Katy Freeway East Continues to Dominate in Office
The submarket stands in stark contrast to the broader Houston office market and is healthier in comparison; where it’s on track to record a fourth consecutive year of positive net absorption.
HOUSTON—The top-performing Katy Freeway East submarket stands in stark contrast to the broader Houston office market. It is on track to record its fourth consecutive year of positive net absorption.
JLL research provided insight as to why Katy Freeway East has remained relatively healthy compared to the rest of Houston’s office market. For starters, it is a smaller submarket at only 5.6 million square feet, which means it can recover quicker from changes in vacancy by leasing up the vacant space faster. Secondly, none of the major oil companies have footprints in the submarket.
“Katy Freeway East has a diverse tenant base, both in terms of industry and size of tenants,” Reid Watler, research manager, JLL, tells GlobeSt.com. “Tenants want to be in newer buildings with modern amenities. The average year of construction in Katy Freeway East is 1994, compared to 1987 for the rest of Houston’s office market. For class A the difference is even greater, 2007 for Katy Freeway East and 1995 for the rest of the market.”
Within that submarket, JLL is marketing a nine-story 149,309-square-foot class-A office building that is 89% occupied. The team is marketing the asset on behalf of Philadelphia-based Equus Capital Partners.
The building’s 77024 zip code is one of the country’s wealthiest, the epicenter of Houston’s population growth, and highly sought after for its desirable single-family neighborhoods and top public schools. Its location provides the lifestyle, walkability, amenities and green space that are sought after by today’s talent and tenants. Located at 10497 Town & Country Way, the asset is positioned just south of Interstate 10 between Midway’s highly successful CityCentre, a 1.8-million-square-foot upscale mixed-use development providing office tenants with desirable amenities, and MetroNational’s Memorial City, a popular commercial district complete with Houston’s second-largest mall, hospitality, upscale residential and class-A office space, says JLL.
The current ownership has invested more than $4.3 million into renovations. Features of the recently renovated building include a two-story lobby, onsite café, fitness facility, and upgraded fixtures and finishes. These capital improvements have positioned the property as the submarket’s only asset that can offer highly amenitized and walkable class-A office space at a discount to the competitive properties within Memorial City and CityCentre, according to JLL.
The rent roll is comprised of more than 14 industries, with no industry accounting for more than 25% of the net rentable area. Notably, the energy industry accounts for only 7% of the net rentable area. With nearly all class-A office buildings in the Katy Freeway East submarket controlled by two generational ownership groups, this listing presents investors with the rare opportunity to invest in one of Texas’ most venerable submarkets, according to the marketing team.
JLL’s Rudy Hubbard, Kevin McConn and Rick Goings are marketing the building on behalf of Equus.