Regions
Southwest | Houston
Jun 29, 2009
By: Tonie Auer, Contributing Correspondent
While Texas struggled later and possibly not as much as the rest of the country when the bottom fell out late last year, Houston’s office market continued to thrive until just recently with rising vacancies and more projects under construction. Recent delivery of projects like Citycentre’s mammoth 425,000 square feet of mixed use space right now might not be ideal timing, but developer Midway Cos. hopes to weather the difficult market.
The global economic downturn has certainly tightened its grip on the local economy, putting pressure on tenants and causing them to hold off on any business decisions, which has resulted in space returning to the market, according to a first quarter Houston office market report by Grubb & Ellis Co. The report said overall vacancy in the market jumped 120 basis points during the quarter, to 14.7 percent--the highest level since the end of 2006. "The increase in vacancy was a result of nearly 1 million square feet of negative absorption coupled with nearly 1 million square feet of new construction deliveries during the first quarter," the report stated. With over 5 million square feet of space still under construction throughout the Houston area combined with sluggish leasing activity, one can expect the trend of increasing vacancies to continue throughout 2009,” the report stated.
“Obviously the current market has its challenges; however, delivering a project with multiple uses and demand generators has many benefits,” Jonathan Brinsden, executive vice president & COO of Midway Cos., told CPN. “Although retail leasing has slowed, the office, hotel, conference center, fitness, restaurants, theater and residential uses all create tremendous traffic and activity which helps our retail leasing momentum.”
Retailers are attracted to the benefits of the additional demand generators in lieu of a traditional retail project, Brinsden said.
“Additionally, a project of this scale and scope has the benefit of being a highly differentiated asset, so to the extent there are opportunities in the market, we have an excellent opportunity to attract them to Citycentre,” he added. “The mixed-use, pedestrian environment differentiates the project to a large extent, however we have also placed a significant focus on bringing new concepts to Houston which further differentiates the project.
Located at the intersection of Beltway 8 and Interstate 10W, the Citycentre complex (pictured) is home to three office towers totaling 425,000-square-feet of first class office space. Citycentre One and Citycentre Two recently opened with several tenants in plance, including Amegy Bank, Streettalk Advisors and McGriff, Seibels & Williams.
The project is not complete, but two office buildings, Lifetime Athletic, Studio Movie Grill, and Norris Conference Center are open now, Brinsden said. Construction will be complete in mid-August when Hotel Sorella opens along with the The Lofts and The Domain, which is a residential aspect to the project. Additionally, several restaurants will open in the fall along with retailers such as Anthropologie.
Brinsden said one of the company’s initial strategies was a "Focus on Firsts" which was an effort to bring new concepts to Houston. Hotel Sorella, Lifetime Athletic, Studio Movie Grill, Yardhouse, Straits Cafe, Bistro Alex, Cafe Rose, Eddie V's are all new to Houston.
“This strategy has continued to pay dividends,” Brinsden noted. “Additionally, we have placed a focus on international and great local/regional retailers who have not been impacted as significantly as the national publicly traded retailers. These two segments also offer the best opportunity to continue our focus on bringing new retailers to Houston.”
By: Tonie Auer, Contributing Correspondent
While Texas struggled later and possibly not as much as the rest of the country when the bottom fell out late last year, Houston’s office market continued to thrive until just recently with rising vacancies and more projects under construction. Recent delivery of projects like Citycentre’s mammoth 425,000 square feet of mixed use space right now might not be ideal timing, but developer Midway Cos. hopes to weather the difficult market.The global economic downturn has certainly tightened its grip on the local economy, putting pressure on tenants and causing them to hold off on any business decisions, which has resulted in space returning to the market, according to a first quarter Houston office market report by Grubb & Ellis Co. The report said overall vacancy in the market jumped 120 basis points during the quarter, to 14.7 percent--the highest level since the end of 2006. "The increase in vacancy was a result of nearly 1 million square feet of negative absorption coupled with nearly 1 million square feet of new construction deliveries during the first quarter," the report stated. With over 5 million square feet of space still under construction throughout the Houston area combined with sluggish leasing activity, one can expect the trend of increasing vacancies to continue throughout 2009,” the report stated.
“Obviously the current market has its challenges; however, delivering a project with multiple uses and demand generators has many benefits,” Jonathan Brinsden, executive vice president & COO of Midway Cos., told CPN. “Although retail leasing has slowed, the office, hotel, conference center, fitness, restaurants, theater and residential uses all create tremendous traffic and activity which helps our retail leasing momentum.”
Retailers are attracted to the benefits of the additional demand generators in lieu of a traditional retail project, Brinsden said.
“Additionally, a project of this scale and scope has the benefit of being a highly differentiated asset, so to the extent there are opportunities in the market, we have an excellent opportunity to attract them to Citycentre,” he added. “The mixed-use, pedestrian environment differentiates the project to a large extent, however we have also placed a significant focus on bringing new concepts to Houston which further differentiates the project.
Located at the intersection of Beltway 8 and Interstate 10W, the Citycentre complex (pictured) is home to three office towers totaling 425,000-square-feet of first class office space. Citycentre One and Citycentre Two recently opened with several tenants in plance, including Amegy Bank, Streettalk Advisors and McGriff, Seibels & Williams.
The project is not complete, but two office buildings, Lifetime Athletic, Studio Movie Grill, and Norris Conference Center are open now, Brinsden said. Construction will be complete in mid-August when Hotel Sorella opens along with the The Lofts and The Domain, which is a residential aspect to the project. Additionally, several restaurants will open in the fall along with retailers such as Anthropologie.
Brinsden said one of the company’s initial strategies was a "Focus on Firsts" which was an effort to bring new concepts to Houston. Hotel Sorella, Lifetime Athletic, Studio Movie Grill, Yardhouse, Straits Cafe, Bistro Alex, Cafe Rose, Eddie V's are all new to Houston.
“This strategy has continued to pay dividends,” Brinsden noted. “Additionally, we have placed a focus on international and great local/regional retailers who have not been impacted as significantly as the national publicly traded retailers. These two segments also offer the best opportunity to continue our focus on bringing new retailers to Houston.”
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