Constructing more offices
It’s geared for those who prefer smaller, single-tenant buildings
Though Houston has lots of vacancies, a developer sees a need for single-tenant buildings.
Clay Development & Construction has locked up land for a new office development at 4435 W. 12th with the pending purchase of the vacant Kennametal industrial building.
The Houston-based company plans to develop the Offices @ North Post Oak, a 150,000-square-foot project on 7.5 acres with frontage along both 12th and North Post Oak. The development is designed to bring seven red brick loft-style office buildings, offered for sale or lease, to a stretch of road where expensive townhomes are replacing aging industrial buildings.
With area office vacancies hitting 20-year highs, some might say the last thing Houston needs is more office buildings. Vacancy averaged 17.8 percent, or 22.2 percent factoring in sublease space, in the first quarter, according to a CBRE.
Clay Development & Construction president Robert Clay sees it differently.
“The reality is, there are almost no single-tenant small office buildings available in the city that are in a good Inner Loop location where the buildings aren’t $500 per square foot,” Clay said, acknowledging that the project is immediately west of Loop 610, just north of Interstate 10.
The project is aimed at business owners who live in nearby areas such as River Oaks, Memorial and Tanglewood who want to own their own buildings, Clay said. Potential occupants include oil and gas, real estate, finance and architecture firms.
“They can’t find the right area and the right cost point to do it,” Clay said.
Clay Development & Construction will break ground on the first two buildings, each containing 16,100 square feet with two stories rising 32 feet tall, in the third quarter. The initial buildings will be finished in the first quarter of 2019. Frost Bank provided construction financing.
Clay will occupy the top floor of one building and offer the bottom floor for lease to businesses and retailers. Future buildings will follow, with the development projected to be completed in about four years.
Jim Foreman at Cushman & Wakefield is marketing the buildings for sale or lease, and Chris Dray with NewQuest Properties is marketing the retail space.
Tim Cisneros of Cisneros Design Studio designed the project, which draws upon Clay Development & Construction’s industrial roots. The prewar loft warehousestyle buildings will incorporate red brick open floor plans and an abundance of small windows.
The price tag for a turnkey move-in-ready building will be $300 per square foot, Clay said. That amounts to about $4.8 million.
In the suburbs, where land costs are lower, a comparable building would cost $200 to $225 per square foot, Clay said. A buyer could expect to pay $150 to $200 per square foot for the land alone in prime areas.
The project may incorporate a portion of the 90,000square-foot Kennametal building, or it may get torn down, Clay said. The property, adjacent to the Post Oak Villas townhouse development on 12th, is within a mile of the planned highspeed rail terminal at Northwest Mall.
Clay envisions more of the concrete warehouses along North Post Oak getting repositioned for higher uses as property values rise over the next decade. Many of them are owned by either real estate investment trusts or private investors. Recent improvements on North Post Oak include the Awty School’s campus expansion.
Clay likened the area’s potential to the Houston Heights, which has been transformed into a destination with some of the city’s top restaurants and retailers in recent years.
The project is aimed at business owners who live in nearby areas such as River Oaks.