5433 WESTHEIMER GALLERIA / UPTOWN SUBMARKET HOUSTON, TEXAS. Executive Summary

Transcription

1 5433 WESTHEIMER GALLERIA / UPTOWN SUBMARKET HOUSTON, TEXAS Executive Summar

2 THE OFFERING BOUTIQUE OFFICE BUILDING IN THE HEART OF THE GALLERIA HFF is pleased to offer for sale 5433 Westheimer (the Propert ) a 133,868 square foot boutique office building located at the western gatewa to Houston s Galleria submarket where West Alabama Street intersects with Westheimer Road. The freshl renovated 11-stor Propert also includes structured parking, a street-level retail jewel-box leased to Houston s onl Ruth s Chris Steak House and the potential for additional development on the western edge of the site Westheimer benefits greatl from its location on the Westside of the vibrant Galleria submarket with exposure to over 87,000 cars per da. The Propert is immediatel adjacent and directl connected to Houston s first aloft hotel b Starwood and is located less than a half mile west of the Galleria mall. Additionall, the office building has excellent ingress/egress and is less than a 15 minute drive to Houston s premier residential neighborhoods including Tanglewood, Memorial Villages, River Oaks and West Universit Place. The Propert s location within the Galleria submarket, access to premier residential neighborhoods and diverse tenant base make this a highl desirable investment.

3 THE OPPORTUNITY 5433 Westheimer represents a rare opportunit to own and continue the repositioning of a boutique office building that marks the western gatewa to one of the nation s premier office submarkets well below replacement cost with substantial upside. The Propert is 72.4% leased and offers several potential leasing strategies to complete the repositioning. In addition, in-place rental rates are 25.9% below market with approximatel 81.5% of the leased space expiring over the next 5 ears. This exceptional combination of well-located vacanc and mark-to-market upside offers the unique opportunit to generate significant value within a three to five ear hold period and exit well below toda s replacement cost.

4 HFF PROPERTY OVERVIEW / / 5433 Westheimer INVESTMENT HIGHLIGHTS VIBRANT GALLERIA LOCATION The Galleria submarket is the largest and most sought after suburban office submarket in Houston and is consistentl in high demand b firms seeking to offer their emploees a true 24/7 - live, work and pla environment. The Propert s location along Westheimer two blocks west of the Galleria mall is one of the most accessible, visible and highl trafficked locations on the near west side of Houston has excellent exposure to over 87,000 cars per da plus is within close proximit to Houston s best amenities including the Galleria Mall, numerous restaurants and other retail destinations. Additionall, the Propert is located near Houston s most prestigious residential neighborhoods including Tanglewood, Memorial Villages, River Oaks and West Universit Place and is surrounded b numerous upscale multifamil rentals and condos favored b Millenials. DEMOGRAPHICS CATEGORY US AVG. 1 MILE 3 MILE 5 MILE 5433 Radius Population 2000 Census 17, , , Census 22, , , Estimate 24, , , Projection 26, , ,028 Datime Population 67, , , Population Growth 10.7% 36.3% 14.5% 11.7% Population Growth 3.0% 7.4% 5.3% 4.7% Projected Population Growth 3.7% 9.1% 7.1% 6.5% Households Avg HH Income $69,821 $100,912 $99,508 $98,277 % with Bachelor's Degree or Higher 26.4% 63.7% 50.8% 49.5% % with White Collar Jobs 60.7% 84.6% 67.0% 68.2% UNIQUE BUILDING FEATURES AND AMENITIES 5433 Westheimer benefits greatl from numerous amenities located at and around the Propert. The Propert includes: Ruth s Chris Steak House which opened in 2013 is globall recognized as a premier restaurant offering. Adjacent aloft hotel, b Starwood offers stlish hotel rooms and the popular W XYZ Bar 9,000 square foot lower level common area with meeting space 2.6 per thousand parking ratio including 231 covered spaces Protected view corridors Potential development on the Propert s western edge SUBSTANTIAL CAPITAL INVESTMENT 5433 Westheimer benefited from significant recent capital investment. Since 2008 over $6.4 million has been invested into the Propert excluding tenant improvements. Significant sstem upgrades and building enhancements performed since 2008 include: Elevator modernization in 2008 and 2009 New chillers, telephone sstem and jocke pumps installed in 2011 Basement boilers and air handlers rebuilt in 2011 Exterior painted with elastomeric coating in 2013 Lower-level build out in 2013 Common area upgrades (lobb, corridors) in 2013 and 2014 Building restrooms brought to full ADA compliance in 2013 and 2014 The upgrades significantl reduce the need for future capital outlas and solidif 5433 Westheimer as a revitalized boutique office building at the Western gatewa to Houston s prestigious Galleria submarket. 4

