HOW A CANADIAN PENSION FUND FOUND ITS WAY TO SWALLOWING A BUNCH OF HOUSTON OFFICE BUILDINGS Ralph Bivins explains how it came to pass that the Canada Pension Plan Investment Board, with its now-completed purchase of REIT Parkway, became the owner of 8.7 million sq. ft. of office space in Houston, including Greenway Plaza, CityWest Place, San Felipe Plaza, the Phoenix Tower, and Post Oak Central: “At one time Cousins and Parkway were separate companies with sizable holdings in Houston. The Houston office market tanked when oil fell from a high of $107 a barrel in June 2014 to less than $30 a barrel in early 2016. Houston energy firms laid off thousands of employees and vacated huge chunks of office space. Publicly traded firms with significant portfolios of Houston office space were under pressure. Security analysts criticized them. So Cousins and Parkway merged, all of the Houston properties were stripped out and placed into a new company, Parkway Inc. Now, the oil markets have stabilized. Houston’s office market is still soft and vacancies are high, but it appears to be on the road to recovery.” [Realty News Report] Photo of Greenway Plaza: Brent Oldbury, via Swamplot Flickr pool
MIDTOWN SEARS CLOSURE NETS RICE 9 ACRES NEAR THE WHEELER TRANSIT CENTER The company that manages Rice University’s $5.3 billion endowment last week bought out the 28 years remaining on a 99-year lease the university had signed with the Sears department store on its Midtown property back in 1945. The Sears at 4201 Main St., which opened in 1939, will close in late January, after a liquidation sale beginning early next month, it was announced today. Rice also bought 3 adjacent acres owned by Sears, giving the university a multi-block 9.4-acre chunk of land near Metro’s Wheeler Transit Center and the Southwest Fwy. it can now decide what to do with. Among the properties on that land: the Sears Auto Center at 4111 Fannin and the Fiesta Mart at 4200 San Jacinto, which has a lease that runs for 2 more years. The Sears’s original art deco façade was covered with metal panels in the 1960s. Rice prez David Leebron says the university will now “initiate a process of thoughtful planning for the future use of this land,” with a yearlong study of options directed by the Rice Management Company. [Houston Chronicle; Click2Houston] Photo: Pete Molick via Swamplot Flickr pool
THE PIERCE ELEVATED’S GREAT UNCROSSING What’s going to replace the giant crosses on the east and west sides of the St. Joseph Professional Building towering over the Pierce Elevated once its new owner takes them down and redoes the exterior? “I want something that’s going to be iconic to Houston,” Boxer Property CEO Andrew Segal tells Katherine Feser. The company has commissioned artists to develop ideas for the 18-story building’s new cross-free exterior look, Segal says: “It may be something that changes at night. It could involve a projector.” Also in the plans for the 135,586-sq.-ft. building at 2000 Crawford St., which dates from 1965: new shared lounges, workspaces, and conference facilities, changes to its ground-floor retail spaces, and a new name TBD. The steel crosses were added to the building in 2009. [Houston Chronicle] Photo: Russell Hancock, via Swamplot Flickr pool
WHEN GOOGLE MAPS REVEALS YOUR HOME’S SOGGY SHAME “Google Maps has outed us as a city that floods,” laments meteorologist Brooks Garner, giving voice to would-be sellers of flooded homes worried that recent soggy aerial views will remain in the mapping system for years: “It should be said that legally, home owners must disclose if their home has ever flooded (or even if their property has flooded, while their actual house stayed dry). While that’s defeating enough to have to do, words are less influencing to a buyer’s decision than seeing an actual image of the inundated neighborhood. It arguably gives the impression that the water is still that high. . . . KHOU 11 has featured Realtors on our News at 4pm who’ve speculated that once people ‘forget’ about the floods, depressed home values in submerged areas will return to their pre-Harvey prices. (At least one realtor with that opinion was a victim of flooding himself, so I wonder if that fact influenced his statement.) . . . Here are several other ‘unfair’ things: Neighborhoods which experienced short-term flooding, but saw it subside after a day or two, were largely missed by the Google satellite update. They look high and dry. The only ‘tell’ in some is the trash which is piled high along the sidewalks. Drywall, couches, mattresses and furniture making up these walls of debris. It’s so extensive in places like Meyerland you can see [it] from space. In other areas like Hall Rd. off Beamer in southeast Houston, the satellite-update at time of this blog’s publishing apparently ‘missed’ the neighborhood and as a result, things look totally normal despite the huge mounds of refuse still present today.” [KHOU] Screenshot of Cinco Ranch on Google Maps: KHOU
COMMENT OF THE DAY RUNNER-UP: TRUST, BUT VERIFY “My home didn’t flood, though a few blocks away, others did. I wonder if we could get a ‘Certificate of Nonflooding’ or some such official thing. I always laugh when I see a home listing with the words ‘Never flooded, per owner.’ Yeah, right!” [Gisgo, commenting on Metro Back in Service; Public Health Threats; A 12-Step Program for Houston’s Flooding Problem] Illustration: Lulu
