BridgeInvest provided a $55.5 million loan to support the acquisition and renovation of Park on Voss, a multifamily property in Houston, Texas, on behalf of Tara Capital. 

Park on Voss boasts 810 residences, with plans to renovate 610 units comprehensively and upgrade the remaining 200 units that have already undergone a recent renovation, then align with market rents and ensure overall property stabilization.

The loan will also fund new appliances, HVAC systems and exterior enhancements such as lighting, landscaping and essential repairs to elevators, sidewalks and roofing, further elevating the property’s aesthetics and functionality.

Situated at 2424 S. Voss Road in Houston’s vibrant Westchase submarket, Park on Voss spans 610,950 square feet. Its strategic location, nestled between Westheimer and San Felipe Roads, is in close proximity to the Galleria market, offering convenience and accessibility to residents.

Tara Capital acquired the property for $63 million, with total project costs estimated at $82.1 million. Upon completion of renovations and stabilization efforts, the intention is to refinance the BridgeInvest loan with permanent debt, securing a long-term investment approach.

The U.S. industrial market saw a dip in leasing activity and an increase in vacancy rates in the first quarter of 2024. But it also saw early signs of a recovery.

That’s the takeaway from the State of the U.S. Industrial Market first-quarter report released in May by Savills.

Savills reported that the U.S. industrial market is shifting from a historically tight market to one that is more balanced. That can be seen in the market’s rising vacancy rates.

According to Savills, the U.S. industrial market’s vacancy rate rose 240 basis points in the first quarter of this year when compared to the first three months of 2023. The vacancy rate for this sector hit 6.7% as of the end of the first quarter.

Demand for industrial space by tenants is cooling, too. Savills reported that industrial absorption dropped to 26 million square feet in the first quarter of the year. That’s the lowest amount of absorption in the first quarter in eight years.

Just look at the first quarter last year: Savills reported that the U.S. industrial market saw 91.4 million square feet of net absorption during the first three months a year ago.

Industrial construction activity remained high in the first quarter, with 462.1 million square feet of new industrial space under construction. But this activity is slowing, too, and is down a significant 44% from its peak in 2022.

During the first quarter of last year, the industrial sector saw a far higher 782.1 million square feet under construction.

Savills reported, too, that industrial deliveries fell to 122.4 million square feet in the first quarter. That is down, too, from the 163.1 million square feet of industrial space that was delivered during the first three months of 2023.

One number that is moving in the right direction? Asking rental rates. Savills reported that the average asking rental rate for an industrial property in the United States rose to $9.47 a square foot in the first quarter. That is up from an average of $8.67 a square foot last year during the first quarter.

Harmon CTH, a special purpose entity managed by Chicago-based Timber Hill Group and Champion Realty Advisors, has signed Mainfreight, a New Zealand-based logistics company, to a long-term, build-to-suit lease for a 62,000-square-foot freight terminal on a 21.3-acre site at 112 Harmon Road in Haslet, Texas. 

Mainfreight’s new freight terminal will feature 86 dock doors, 24’ clear ceiling height, 20,000 square feet of premium two-story office space, and extensive trailer parking. The site is located one mile west of I-35W, ten minutes from the BNSF Intermodal and one mile to Perot Field Fort Worth Alliance Airport, one of the busiest freight airports in the U.S.

Harmon CTH acquired the site in October 2021. Completion is expected in December 2024.

Lee & Associates DFW represented Harmon CTH while Mainfreight was represented by CBRE in the transaction. 

Too much supply? That might be the big challenge facing the industrial sector today, according to the latest research from Crexi.

As Crexi says in its first quarter 2024 National CRE Trends Report, the e-commerce boom and an increased focus on reshoring to help strength supply chains led to an industrial building boom during the first half of the COVID-19 pandemic.

And that building boom left the industrial market with so much space that this formerly red-hot sector is finally starting to show some weakness.

