"The sales activity for 2007 was a record year that significantly outpaced all previous years," Darrell Betts, senior vice president in Houston for Grubb & Ellis Co., tells GlobeSt.com. "Houston is one of the last places in the country where you can buy at below-replacement costs and the price per sf has a tremendous amount of growth opportunities."
Betts and other top local executives are headlining this morning's forecast meeting in River Oaks Country Club at 1600 River Oaks Blvd. An estimated 450 brokers, investors and developers are expected to attend the Santa Ana, CA-based brokerage firm's annual event.
Betts says Houston's emergence as "truly an international city" has catapulted it onto radar screens of investors worldwide. He credits direct flights to Dubai and soon to Moscow with fueling new interest from afar. The three flights per week to Dubai will go to daily direct flights in February and Moscow goes live in March.
"We are truly becoming a global market and global economy. And, Houston is at the forefront," says Betts, whose Southwest investment sales partner is Scot Farber in Dallas. As the dollar loses value, he says many investors from countries with stronger currencies are planning to invest in Houston.
Grubb & Ellis research shows CBD cap rates for office sales nudged 6.5% while suburban buildings hit 7% last year. The 1.3-million-sf Bank of America Center at 700 Louisiana St. went for $350 million or $300 per sf. The second highest check was written for the 844,207-sf 1201 Louisiana at $125 million or $148 per sf. And Bank One Office Center at 910 Travis St. drew $184 per sf, but its smaller size of 747,380 sf worked out to $100.5 million at the closing table.
With absorption high and rents rising, the metro's stars are aligned after a slower 2006 on the sales front. Other local pros also have confirmed that Houston this year clearly is on pace to outperform most other US metros.
Among the deals to watch this quarter will be the 1.5-million-sf Williams Tower at 2800 Post Oak Blvd. Ken Page with Cushman & Wakefield of Texas Inc.'s Houston office brought the trophy to market in December. "The market expects to have a buyer selected in first quarter 2008," Betts says.
Although it's too early to say what will happen, Betts says the rest of the US might slow down, but Houston isn't likely to falter. "People expect our volume not to slow down," he says.
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