HOUSTON-The competition to acquire the 149,827 square-foot City Centre II came down to one thing: Pricing. A partnership formed between LaSalle Investment Management Inc. and Midway Cos. through a single investment vehicle arranged by Jones Lang LaSalle beat out other institutional investors with the best price and structure to acquire the mixed-use office and retail building.
The partnership is also developing CityCentre III, which broke ground about a month ago. CityCentre III, which will be completed in 2012, will have 103,000 square feet of office space and 17,000 square feet of ground floor retail space. In a nod to the success of the CityCentre development, the six-story building is already 44% pre-leased. Both buildings are located in the $500 million, mixed-use CityCentre development.
Holliday Fenoglio Fowler LP senior managing director H. Dan Miller tells GlobeSt.com that for the seller, a partnership between a Midway Cos. affiliate and an L&B Realty Advisors proprietary fund, owning the building was an opportunistic play “They built the building, leased it up, and in the normal course of stabilizing, it was time to sell,” comments Miller, who teamed with HFF associate directors Martin Hogan and Trent Agnew on behalf of the seller.
The buyer was represented by Jones Lang LaSalle executive managing director Tom Fish, executive vice president James Tramuto and senior vice president Robby Zorich.
Miller says sales of this type attract pension funds and REITs. The same thing happened with Energy Center II, which sold in June 2011 for $94 million. “Any quality class A, stabilized asset, the buyer pool will be institutions and public and private REITs,” Miller says.
CityCentre II, Agnew adds, had all the boxes checked for what institutions are looking for; new product long-term leases to credit-worthy tenants and part of a huge project that has been a successful work-live-play one. There is also some upside to the deal. “There is retail space on the first floor, and about 14,000 square feet of vacancy on the office side,” Agnew says.
Miller says there is room at the CityCentre development for a fourth office/retail building, though no groundbreaking date is scheduled. CityCentre, built on the site of the old Town and Country Mall in the Memorial submarket, includes a hotel, restaurants, shops, a health club, a movie theater, apartments and townhomes, in addition to the two office buildings. Midway Cos. broke ground on the 1.1-million-square-foot mixed-use project in early 2007.
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