5 HFF PROPERTY OVERVIEW / / 5433 Westheimer SIGNIFICANT DISCOUNT TO REPLACEMENT COST Institutional demand for core Class A office buildings has pushed pricing above replacement cost in man markets including Houston Westheimer offers an opportunit to acquire a high qualit, boutique office tower well below current replacement cost, which is estimated to be approximatel $400 per square foot. In addition, ver few comparable office development sites are available in the submarket which has pushed land prices to new highs. Due to Houston s continued strong population growth, office developers have had to compete with multi-famil developers for the best sites putting further upward pressure on land prices and contributing to the scarcit of desirable sites. UPSIDE IN LEASE ROLLOVER 5433 Westheimer offers investors the opportunit to enjo a stable cash flow from a diverse rent roll featuring a balanced lease rollover schedule with an average of 12% of the Propert expiring per ear over the next five ears. In-place rents are on average 25.9% below market as the expire. As rents are reset, an investor would conceivabl be able to double NOI during the first 5-ears of ownership. HIGHLY DIVERSE TENANT ROSTER The Propert cash flow is highl diversified with no tenant accounting for more than 20% of the revenue or square footage. The tenanc spans the full spectrum of technolog, professional and business service, finance, architectural and design, fashion and charitable organizations. The depth and diversit of the tenanc not onl provides investors a consistent cash flow and exemplifies the abilit of 5433 Westheimer to attract a wide arra of users. Medical, 2.5% FIRE, 19.9% Retail/ Restaurant, 9.3% Charitable, 8.5% Legal, 11.7% Technolog, 18.5% Fashion/ Jewelr, 9.5% Architectural/Design, 5.4% Prof Business Services, 14.7% FUTURE DEVELOPMENT SITE INCLUDED The offering includes a potential development site that can accommodate a mid-rise hotel or multi famil building. Strength in Galleria hotel and residential fundamentals coupled with a scarcit of remaining high qualit development sites makes this an exciting development pla. WITHIN PRO-BUSINESS UPTOWN HOUSTON DISTRICT The Propert is located within the Uptown Houston District, a nonprofit organization that coordinates mobilit, urban design, business development, and promotional services with propert owners in the District. The District oversees the Uptown Houston Tax Increment Reinvestment Zone (TIRZ) which is a limited life funding vehicle utilized to implement capital improvement projects within the District. The Uptown District anticipates investing over $235 million in mobilit projects alone over its 30-ear life. HOUSTON S ECONOMIC STRENGTH Driven b robust energ, medical, and manufacturing and trade sectors, Houston is arguabl the best performing major MSA in the nation - emerging as one of the leading investment markets in 2013 and continuing that distinction into Houston added 107,400 new jobs in the twelve month period ending August 2014, representing a 3.9% growth rate the highest of an major metro area in the U.S. Since Januar 2010, Houston has added 420,000 new jobs. No other major metro in the U.S. has added a larger share to its emploment base. In addition, Houston s unemploment rate stands at 5.5%, compared to the U.S. rate of 6.5%, and the cit has regained 273% of jobs lost since the recession. GLOBALLY RECOGNIZED INVESTMENT MARKET Houston ranked as the fourth best cit in the world for commercial real estate investment in a recent surve b The Association of Foreign Investors in Real Estate ( AFIRE ), a global commercial real estate professional association representing over $2 trillion dollars of real estate assets under management. Not onl did Houston move up one notch globall, but also in AFIRE s rankings of top U.S. cities for foreign investment, jumping to third behind onl New York and San Francisco. Additionall, Houston s office market has outperformed the NCREIF Index for the past two ears generating total returns of 15.9% and 13.1% in 2012 and 2013, respectivel. The NCREIF Office Index returned onl 9.49% and 9.86% in those same ears. Of the MSA s that NCREIF tracks, Houston has consistentl been ranked in the top ten U.S. office markets in terms of total return over the last ten ears. 5

