THE DEEP RETAIL DISCOUNTS AT HOUSTON PAVILIONS 
Four years after its opening, the troubled Downtown mall-office complex known as Houston Pavilions may sell for $50 to $75 million below the cost of its construction. To avoid foreclosure on a loan valued at $130.7 million, the developers turned the property over to a receiver late last year; Transwestern is now marketing the project for sale. Offices are fully occupied, but the big problem is the 59-percent-vacant retail portion of the project, says Real Estate Alert: “More than half of the retail tenants haven’t been paying full rent because the overall retail occupancy rate remains below the prescribed threshold cited in their leases. A buyer could convert about 42,000 sf of vacant retail space into offices to exploit downtown Houston’s booming office market . . . However, a conversion of all the retail space isn’t an option, because doing so would make it impossible to meet the retail occupancy threshold necessary for the existing tenants to pay full rent.” [Real Estate Alert; previously on Swamplot] Photo: Flickr user cjt3
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Tag: Leasing
Unverified rumors from 2 sources that appear to be separate have now made their way to Swamplot, but we have no details or confirmation. The first is that Fiesta Mart is considering taking the Randall’s Flagship location at the corner of Westheimer and Shepherd Dr.; the second is that Fiesta actually will move into the space — from the West Alabama and Dunlavy location now slated for an apartment building. If you’ve got more of the scoop, let us know!
- Previously on Swamplot: Apartments Planned for Montrose Fiesta Site Will Go Tall Mediterranean
Photo of Randall’s Flagship Shepherd Square: Panoramio user Wolfgang Houston
COMMENT OF THE DAY: FUNKY MONTROSE APARTMENTS ARE IN HIGH DEMAND “Here’s what I am seeing in Montrose this year and last year: Every nice garage apartment, side-by-side duplex, fourplex, etc brings on multiple applicants. (Sometimes renting for more than the stated price.) With several to choose from, the Landlord’s pick will have excellent credit and high income — a lot higher than you would expect for say a garage apartment. These tenants could afford to live in those shiny new apartment complexes. Easily. But they don’t want to. They want to live in the neighborhood, on a residential street. This doesn’t apply to every tenant — obviously there are more who want to live in the beehive. But the demand for funky old Montrose housing isn’t diminishing — It is tighter than ever.” [Harold Mandell, commenting on The Coming Flood of New River Oaks-Area Apartments in Montrose]
According to an attorney for a woman who was raped and sodomized for more than 12 hours in her second-floor apartment in the Promenade Cullen Park 3 years ago, managers of the apartment complex just west of the Addicks Reservoir had in fact sent out a notice to residents after a through-the-balcony break-in of the unit next door to her 2 weeks earlier. However, it was “the same warning that they would send out if a bicycle was stolen off a balcony or a TV was stolen out of an apartment,” attorney Troy Chandler tells the Houston Chronicle. “The notice failed to mention that a burglary occurred, that the assailant waited inside, that a tenant was attacked and that there had been an attempted rape.” After that incident but before she was raped, the woman renewed her lease on the apartment — without being informed about the nature of the attack, according to her attorneys.
COMMENT OF THE DAY: THE CLUE THEY’LL BE TEARING IT DOWN “The standard Texas Apartment Association lease does not give the owner the right to cancel the lease in the event of a sale. If the land value is approaching the as-built value, however, a smart landlord is going to put a clause in the lease that allows for a 30-day termination. At the complex I listed above, that was exactly what happened. The landlord had a cancellation clause in the lease for years before the property was sold to a developer. Some tenants may be turned off by it. It may have some affect on the rental rates. You have to weigh the pros and cons. Every situation is different.” [Bernard, commenting on New Owner Orders Everybody Out of the Greenbriar Chateau Apartments]
COMMENT OF THE DAY: UP OR DOWN “On the agent side of HAR, you can see the different listing amounts. So while you might avoid the big red arrow showing a decrease, any agent can still see the pricing history. What a lot of agents do is lower their places by a few bucks a day, that way people with searches setup for a given location will keep being notified of their listing (since a price change will kick in a notice to be sent out). I know it works as I just RAISED the price of a rental on HAR and got a ton of calls. Likely because anyone that has an alert setup for my rental type just got ‘re-alerted’ about the apartment.” [Cody, commenting on Back, Slashed: Ken and Linda Lay’s Huntingdon Penthouse]
Workers began taking down the engraved stone Stanford Financial Group sign embedded in the facade of the company’s former headquarters building at 5050 Westheimer last Friday, reader Andrew Tyler reports with this tweeted photo. Federal law enforcement officials raided the building and Stanford Financial offices in Galleria Tower II almost 3 years ago; company founder Allen Stanford was arrested 4 months later. In July of 2010, Woodlands-based Black Forest Ventures bought the 3-story, 71,000-sq.-ft. structure across the street from the Galleria for $12.5 million.
