Capital Flows into Houston Office Assets Despite the Economy
Chasewood Technology Park is a four-building office campus totaling 463,969 square feet that is 92.9% leased overall to a diverse array of tenants, and the asset was recently sold to Nitya Capital.
HOUSTON—Northwest Houston has been driven by population growth, given the proximity to the Energy Corridor and The Woodlands. One four-building campus is the beneficiary of that growth, leading to its recent sale.
Chasewood Technology Park is a four-building office campus totaling 463,969 square feet. The multi-story buildings are 92.9% leased to a diverse array of tenants in the oil and gas, consulting, technology, engineering, architecture, healthcare and food services industries.
JLL Capital Markets represented the seller, The GenCap Group, and procured the buyer, Nitya Capital, in the transaction. Additionally, JLL worked on behalf of the buyer to secure a $46 million loan through Morgan Stanley.
Chasewood Technology Park consists of One, Two, Three and Four Chasewood, which are located at 20333, 20405, 20445 and 20329 State Highway 249, respectively. The 10.44-acre site is strategically positioned in one of Houston’s fastest-growing submarkets near the intersection of State Highway 249 and Louetta Road, equidistant between the Grand Parkway and Sam Houston Tollway. Planned future development in the area includes class-A multifamily, retail pads and jogging/biking trails along Cypress Creek, which is adjacent to the property.
The GenCap Group’s first investment at Chasewood Technology Park was the acquisition of Two Chasewood in 1997, followed in the late nineties by the purchase of One Chasewood and the development of Three Chasewood. Four Chasewood was developed and delivered at the start of the 2008 financial crisis. Within a year, the building was more than 85% leased.
“This type of strong demand has been typical during our holding period,” said Paul Vangrieken, executive vice president with the GenCap Group. “Despite the many challenges, these assets have continuously outperformed the market, thanks to a strong ownership sponsor and the dedication of the Transwestern leasing and management team.”
The JLL team representing the seller was led by director Rick Goings and analyst Ethan Goldberg. Financing efforts were led by JLL senior director John Ream and associate Laura Sellingsloh.
“This portfolio is among the first large office trades to occur in the Houston market since COVID-19 hit the US,” Goings said. “The pandemic created numerous challenges in bringing this deal across the finish line, but we had the right assets, the right tenancy and the right buyer to get it done. The prior owners did a great job in positioning these buildings to withstand macro-economic events and Nitya understood that value proposition.”
The GenCap Group’s only reason for selling the portfolio is because one of the partners, an undisclosed Dutch pension fund, is divesting all of its US holdings.
“Chasewood Technology Park is the largest office sale in Houston since January 2020,” Goings tells GlobeSt.com. “Its closing is a great sign to the market that capital will continue to flow into high-quality office assets despite the economy.”
As expected, office market fundamentals in the second quarter continued to soften and tenant occupancy moved into the red, bringing the year-to-date total to 381,421 square feet of negative net absorption, according to a second quarter report by JLL. Thanks to recent move-outs, the overall vacancy rate–which includes vacant sublease space–sat mid-year at 23.1%, a 110 basis-point increase from the first quarter, the report points out.