Office space expands in The Woodlands
The office market in The Woodlands is rebounding, with a new facility opening on The Woodlands Waterway and a two more buildings planned for the Research Forest Drive area.
In late December, the market got an additional boost when Anadarko Petroleum Co., the second largest employer in South Montgomery County, opted to buy instead of continue leasing two buildings along The Woodlands Waterway. The purchase included its 30 story office tower on Lake Robbins Drive and a midrise at 1200 Timberloch Place, for a total of more than one million square feet.
It doesn't change the market, but it does show a definite sign of confidence," said Dennis Conine, a principal in Conine and Associates, the listing broker for office space with The Woodlands Development Co. They appear to be a good corporate citizen with a major investment in The Woodlands."
The Woodlands Development Co. recently opened its newest office building at 4 Waterway Square, a nine story, 216,000 square foot facility on the waterway at Woodloch Forest Drive. It has signed three tenants to date Beusa Energy, a energy and production company; Vitruvian Exploration, an independent oil and gas company and Benchmark Hospitality, an international hotel management company.
Two of the tenants are upgrading from within The Woodlands, while Vitruvian is relocating from downtown Houston.
We're making process," said Conine. Thirty five percent of that building is committed. A year and a half ago, the office market was great. Now it is good."
Vacancy rates in Class A office space in The Woodlands stands at about 8.9 percent, but most of that is attributed to the addition of the new space. This compares to an overall Houston region vacancy rate of 14 to 15 percent, with many new oil and gas buildings vacant of the west side of Houston, Conine said.
The vacancy rate jumped up because we delivered the new building on the waterway," Conine said.
With the economy slowly turning around, Black Forest Ventures, an investment firm in real estate, hospitality and the venture capital market, decided to build a new 70,000 square foot office and retail center on Research Forest Drive and renovate another 70,000 square foot building on Technology Forest Drive with office and warehouse space.
Beginning last year, everyone was in a holding pattern," said Sean Quinn, an asset manager with Black Forest Ventures. But life moves on and there are lots of decisions to be made."
Quinn said his firm often takes the contrarian view of the market and builds when other aren't. It allows his firm to build at lower costs and to use existing cash reserve. The gamble is paying off.
The new Class A office building, to be located at Research Forest and Gosling, isn't expected to be complete until September, and already the first two floors are leased. It will feature a Hubbel l & Hudson Express, a smaller version of the Town Center store, which will include a coffee bar, bakery, prepared foods and a small restaurant.
The 17 acre site includes more land for future growth, Quinn said.
In addition to the Research Forest site, which will be called Black Forest Park, the company also is renovating a second 70,000 building at 2828 Technology Forest Drive. The former home of Novasci, it will include 50,000 square feet of Class B office space and a 20,000 square foot humidity controlled warehouse
We were getting phone calls looking for smaller space that was rent competitive," said Quinn.
That building, which is being constructed to green standards, should open by July or August.
Black Forest Ventures owns other successful real estate in The Woodlands including 24 Waterway Square, Hubbell & Hudson and the Black Walnut Caf.
While more new office space is coming to The Woodlands, interest in existing space is picking up, Conine said. In mid-January, there was activity on small office spaces, from 2,000 to 3,000 square feet and lately, there have been more calls for 10,000 to 20,000 square feet of space.
There is more confidence in the economy," said Conine. The package we offer is different in that we take care of the employees. We have lot of amenities and it's a good place to live, with good schools."
While Anadarko said their decision to purchase their campus was financial, spokesman John Christiansen said it was the work/live balance" that initially attracted the firm to The Woodlands.
Conine said he has noticed two trends in the local office market one is a move up market among local business, which are seeking better space, and one is a demand for more medical office space.
In the future, the office space market in The Woodlands would benefit greatly if Exxon Mobil relocates its corporate center to a tract near Interstate 45 and the Hardy Toll Road. The company said it is conducting a study of the land, but would not comment on its future use until the study is complete.
If that happens, it would be positive for The Woodlands and another showing of confidence in the area," said Conine.
New Office Space in The Woodlands
The Woodlands is seeing a resurgence in the office market with three new products in the market. Following are new office space that is opened or planned in 2010/
4 Waterway Square
Nine stories, 216,000 square feet
Class A office space
Currently 35 percent leased to three tenants, including Beusa Energy., Vitruvian Exploration, and Benchmark Hospitality.
Research Forest and Gosling
70,000 square foot office and retail
Class A office space
First two floors are leased, including Hubbell & Hudson Express
2828 Technology Forest Drive
70,000 square foot office and warehouse
Class B office space; humidity controlled warehouse
Opens July or August
Source: The Woodlands Development Co., Black Forest Ventures
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