- 5050 Westheimer [Black Forest Ventures]
- Previously on Swamplot: The Black Forest Mix, Comment of the Day: Inside the Stanford Financial Group Offices at 5050 Westheimer, Westheimer Office Building and All: Allen Stanford Says Sell!, Feds Now Raiding Stanford Financial Group Offices in the Galleria
Photo: Andrew Tyler
The Sicardi Gallery’s impending move to its new Brave Architecture building currently under construction at the corner of West Alabama and Mulberry in Montrose (above) should send a few ripples through the local gallery landscape, art blogger Robert Boyd notes. Headed for the current Sicardi Gallery space at 2246 Richmond (across the street from Blue Fish House and the Hobbit Cafe), according to Boyd’s sources, will be Thom Andriola’s New Gallery:
COMMENT OF THE DAY: THE RENTS ARE TOO DAMN HIGH “Finally some progressive thinking from a Houston property owner. Houston is filled with vacant junk space left over from failed retail projects priced at ridiculous, speculative prices. The kind of development necessary to pay the outrageous rent asked by property managers and owners for dilapidated spaces just isn’t supported by the market here. There are only so many Applebees etc. that can be crammed into a given area. I’ve never figured out why keeping a space vacant is better than reducing the rent and making it accessable to artists, creatives, and small business owners. If things go well for them the neighborhood becomes more viable and lively, crime goes down, rent goes up and it’s on to the next neighborhood. It’s a win for everyone.” [JE, commenting on New Arts Complex Planned for Abandoned JCPenney at West Oaks Mall]
COMMENT OF THE DAY: FEEDING THE WEST OAKS MALL JCPENNEY ARTS BEHEMOTH 
“At 100,000 square feet, it is more than twice as big as all the alternative/artist-run spaces currently in existence in Houston combined. If it can actually be filled with stuff and events in a compelling, convincing way, it moves the center of gravity for Houston art to the west purely by virtue of its size. The more I think about it, the challenge will be figuring out ways to effectively use that space. Usually the issue for an art exhibit is a lack of space — a show at, say, Labotanica can feel uncomfortably cramped. For a curator or artist, this space presents the precise opposite problem. A good model in this regard might be Mass MOCA, the enormous museum in North Adams, MA. Filling the cavernous old factory buildings required big, bold artworks. Are there Houston artists who could step up to this challenge? I’d say yes — for example, Sharon Engelstein’s inflatables.” [Robert Boyd, commenting on New Arts Complex Planned for Abandoned JCPenney at West Oaks Mall] Photo: Sharsten Plenge
3-year-old 11-building condo complex at the intersection of Beltway 8 and Hwy. 59; great feeder-road-U-turn access to IAH. Swimming pool — okay, it’s a retention pond — at the center. And bank-owned. Well, not anymore. Interra Capital Group bought 112 of the 128 flex-space industrial condo units at the High Ridge Business Park from the lender last month, and for the 60-some units still available, it’ll be lease only.
- Interra Buys High Ridge Industrial Condos [CoStar Group]
- Industrial Condos [Real Estate Bisnow]
- Virtual Tours [High Ridge Business Park]
Photo: Commgate
In a late-Friday afternoon press release that doesn’t mention Trader Joe’s at all, Alabama Theater owner Weingarten Realty is announcing that the company has begun construction on the landmarked 1939 Art Deco building at 2922 S. Shepherd to “create a more desirable space for future retail tenants.” What does that mean? Apparently, removing the few elements of the interior that made the building suitable as a movie theater: The entire screen wall along with the murals flanking both sides of the screen, and the auditorium’s sloped floor.
How did an artist out of L.A. convince the owners of Houston’s West Oaks Mall to turn the vacant building of former mall anchor JCPenney into a 100,000-sq.-ft. department-store-sized arts complex? Well, it helps that the building — at the northern crotch of the West Houston mall — has been sitting vacant for 8 years and has received no major retail anchor interest in the 2 years Pacific Retail Capital Partners has owned the property. It also helps that the artist, Sharsten Plenge, is a Pacific Retail employee — and that her father is the firm’s managing principal. But Plenge tells Swamplot the company is behind her novel rehab concept, which is currently her main focus at work.
GEORGE MITCHELL WANTS TO BUY GALVESTON PIERS 
Billionaire George Mitchell’s Mitchell Historic Properties has been leasing Piers 19-22 on the dock side of Galveston since 1993. The leases don’t expire until 2065, but he now wants to buy the properties from the city. Sitting on the piers: the Harbor House Hotel and Marina and a couple of Landry’s-owned restaurants. Mitchell claims he wants to make improvements to the docks that would make more development possible. The sale would require a city charter amendment and voter approval, which the company hopes would take place next May. [Galveston County Daily News] Photo: TripAdvisor
It sure looks like it: Here’s a photo of the theater’s west parking lot, sent to Swamplot by a reader who noted that a concrete pour began on Saturday morning. Earlier this month, Weingarten received a permit for “Landlord Improvements — Infill/Leveling,” though the permit’s title doesn’t make it clear what kind of leveling the national REIT wanted to do to the landmarked structure at 2922 S. Shepherd Dr., which is expected to be transformed into Houston’s first Trader Joe’s market.
Why would Weingarten want to pour a thick layer of concrete onto the floor of its historic building — and how much demolition of the theater’s interior might be accompanying this work?
