for conversion to multi-tenant use, leasing commissions and tenant-improvement allowances. Cameron says the opening quote will be $20 per sf, net of operating expenses.
[IMGCAP(2)] Cameron says competition was stiff for the building because of its class A location and built-in amenities that include a fitness center and full-service cafeteria. Just last year, Coca-Cola pumped $11.8 million into upgrades. Coca-Cola had a New York City-based independent broker running the sale.
Cameron won't disclose the sale price. But, the building's size and assessment factor out to $93 per sf, which one source says is about right for a soon-to-be-empty building of its caliber and the leasing risk that goes along with the play. According to Colliers International Inc., this year's 102 sales citywide have averaged $133 per sf. From a leasing perspective, the Galleria/West Loop's 16.5 million sf of class A office space is 9.4% leased, with the rate averaging $26.05 per sf while class B space, totaling 4.9 million sf, is 15.6% vacant. Class B space is getting $18.26 per sf on average.
Cameron's upside, though, has been the building's upkeep for the 400-employee headquarters team. “The appointments are really class A,” he says, “and the guts of the building are all recent technology.”
Cameron, which leases and manages assets in house, got acquisition financing from Charlotte, NC-based Wachovia Bank and equity from local partners to make the close. The buyer credits the win to the firm's experience in corporate sale-leasebacks with short-term stays. The firm recently bought the Houston Club Building at 811 Rusk in the Downtown under the same type of arrangement with the seller. In Minute Maid's case, it has 14 to 24 months to vacate, according to the firm's CEO.
“We really like buying buildings from corporations. This one is very well located even for the Galleria,” Cameron says. “Most of our competing buyers want to occupy or want to renovate right away. We're a bit of a hybrid. Our goal is to buy it and hold it forever.”
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