POPEYES, BURGER KING KING TAKING A BIG BITE OF LA MADELEINE, SWALLOWING CYCLONE ANAYA’S Sugar Land’s Dhanani Group, owner of 501 Burger Kings and 240 Popeyes as well as 130 Houston-area convenience stores — and ranked as the country’s third-largest restaurant franchisee — has just added all 16 Houston-area La Madeleines to its holdings (plus 10 more in Austin and Louisiana), as well as the entire Cyclone Anaya’s Mexican Kitchen chain. The La Madeleine purchase, which includes the right to open an additional 57 locations of the French bakery-café chain, was completed by Sugar Land-based HZ LM Casual Foods, whose owner, Amin Dhanani, is a Dhanani Group general partner. Another Dhanani Group entity, Heritage Restaurant Group, is buying all 6 Houston-area locations of Cyclone Anaya’s from Ricardo Valencia, the youngest son of wrestling champ Cyclone Anaya, and says it has plans to open additional locations. It was Dhanani Group’s Houston Foods unit — the owner of its local Burger King franchises — that was cited by city officials in 2014 for excessive oak-hacking, after street trees surrounding several of the company’s restaurants were found cut back to tall-stump status. [Houston Business Journal; previously on Swamplot] Photo of original Cyclone Anaya’s at 1710 Durham Dr.: Accent Graphics
The broker representing the new and prospective owners of the shuttered Macy’s and Dillard’s buildings at Greenspoint Mall gives just a hint of the rancor between the groups who now appear to be negotiating the mall’s future: Maddox Properties’ Jim Maddox tells Bisnow’s Kyle Hagerty that any supposed redevelopment plans hinted at by the investment group led by Chinese developer Feng Gao that now has the mall itself under contract are “full of sh*t.” [Hagerty’s punctuation.] Maddox says he hung up the phone on area Chamber of Commerce prez and mall redevelopment partner Reggie Gray after Gray complained to him that plans in place by the owners of the retired department store buildings would ruin redevelopment plans for the area.
About those plans: Spring Real Estate Investment’s Zulfiqar Karedia, Hagerty reports, is seeking to develop a truck stop on a 4-acre portion of its newly purchased Macy’s property fronting I-45. Maddox says a restaurant distribution business is slated to take over the Dillard’s property in the mall’s southwest corner — after a sale he brokered last week closes in September.
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Full of It
THE END OF THE GREENSPOINT MALL IS UPON US Greenspoint Mall may close its doors for good in as little as 60 days, a source tells Click2Houston reporter Sophia Beausoleil — after news broke late Friday that the hobbled 42-year-old shopping center at I-45 North and Beltway 8 is under contract for purchase by an investment group headed by Chinese investor Gao Feng. Global Plaza Union says it is still considering several different redevelopment concepts for its newly acquired property. Not included in the purchase, but expected to be added to it for any transformation to take place: the 3 independently owned anchor store sites within the property. The Sears store at the southeast corner of the property closed 7 years ago; the Macy’s, in the northwest corner, shut down earlier this year; the Dillard’s in the southwest corner, closest to the freeway interchange, is one of only 2 anchors still operating in the mall. (The other is a Palais Royal.) [Click2Houston; Houston Chronicle ($); previously on Swamplot] Photo: Colliers International
COMMENTS OF THE DAY: WHEN HOUSTON JEWELRY WRAPPED A SHINY BAND AROUND A COUPLE OF DOWNTOWN BUILDINGS AT 720 RUSK “We bought this building from Star Furniture in 1966 and operated in it until 1983 when we were offered a very generous price at the top of the market. After we left the building stayed empty until the Subway opened. . . . This is how the building looked when it was remodeled by architect Arnold Hendler in 1966.” [Rex Solomon, commenting on Downtown Houston Is Now Down To A Single Street-Level Subway] Photo: Houston Jewelry
AMAZON WILL SWALLOW WHOLE FOODS WHOLE For those who expected Whole Foods Market to shop itself to a fellow grocery store chain and not a powerful company experimenting with drone delivery, some surprising news this morning: Amazon plans to acquire the Austin-based company for $13.7 billion. “Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world,” the company reports. [Whole Foods; background from Texas Monthly] Photo of Whole Foods Market at West Alabama and Kirby: ilovebutter [license]
A meeting is set for September 7th to take public input on the city’s plan to purchase the long-vacant land at the northeast corner of SH 288 and MacGregor to let H-E-B build a store on the site (at the edges of a few of Houston’s USDA-defined food deserts). The city says the meeting and comment period (which lasts through September 11) are standard parts of its 8-step program when developing within the floodplain — Brays Bayou is just to the left of the frame above (snapped back in 2014), which the southeastern corner of the land as the facade-and-foreclosure-twin Mosaic and Montage towers peek over from west of 288.
