Galleria-area growth lures Shorenstein

November 11, 2007
By KATHERINE FESER
Houston Chronicle

Shorenstein Properties has re-entered the Houston market with the acquisition of 2000 West Loop South, a 356,750-square-foot office building in the Galleria area.

"This is a building that fit our criteria, with good strong cash flow and creditworthy tenants in a good location," said Christine Kwak, managing director in the San Francisco firm's capital transactions group.

The seller was a group of tenants-in-common investors represented by US Advisors and Houston-based Means Knaus Partners. Jeff Hollinden, Barbara Guffey and Robert Williamson of Holliday Fenoglio Fowler represented the seller. The sales price was not disclosed.

Job growth, strength in the oil and gas industry, and pricing that's less expensive than many parts of the country have kept Houston attractive to investors.

"The fundamentals are very strong in our real estate market," Hollinden said. "Houston is gaining a lot of attention nationally."

The building is 98 percent leased. Three main tenants - United Healthcare, Live Nation and AM/FM Operating - occupy 70 percent of the building.

Rents have been rising as vacancy fell to 9.4 percent for top buildings in the Galleria/West Loop area in the third quarter.

"We have some rollover of tenants five plus years out," Kwak said, adding that the firm will benefit from higher rents.

The 21-story building was built in 1970 and renovated in 2002. The purchase included a five-level parking garage.

Shorenstein is not new to Houston. The firm developed 2 Riverway for IBM but sold it in 2003.

The 2000 West Loop purchase was made by Shorenstein's ninth investment fund, which amounts to $1.3 billion. The private real estate investment company acquires, develops, owns and manages office and mixed-use properties throughout the United States.