SVN|J. Beard Real Estate – Greater Houston facilitated a 5,000-square-foot office lease at the new Woodforest National Bank building at 400 W. Davis in Conroe, Texas, for Griffin, Cain & Herbig, Attorneys at Law, PLLC.

Situated on a full city block in the heart of downtown Conroe off the courthouse square, the new 30,000-square-foot three-story, Class-A mixed-use office retail building boasts clean finishes and modern architecture.

Senior Advisor Lisa Hughes of SVN | J. Beard Real Estate – Greater Houston represented Woodforest National Bank in the execution of a lease with Griffin & Cain Attorneys at Law.

Last year was a tough one for the U.S. office market. That doesn’t mean, though, that the sector didn’t see its share of big deals.

And some of those deals? They took place in the Midwest.

CommercialEdge recently ranked the 50 largest office transactions of 2023. And when CommercialEdge says “largest,” it means most expensive, ranking its top-50 office deals by sales price, not square footage.

So which office sale topped the list last year? Italian fashion house Prada purchased two Wharton Properties buildings on Fifth Avenue in Manhattan for $822 million in December of last year. The properties at 720 and 740 Fifth Avenue total 178,302 square feet.

Coming in second place was Alaska Permanent Fund’s purchase of The Gauge and Centerpoint office properties at 41 Seyon St. and 43 Foundry Ave. in Boston for $578 million. The two buildings total 578,130 square feet.

Overall, CommercialEdge’s top-50 office sales totaled $8.7 billion in 2023. This is a big number, but it’s also indicative of the struggles of the office sector. That $8.7 billion total represents a drop of 67% when compared to 2022’s figure.

What about the Midwest? What were its biggest office sales in 2023?

• A sale in Minneapols-St. Paul topped all Midwest office transactions last year. That was the $225 million purchase of RBC Gateway by Spear Street Capital from sellerr United Properties. This ranked as the 9th most expensive office sale of 2023.
• A Detroit office sale came in 20th in CommercialEdge’s rankings. That was the $150 million sale of Huntington Tower by The Herrick Company from seller Richards & Robbins.
• Texas’ first big sale came next, the $142 million purchase of the VA Outpatient Clinic in Austin by Boyd Watterson Asset Management. That sale ranked as the 21st most expensive office transaction of last year, according to CommercialEdge.
• Coming in 35th place, was the $103 million NuStar Energy Corporate Heaquarters purchase in San Antonio by Truist Bank.
• The 36th spot on CommercialEdge’s rankings also came in Austin, the $102.2 million purchase of the Offices at Braker Center by MIG Real Estate.
• A Houston transaction — the $100.7 million purchase of Noble Energy Center II by Acquest Development — ranked 39th on Commercial Edge’s list.
• Chicago finally made the list at spot 45, with the 96.5 million purchase of 300 South Wacker Drive by Agave Holdings.
• Not too far behind, was the $95.3 million purchase by Woods Capital of Saint Paul Place in Dallas, which CommercialEdge ranked as the 47th most expensive office sale of 2023.

Titan Development and the Sansone Group have engaged CBRE and Aquila to market a 208,560-square-foot speculative cold storage industrial building within Innovation Business Park in Hutton, Texas.

The state-of-the-art facility will have temperature capability from 40° to -20°, 50’ freezer clear heights, and is slated to break ground in Q2 of 2024.

CBRE’s Jason Lev and Jimmy Kowalczyk and Aquila’s Omar Nasser will market the opportunity on behalf of Titan Development and Sansone Group.

Located 30 minutes north of Austin, the property is situated in one of the fastest-growing cities in Texas, with a population of 581,027 within a 15-mile radius. Hutto is known as a transportation hub, with Dallas, Houston, and San Antonio all located within 2.5 hours drive time.

84 Lumber, the nation’s largest privately held supplier of building materials, has signed a 142,100-square-foot long-term lease in the Barker Cypress Distribution Center at 12020 Barker Cypress Road in Cypress, Texas.

The landlord, Molto Properties, was represented by Wes Williams of Colliers and Conrad Bernard of Boyd Commercial. 

Barker Cypress Distribution Center is a new Class-A distribution building in Northwest Houston with 142,100 square feet of space on 11.92 acres. It has frontage on both Barker Cypress and Highway 290.

Williams and Bernard helped the Molto team acquire the land site on Barker Cypress and oversaw the successful lease-up of the project. 84 Lumber has leased the entirety of the available space. 

Another record-setting year. That’s what the data center industry enjoyed in 2023, according to the latest research from Colliers.

