ON THE GROUND
Real estate investment dips in the third quarter, following national trend.
Buyers spent $3.8 billion on investment properties in the Houston area in the third quarter, a sharp decline from the same period a year earlier, which was marked by the sale of a trophy medical office building in the Texas Medical Center for a record sum.
The decline in the overall value of transactions, down 47 percent from the year earlier, fell across most property categories, according to Real Capital Analytics, a research firm that tracks commercial property transactions.
Houston followed the national trend in attracting fewer investment dollars in the third quarter. Overall deal value totaled $154 billion in the U.S. in the third quarter, down 4 percent, according to the firm.
Local third-quarter office investments totaled $500 million, down 56 percent from the year-ago period. In the third quarter of 2018, LaSalle Investment Management set a record price for medical office buildings in the U.S. with the purchase of Memorial Hermann Medical Plaza for $405 million, or $794 per square foot.
Lionstone Investments’ purchase of a majority interest in the CityCentre Five office building from Midway was the top office deal of the most recent quarter. Others include Los Angeles-based Regent Properties’ acquisition of Park Towers on the West Loop.
Local hotel investments were an exception, totaling $200 million in the quarter, nearly double the amount from the third quarter 2018.
In the largest deal, AVR Realty bought the JW Marriott - Houston Downtown from Pearl Hospitality for an undisclosed price, according to Real Capital Analytics. Louisiana-based Dimension Development Co. was named as the management company for the hotel this summer.
The value of apartment deals transacted in the quarter fell by 40 percent year over year to $1.5 billion in the Houston region in the third quarter.
Even with the decline, multifamily properties were still the top choice of investors, making up nearly 40 percent of the local sales activity. PSP Investments, Crow Holdings, Cortland, Starwood Capital and Western Wealth Capital were cited as top buyers.
In one of the largest transactions, a venture of Fogelman Properties and DRA Advisors acquired the 390-unit Retreat at Steeplechase apartments in northwest Houston for $49.6 million, or $127,179 per unit, according to Real Capital Analytics. In another significant deal, Crow Holdings bought the 318unit Arlo Buffalo Heights from AvalonBay Communities.
Last year, some high-dollar apartment properties also changed hands in the third quarter, including The Westmore at Bellaire, WaterWall Place near the Galleria and Venue Museum District.
Apartment properties represented the largest sector nationally as well, comprising $46.9 billion or about 30 percent of the nation’s sales value in the third quarter. National multifamily sales volume fell by 7 percent.
Nationally, sales of industrial properties totaled $41.3 billion in the third quarter, including two large portfolio transactions. Blackstone spent $13.4 billion for 558 properties, and BREIT, a Blackstone affiliate, spent $5.3 billion on 316 properties, both from GLP, which has holdings in Houston.
Locally, sales of Houston area industrial properties totaled $900 million in the third quarter, down 13 percent from a year earlier.
Among the local largest deals, Angelo Gordon purchased the Main Park Industrial Center from DRA Advisors.
The value of year-over-year sales of local retail properties dropped by 85 percent to $300 million. Among the deals, Wu Properties purchased Fondren Southwest Village from Garrison Investment Group.
Besides hotels, the only other category experiencing a rise in sales was senior housing and care properties, rising 47 percent to $100 million in the third quarter.