Timing Was Right to Sell HP Plaza, CEO Says

SPRING, TX—Completed in November 2018, HP Plaza in CityPlace at Springwoods Village was developed by Patrinely Group for HP Inc., which occupies 100% of the space in a long-term lease. Northridge Capital LLC recently purchased HP Plaza for an undisclosed purchase price, according to the joint venture seller group Patrinely Group, USAA Real Estate and CDC Houston.

“HP Inc. was the largest office lease inked for 2016 in Houston,” said Robert Fields, president and CEO of Patrinely Group. “This transaction reinforces the strength of this new urban center in North Houston.”

In fact, North Houston also took center stage with regard to first quarter 2019 leasing. During the quarter, top leasing transactions totaled 36% more square feet than first quarter 2018, according to a report by CBRE. This activity was concentrated in the CBD (31%), Energy Corridor (30%), North Houston (22%) and West Loop/Galleria (14%).

“Our strategy is always to evaluate opportunities like this on a case-by-case basis,” Fields tells GlobeSt.com. “We went into this investment with the strategy to sell. Before deciding on whether to hold or sell, we like to take a step back to look at the market and make sure we’re timing it right. In this case, we decided it was the right time to sell to maximize value.”

Located at 10300 and 10400 Energy Dr., the property includes two buildings comprising 233,516 rentable square feet on floors one through four of building one and 144,886 rentable square feet on floors one through five of building two totaling 378,402 rentable square feet. The newly constructed property offers rectangular floorplates, structured parking, exposed ceilings and open workspaces. The property has a variety of workspaces and onsite amenities such as a full-service café and fitness center.

Powered by 100% renewable energy, the site is on track to earn LEED certification.

“The area surrounding HP Plaza is on the rise as it is the new, exciting urban center in North Houston, Fields tells GlobeSt.com. “We think the desirable location and walkability appeals to the future workforce, in addition to the modern design and functionality of the buildings, the confluence of three major highways, and the long term lease with HP Inc., contributes to the appeal of the property for all parties involved.”

Jeff Hollinden and Trent Agnew of HFF served as the listing agent for the transaction.

CityPlace is a 60-acre mixed-use development providing the growing area along the Grand Parkway  corridor near the ExxonMobil campus with integrated working, shopping and living. When fully developed, the project will include the recently opened full-service Houston CityPlace Marriott, up to 8 million  square feet of class-A office space with 500,000 square feet of retail space and additional multifamily.

CityPlace is the commercial urban center of Springwoods Village, a 2,000-acre master-planned  community. It is home to four major corporations including HP Inc., Southwestern Energy, American Bureau of Shipping and the future home of Hewlett Packard Enterprise.

Some 87% of tenants leased class-A properties in first quarter, according to the CBRE report. Asking rates increased from $29.19 in first quarter 2018 to $29.28 in first quarter 2019. The Houston office market vacancy rate recorded an increase of 120 bps from 17.8% in first quarter 2018 to 19% in first quarter 2019. First quarter 2019 ended with net absorption of negative 440,000 square feet.

The Energy Corridor was the biggest contributor to negative absorption where more than 220,000 square feet of sublease space expired and rolled vacant. Combined with tenants vacating space, the Energy Corridor gave back 620,000 square feet of space. On a positive note, the North and Westchase submarkets contributed 400,000 square feet of combined positive absorption, says CBRE.