Innovation Tower to Meet TX Med Center Needs
The healthcare sector has seemingly recovered from a slew of major-provider layoffs in 2017, and more than 130,000 square feet of medical office space was delivered in Q4 2018, with more developments on the way.
HOUSTON—The healthcare sector has seemingly recovered from a slew of major provider layoffs in 2017. More than 130,000 square feet of medical office space was delivered in the fourth quarter of last year with more developments coming in the near term, according to a report by Transwestern. This is resulting in developers’ continued interested in the potential Houston holds for medical office buildings.
Another project is set to get underway with a primary focus on meeting the needs of biomedical, technology and healthcare users at the Texas Medical Center. Construction on Innovation Tower, a 48-story 1.6 million-square-foot mixed-use facility, is slated to begin at the end of third quarter 2019.
Transwestern has been retained to provide leasing services. Justin Brasell, executive vice president, and Lisa Bovermann, senior vice president, are providing healthcare leasing services for the project on behalf of Medistar Corp.
“Once completed, Innovation Tower will be the first class-AA tower in the Texas Medical Center offering world-class building amenities to create a distinct live/work/play environment,” said Brasell. “Innovation Tower will be an iconic building and great complement to the Texas Medical Center. It will truly revolutionize the district with unmatched prominence and walkability to local hospitals and universities.”
Medistar is developing the tower in two phases. Phase 1 offers 476,500 square feet of medical and life science office space with 35,000-square-foot floorplates above a parking garage for 1,700 vehicles, with retail and a penthouse-level restaurant and lounge. Medistar will develop Phase 2 to respond to market demands with the possibility of including 410 luxury high-rise residential units or additional medical, biomedical and life science office space.
“With floor-to-ceiling windows, abundant natural light and numerous walkable amenities, Innovation Tower will provide appealing and flexible high-quality space to attract and retain top talent,” Brasell tells GlobeSt.com. “It will be constructed to accommodate laboratory and in-patient clinical space with upgraded infrastructure, power, HVAC and plumbing. The property will allow for-profit tenants a place to collaborate with Texas Medical Center institutions, most of which are within walking distance of the building. With a 95%-occupied market, this will allow for large users to enter Houston, as most of the vacancy is in suites that are less than 5,000 square feet. The residential component will attract physicians, hospital executives and individuals looking for a walkable work commute or proximity to the museum district, Houston Zoo and Hermann Park.”
Indeed, Innovation Tower will not only provide proximity to the Texas Medical Center, but also Rice University, Rice Village, the Museum District, the Houston Zoo, Hermann Park Golf Course and Houston’s culinary and art scene. Innovation Tower will be further differentiated by its connectivity to the recently completed and adjacent InterContinental Houston Medical Center hotel at 6750 Main St. and 35-story LATITUDE Med Center apartment tower at 1850 Old Main St.
This project brings the Transwestern healthcare leasing and management portfolio to 69 properties totaling more than 5 million square feet on behalf of some of the largest healthcare institutions in the country, including Memorial Hermann, Baylor College of Medicine, Texas Children’s Hospital and HCP.
Houston medical office metrics had a positive showing in the fourth quarter of 2018 as absorption drove declines in direct vacancy, while rents and availability remained stable, according to the Transwestern report. Year-over-year direct vacancy increased marginally, up 10 basis points to 11.4% and total availability remained stable at 14.6% during the same period. Although registering a slight decrease during the quarter, rental rate growth was strong for the year increasing 410 bps at $27.25 per-square-foot gross. Absorption for the quarter recorded positive, 38,832 square feet, with the Northeast submarket leading the way at 13,576 square feet.
The Houston healthcare sector created 2,000 jobs during the fourth quarter. Year-to-date job growth ending in November was at an all-time record high. Year-over-year job growth was 10,800 jobs for the 12 months ending in November, as compared with the -400 created during the same period last year.