The land is currently owned by Houston Community College; the college system bought the tract (reportedly for the second time) back in 2013 as the proposed site of the elaborately monikered HCC Coleman College of Health Sciences’ Medical Science & Technology Early College Charter High School. The city would bundle the land together with some adjacent already-city-owned property to lease it to H-E-B, and the grocery chain would be able to buy the whole package once all 72,000 sq. ft. of new store are constructed and certified for occupancy.
Photo: Swamplot inbox
Flood Plain Food Desert
LAND PURCHASES BEGINNING ALONG PROPOSED HOUSTON-TO-DALLAS BULLET TRAIN ROUTE Texas Central Railway’s CEO tells Realty News Report’s Ralph Bivins that owners of some properties in the projected path of the planned Houston-to-Dallas 200mph rail line have already agreed to sell their land to the company, which is hoping to get started on construction of the 90-minute route next year. Tim B. Keith says he’s “encouraged with the progress” of what he refers to as the project’s “voluntary land purchase program.” He notes that “Texas’ Constitution and state statutes have long granted eminent domain authority to railroads such as Texas Central, as well as pipeline companies, electric power companies and other industries,” but calls eminent domain “a last resort.” The line’s Houston station is now planned for “the area along the 610 Loop between 290 and I-10″ after a Federal Railroad Administration review rejected the idea of a Downtown stop because of projected high costs and environmental impacts. [Realty News Report; Houston Public Media; previously on Swamplot] Photo of Tokaido Shinkansen Tokyo-Osaka line: Texas Central Railway
MIDWAY: GIANT FIFTH WARD KBR SITE WON’T BE CALLED NORTHBANK BUFFALO BAYOU, BUT SOMETHING ELSE MIGHT A representative from Midway tells Swamplot that, while the company has been working on a trademark for the name Northbank Buffalo Bayou, it won’t be used for whatever the company is planning for the 136-acre former KBR site in Fifth Ward (which was recently bought by a Midway affiliate). The name is actually connected to another project floating around on the company’s drawing board — no confirmation yet as to exactly where that development might be located, if it comes to be, but the north bank of Buffalo Bayou seems like a reasonable guess. Wherever the moniker is applied, the US Patent and Trademark Office lists the name as intended for use related to both commercial and residential real estate marketing and construction. Also on the list of things the brand could be used for: wine and food tastings, and presenting live musical performances. [Previously on Swamplot] Listing photo of KBR site: LoopNet
Whatever’s in store for the 136-acre former KBR site along the the Ship Channel at 4100 Clinton Dr., CityCentre developer Midway now looks to be involved. Documents filed with the county clerk’s office near the end of May reveal that Cathexis Holdings recently sold the site to KBRN, an entity connected to Midway through a recently minted corporate partnership (and officially located down the hall from Midway’s CityCentre office.)
And might Midway — which also heads the team that turned failed Downtown Mall Houston Pavilions into GreenStreet, and is developing the Kirby Grove park-and-office-building complex along the banks of the Southwest Fwy. in Upper Kirby — have some big office-shopping-residential-and-park-y plans in mind for this vast property, which lies about a mile and a half downstream from Downtown? A couple of clues are out there:
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Sold on the Ship Channel
COMMENT OF THE DAY: THE ART OF SLIPPING AWAY “The luxury real estate article says that a lot of owner/CEO’s of small oil companies are selling their mansions to help save their companies. That’s an assbackwards way — there’s a reason you stash a few million in your homestead: It’s exempt from creditors and bankruptcy. Let the dying company fold, file bankruptcy, sell the house later, and boom, you’re liquid again and start with fresh paper and zero liabilities.” [commonsense, commenting on The Typical Home Buyer’s Salary; Getting Creative in the Luxury Housing Market] Illustration: Lulu