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[Houston, TX] – July 14, 2022 – Tarantino Properties announces the sale of 1053 & 1055 Conrad Sauer Drive in Houston, Texas.
The property includes two warehouse buildings totaling 47,000 SF. The property was the former home to reputable Houston print company, Southwest Precision Printers. SWPP was founded in 1975 and earned the title of largest independent family-owned commercial printer in the Southwest.
The buildings are located in an extremely coveted location between the CITYCENTRE area, one of Houston’s most popular retail, dining, and entertainment hot spots — and the residential area of Spring Branch, one of the fastest-growing neighborhoods with a mix of luxury multifamily, townhomes and single-family homes.
Kim Brake — Commercial Associate with Tarantino Properties — represented the seller in the transaction. The listing generated multiple offers and went under contract within one week. The sale closed on June 28, 2022 and sold to a local Houston developer.
About Tarantino Properties, Inc.
Tarantino Properties is a real estate investment and service company based in Houston, Texas, specializing in income-producing properties since 1980. The company manages more than $2 Billion in assets throughout the United States providing a full complement of quality services including management, brokerage, leasing and construction services for multifamily and commercial properties.
It’s not easy finding workers today. And that’s especially true in the hospitality industry, where a new survey finds that nearly all hotels are struggling to find enough workers to clean their rooms, check-in guests and maintain their properties.
In a member survey by the American Hotel & Lodging Association, 97% of respondents said that they are experiencing a staffing shortage. A total of 49% of respondents said that they are severely understaffed.
The most common staffing need is houekeeping, with 58% of survey respondents pointing to it as their biggest challenge today.
The association says that respondents are offering incentives to increase staffing, with nearly 90% of respondents saying that they have increased wages and 71% offering greating flexibilty in the hours that employees must work.
An additional 43% of respondents say they have increased the benefits they offer as a way to attract more staffers.
These efforts are working … somewhat. The survey found that respondents during the last three months have hired an average of 23 new employees per property. But these same respondents said that they are also trying to fill an additional 12 positions on average. A total of 97% of respondents said they have been unable to fill open positions.
According to the lodging association, hotels need to fill more than 130,000 open positions across the United States.
The American Hotel & Lodging Association conducted its survey of more than 500 hoteliers from May 16 to 24 of 2022.
“The office market, more than any other sector, is still dealing with occupiers grappling with long-term adjustments brought on by work-from-home shifts in the workforce and short-term concerns over the direction of the economy. The result is that larger organizations have been quiet, and most of the leasing activity has been with smaller, private companies. The larger organizations, which can best move the occupancy needle, are on the sidelines for now. Construction issues have improved slightly since Q1, and we expect continued improvement in that area for the balance of the year.” Patrick Duffy, MCR President, Houston
Key TakeawaysHouston office market records negative net absorptionVacancy up marginally by 10 basis pointsLeasing activity remains steady over quarterClass A occupiers gravitate toward newer product
Houston Highlights Houston’s office market posted negative net absorption in Q2 2022, recording -224,211 square feet. The overall average vacancy rate rose marginally by 10 basis points between quarters from 23.4% to at 23.5%. Office inventory remained unchanged, as no new inventory was added and there is 2.0 million SF of office space under construction. Average rental rates increased over the year. Houston’s Class A overall average full service rental rate rose from $35.10 per square foot in Q2 2021 to $36.29 per square foot in Q2 2022. Leasing activity remained steady over the quarter, recording 2.9 million square feet, which includes renewals.
Houston Highlights
Houston’s office market posted negative net absorption in Q2 2022, recording -224,211 square feet. The overall average vacancy rate rose marginally by 10 basis points between quarters from 23.4% to 23.5%. Office inventory remained unchanged, as no new inventory was added and there is 2.0 million SF of office space under construction. Average rental rates increased over the year. Houston’s Class A overall average full service rental rate rose from $35.10 per square foot in Q2 2021 to $36.29 per square foot in Q2 2022. Leasing activity remained steady over the quarter, recording 2.9 million square feet, which includes renewals.
Executive Summary
Commentary by Rob Johnson | Vice President
While overall office vacancy in Houston’s Class A buildings currently exceeds 25%, newer Class A buildings continue to show strong absorptions trends, leaving a wake of opportunity for prepared and informed office users.
Many real estate publication headlines will quickly lead readers to statistics outlining the vacancy rate of office buildings in Houston. According to statistics from our data sources, the current Class A office vacancy across all of Houston is 25.7%, however, this can be a misleading statistic.
Organizations that continue to show firm commitments for in-person office presence have indicated their desire for premium facilities. Justification can range from employee recruitment and retention to maintaining an image.
When looking at Class A occupancy of properties larger than 100,000 RSF delivered to the market in the last ten years, an alternate picture emerges. Across all Houston submarkets, this younger asset class has a vacancy rate of 13.9%, a statistically significant decrease from the 25.7% for all Class A buildings. This data set’s occupancy and absorption trends suggest a more competitive market for newer Class A product.
Additionally, several large Class A buildings have been delivered to Houston’s CBD in recent years. It is important to consider that these buildings will likely need some time to accurately determine their effect on the market and if they will further exacerbate the trend of movement from legacy Class A properties to newer product. When users maintain the same occupancy footprint when relocating, the absorption net result is marginal. Still, it is important to note what asset class the occupiers were vacating and which buildings they are gravitating toward.
Lease commitments at the newer Class A buildings have created an opportunity in some legacy Class A assets where owners compete for tenants to fill available space and maintain existing tenants. Many of the legacy Class A assets have undergone, or are in the process of, large capital projects to provide or improve the amenities tenants have come to expect from Class A buildings. In addition, many landlords are providing concession packages that enhance their attractiveness to existing occupants to maintain their tenancy as well as to attract new potential users considering a different location.
For tenants to capitalize on the opportunities in the current office market, two key factors will play a significant role: 1) knowledge of which landlords and assets are willing to provide rich concession packages, and 2) the creditworthiness of the occupier. With proper direction, strong credit tenants will likely find amenity-rich buildings with economic concession packages that will not likely be seen again until the next tenant-friendly market cycle – perhaps years from now.
State of Texas Acting by and Through the Texas Facilities Commission renewed 14,096 square feet at 1055 S. Sherman Street in Richardson, TX. Lynna Smith represented the landlord, Hartman Income REIT.
Flextek Resources, LLC expanded into 4,767 square feet at 11200 Westheimer Rd in Houston, TX. Donna Svec represented the landlord, Hartman Income REIT.