According to Colliers’ 2024 Data Center Marketplace report, the overall U.S. data center vacancy rate tumbled to 1.7% last year, with demand for data center space especially strong in markets such as Dallas, Atlanta and Northern Virginia.

But it’s not just these major markets that are enjoying soaring demand. Colliers reported that Midwest markets, too, are seeing demand climb for data center space, pointing specifically to the Ohio market of Columbus as a hotbed of activity in this sector.

The low vacancy rates in the data center space aren’t a surprise. Companies need ever more data center space. This is a trend that isn’t slowing anytime soon. Just consider these numbers attributed to Statista Market Forecast: Global data center revenue is projected to have reached $325.9 billion in 2023. By 2028, data center revenue is expected to reach $438.7 billion, according to Statista.

What’s driving this growth? Plenty of it is because of the explsoive growth of AI.

As Colliers says in its report, 2023 will be remembered as the coming-of-age year for AI. Applications such as ChatGPT and Dalle have captured the imagination of companies and individuals, both of which are already testing the limits of what this technology can do. Colliers said that ChatGPT reached 100 million users across the globe in just two months. That’s impressive, especially when you consider that it took Facebook four-and-a-half years to reach this same milestone.

Colliers says that the ability to scale resources on demand, critical to the rapid growth of AI, is driving demand for hyperscale cloud providers like Amazon Web Services, Google Cloud and Microsoft Azure. Because of this, hyperscale providers increased their megawatt output across North America to more than 15.2 gigawatts last year, 17.8% more than the previous year.

This all points to 2024 being an even busier year in the data center market. Expect a surge in consruction of these facilities this year and continued tight vacancy rates.

Colliers reported that for the fifth consecutive year, the U.S. data center sector set a new record for absorption last year, absorbing 3,870 megawatts in 2023.

In somewhat of a surprise, the total amount of power under construction last year fell on a year-over-year basis by 68.8 megawatts. This wasn’t because of a lack of demand, though. Instead, the slowdown was caused by a lack of shovel-ready sites. Still, 282.1 megawatts of power was under construction last year.

This doesn’t mean that the data center space is free of challenges. Colliers pointed to NIMBYism as a big issue. Many residents don’t want large data centers built near them, and they will fight new construction.

Then there is the labor shortage in the construction field. It can be challenging for developers to find the workers they need to build all the data centers that their clients demand.

Construction costs are high, too, which can make it difficult for developers to build today.

“It’s harder to source the debt and equity to get the scale of these transactions done,” said Michael Johnston, partner with Menlo Equities, quoted in the Colliers report. “The required yields are not going down since you have to make enough of a profit margin to justify taking the associated risk. I don’t see this changing in the short term.”

Rafal Rak, president of VP Digital Realty, agreed that costs are posing a challenge to developers.

“Supply chain and associated costs are still in flux,” Rak said, also quoted in the Colliers report. “In particular, electrical equipment is still challenging and has tremendous risk.”

Then there are the challenges associated with the speed of how the data center industry is evolving. As Colliers says, data center designers and operators must constantly adjust to evolving technology, everything from the need for increased power density and cooling efficiency to security, remote monitoring, sustainability and green designs.

An example? Meta has stated that its upcoming AI-powered data centers will incorporate an expanded utilization of liquid cooling.

“The evolution of the data center industry continues to be dynamic with increasing cloud adoption and expanding use-cases for AI,” said Carrington Brown, senior managing director of development for Affinius Capital, as quoted in the Colliers report.

In the final quarter of 2023, Wan Bridge had the exciting opportunity to be filmed and featured in an upcoming episode on Lifetime’s Designing Spaces, highlighting us as a pioneer in the build-to-rent industry. Set to be live on TV this Sunday, March 3rd, at 11:30 am, viewers are invited to tune in to witness a glimpse of our charming Lakeside Conroe community. With lights, camera, and action, the excitement mounts as we prepare to share our story with audiences nationwide.

This episode will spotlight our innovative approach and vibrant culture, thanks to the dedicated efforts of the Wan Bridge and Lakeside Conroe team along with our amazing volunteer interviewees. Adding to the anticipation, Designing Spaces recently had us in a live YouTube premiere on Saturday, February 17th, and the Wan Bridge team got together on the 20th for a team watch party. Furthermore, mark your calendars for a later airing on Saturday, March 9th, at 10 am, for another chance to catch the episode. For those eager to explore further, check out our Wan Bridge community yourself and experience the charm firsthand at Lakeside Conroe.

Stay connected via our social channels as we redefine the rental experience and shape the future of real estate together! Discover more about Designing Spaces and the YouTube premiere down below! CHECK OUT LIFETIME’S DESIGNING SPACES  DESIGNING SPACES YOUTUBE PREMIERE