6 HFF PROPERTY OVERVIEW / / 5433 Westheimer SITE PLAN W e s t h e i m e r R o a d 5433 WESTHEIMER Yorktown Street F uture Development Site West A labama Street PROPERTY SUMMARY Address: Site: Net Rentable Area: Stories: 5433 Westheimer Rd, Houston, Texas 2.26 acres 133,868 SF 11 Floors plus Lower Level Year Built (Renovated): (Renovated ) Percent Leased: 72.4% Average In Place Rent: $21.44 % Below Market Rent: 25.9% % Rollover Next 4 Years: 52% Parking: Adjacent 2 level parking garage and shared access agreement with adjacent aloft hotel Ratio: 2.6 / 1,000 Floor Plate Size: 11,000 square feet 6

7 der Construction Grand Pkw U n H FF w Pk U Eas tex Fr LOCATION Gr d an Houston State Park w MONTGOMERY COUNTY ction nstru Co ExxonMobil er Corporate Headquarters nd LIBERTY 69 Lake COUNTYer PROPERTY OVERVIEW / / Westheim HARRIS COUNTY Pr op George Bush Intercontinental Airport d Toll w Fr Sheldon Reservoir Road Frw Lake Houston 69 Hard st rth we No rth ed Gran Sam Houston Pkw No os ont aum Be North Hw n Batow Loop Kat Frw 5433 WESTHEIMER Downtown East Loop George Bush Park stpark Tollwa We RT BEND OUNTY w Fr hw ut So t es West Loop Westheimer Rd 69 Texas Medical Centerth Pasadena Frw Loop Sou 69 Ga Pk w William P. Hobb Airport Be nd Sam Houston Tollwa w Fr Fort lf South Frw Gu Smithers Lake GALVESTON COUNTY BRAZORIA COUNTY W ES T LO Proposed Grand Pkw O P I H 61 0 P O ST O A K B O U LEV ARD WE S E TH I R ME RO AD THE GALLERIA W E S T H E IM E R W ES T A AL BA M A YORKT 7 San Jacinto Ba ST RE ET OWN S TREET Armand Baou Park Clear Lake

8 HOUSTON 9 Greenwa Plaza, Suite 700 Phone (713) Fax (713) H. DAN MILLER, CCIM, SIOR Senior Managing Director Phone (713) dmiller@hfflp.com MARTIN T. HOGAN Director Phone (713) mhogan@hfflp.com ROBERT WILLIAMSON Senior Managing Director Phone (713) rwilliamson@hfflp.com JOHN INDELLI Senior Real Estate Analst Phone (713) jindelli@hfflp.com CAPITAL MARKETS INQUIRIES CAN BE DIRECTED TO CORBY CHAFFIN Associate Director Phone (713) cchaffin@hfflp.com Hollida Fenoglio Fowler, L.P. acting b and through Hollida GP Corp a Texas licensed real estate broker ( HFF ) HFF and HFFS (HFF Securities L.P.) are owned b HFF, Inc. (NYSE: HF). HFF operates out of 23 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industr. HFF together with its affiliate HFFS offer clients a full integrated national capital markets platform including debt placement, investment sales, equit placement, advisor services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on HFF has been engaged b the owner of the propert [properties] to market it [them] for sale. Information concerning the propert [properties] described herein has been obtained from sources other than HFF and we make no representations or warranties, express or implied, as to the accurac or completeness of such information. An and all references to age, square footage, income, expenses and an other propert specific information are approximate. An opinions, assumptions, or estimates contained herein are projections onl and used for illustrative purposes and ma be based on assumptions or due diligence criteria different from that used b a buer. Buers should conduct their own independent investigation and rel on those results. The information contained herein is subject to change. 8