As Crexi says in its first-quarter report, the demand for industrial space soared during the last cycle, leading to stiff competition for existing warehouses and manufacturing sites. This demand surged particularly during the COVID-19 pandemic. You can blame part of this on consumers who wanted products delivered quickly during the pandemic, and companies realizing that their just-in-time approach wasn’t going to work when consumers across the country flocked to online shopping.

While the U.S. office market struggled mightily during the pandemic, along with the retail and hospitalization sectors, industrial thrived. Crexi pointed to average absorption rates in 2021 that doubled that of the previous five years. In 2022, industrial absorption rates were 60% higher than the five years prior to 2021.

To address a shortfall of space in the face of this surging demand, companies scheduled a record-breaking wave of construction that was to begin at the end of 2023, despite certain markets experiencing ultra-low vacancies and robust rent growth across the U.S. This has led to a tapering off of the sector’s fundamentals, with an abundance of supply eating into the high-velocity rent growth that the industrial sector had seen for so long.

Crexi’s report isn’t all bad news, though. It’s not even mostly bad. That’s because despite construction hurdles, such as high costs, supply chain issues and protracted delivery timelines, the U.S. industrial sector benefits from a long-term positive outlook, thanks to e-commerce’s gains, healthy consumer spending and continued onshoring incentives.

Some of the industrial sector’s metrics remain solid, too, according to Crexi’s research.

The average industrial asking rent per square foot for new industrial listings stood at a solid $11.27 in the first quarter of 2024. That is up slightly from the fourth quarter of last year, when this figure stood at an average of $11.11 and is up from the average of $11.01 a square foot in the first quarter of 2023.

And what about sales? Crexi reported that the median sold cap rate stood at 7.1% for industrial sales that closed in the first quarter of 2024. That is down from 7.5% in the fourth quarter of last year and up from 6.3% in the first quarter of 2023.

Crexi reported that Houston recorded the highest average cap rate for industrial assets in the first quarter of the year at 8.18%. San Diego had the highest average asking industrial rent in the first quarter at $15.51 a square foot. And Los Angeles saw the highest average industrial price in the first quarter of 2024 at $431.42 a square foot.

JLL Capital Markets has completed the sale of 777 Post Oak Boulevard, a 176,779-square-foot, Class-A, boutique office building in Houston’s Galleria/Uptown submarket.

Most recently renovated in 2021, the nine-story office building is currently 70% leased to a diverse rent roll of tenants with four years of remaining weighted average lease term (WALT).

777 Post Oak Boulevard is located in the heart of the Galleria and Uptown submarkets, surrounded by extensive retail and dining options. The property is adjacent to the Post Oak Hotel, the Uptown Park shopping center and is walkable to the Galleria, Houston’s most prestigious enclosed mall.

Additionally, the immediate area surrounding the property is home to some of the wealthiest neighborhoods in Houston, with home values ranging from $1 million to more than $40 million. 777 Post Oak Boulevard also has convenient access to Loop 610, Interstate 10 and Route 69 providing vehicular access to the greater Houston metropolitan area.

The JLL Capital Markets Investment Sales and Advisory team representing the seller was led by Managing Directors Kevin McConn and Marty Hogan. Fertitta Entertainment, Inc. purchased the asset.

Stream Realty Partners represented building ownership on a new lease at 2200 Post Oak, a 22-story 326,200-square-foot Class-A office building in Houston’s Galleria submarket. The new tenant, McCarthy Building Companies Inc., signed a 38,230-square-foot lease and is set to move into the space in 2025.

The building owner, Masaveu Real Estate, was represented by Stream Senior Vice President Brad Fricks and Vice President Adam Ross.

McCarthy Building Companies Inc., a renowned national general contractor with a longstanding presence in Houston, will relocate from Greenway Plaza.

2200 Post Oak is a LEED Gold Certified and Energy Star-certified building. The property’s location offers tenants on-site access to two upscale restaurants, a grab-and-go convenience store, and walkable amenities, including various dining and retail offerings. The building is also being renovated to include a state-of-the-art fitness center, which is set to deliver in 2025.   

McCarthy Building Companies Inc. was represented by Scott Wetzel from JLL’s Irvine, California office and Beau Bellow from JLL’s Houston office.