Category: Focus 2020

The Lease You Can Do

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By Lydia Bennett, CCIM, Soozi Jones Walker, CCIM, SIOR | Fall 2020

By definition, a market disruption is a situation where a market stops functioning regularly, which usually results in a steep, significant decline. The global COVID-19 pandemic that will define 2020 is a disruption like none other. For commercial real estate professionals, one significant concern is the fundamental relationship between tenants and landlords. As economic instability reverberates across all sectors and in every geographic area, leases will be under strain. Every morning, you can see headlines that reflect a changing industry. E-commerce has been a bright spot in the national response to COVID-19, with major repercussions for real estate. Landlords across sectors are faced with difficult questions resulting from tenants under stress. Is forbearance a way to keep tenants in properties? Are rent deferrals a short-term solution to disruptions in retail, multifamily, hospitality, and other sectors? Pinterest offers one huge example of how quickly things can change in the office market. Back in March, literally hours before the coronavirus led to massive shutdowns across the U.S., the online giant signed a deal for 490,000 sf of office space in San Francisco, adding up to $440 million in total payments over the life of the lease. Flash forward to August, Pinterest decided to pay the landlord $89.5 million to cancel the contract. In this case, the tenant calculated the discounted value of the office space and decided to negotiate with the landlord/owner to reach an agreeable settlement – one that totaled 20 percent of the $440 million in payments.

Partners Capital Sells Spring Park Village

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Partners Capital—the investment arm of NAI Partners—has sold Spring Park Village, a retail property located in Spring, Texas. Terms of the transaction were not disclosed. Partners Capital’s Fund I originally acquired Spring Park Village in 2017. The property consisted of two buildings leased to a diverse roster of tenants, including American Freight, Conn’s Appliances, AT&T and Starbucks, and also included a two-acre land pad for future development. “After negotiating a long-term renewal with Starbucks and leasing the remaining vacancy, we divested the smaller building located in the front of the property two years ago,” said Andrew Pappas, head of Partners Capital. “This summer, we secured an early renewal for the Sears Outlet store—which was recently acquired by Liberty Tax and rebranded as American Freight—and subsequently sold the large building and the development pad site to a local Houston investor.” The sale of Spring Park Village represents Partners Capital’s fifteenth deal overall since its launch in 2015. It’s been a busy several months for Partners Capital, which recently announced a rebrand to Partners Capital from the NAI Investment Fund earlier in October, announced the acquisition of The Trails at 620 retail property in Austin, Texas and retail center Blanco Crossing in Blanco, Texas; and launched Partners Investment Fund IV, the entity’s fourth commercial real estate investment vehicle. The Partners Capital team is looking to raise at least $50 million in equity in order to continue its success in identifying and acquiring high-quality office, industrial, and retail assets in attractive markets.

Cadence Bank Relocates to Park Towers with 82,215-SF Lease

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Cadence Bank has signed a long-term, 82,215-square-foot lease at Park Towers at 1333 W. Loop S. in Houston’s Uptown submarket. Transwestern Real Estate Services brokered the deal on behalf of the landlord, Regent Properties, with CBRE representing Cadence. Transwestern managing director Doug Little, executive vice president David Baker, vice president Kelli Gault and associate Jack Scharnberg provided agency leasing services on behalf of Regent Properties. CBRE’s Weldon Martin and Jon Lee represented the tenant. “Our focus at Regent Properties and specifically at Park Towers is always on delivering the best-in-class amenities coupled with a tenant experience that employees value,” said Matthew Benbassat, chief operating officer at Regent Properties. “When a tenant as prominent as Cadence Bank recognizes our commitment and selects our project, we can’t think of any greater compliment we can receive as an operator of first-class campuses.” Park Towers is a Class A, 545,242-square-foot office property comprised of two 272,621-square-foot buildings with 18 stories. The space boasts two high-performance fitness facilities, tech-savvy conference center, in-building dining, tenant lounge with state-of-the-art golf simulator, bike storage and Amazon Lockers. Additionally, a drive-through coffee destination is being developed with a nationally recognized provider. The location is abundant with walkable amenities at the nearby Uptown Park shopping center and has excellent proximity and a paved walkway to Memorial Park. Economic value, location and building signage and visibility attributed greatly to the tenant’s decision to lease the space. The tenant’s holding company, Cadence Bancorporation, will also be relocating their headquarters to occupy the new space at Park Towers. “Our strategic decision to move to Park Towers offers us enhanced efficiencies, more opportunities for collaboration, greater visibility and cost savings,” said Paul B. Murphy Jr., chairman and CEO of Cadence Bancorporation. “With this move, we’ll embrace a more dynamic and agile office, giving our associates more flexibility in how they work and fostering teamwork with more collaborative spaces, both formal and informal. The new space will be much more reflective of our culture at Cadence.”

193-Acre Development Site in Robinson Ranch Hits the Market in Austin

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JLL’s capital markets team has been named to market a 193-acre development site encompassed by Highway 45, CR 172 and E. McNeil Road in the greater Austin area on behalf of the Robinson Family. Located at Highway 45 and MoPac Expressway and one mile west of I-35, future development will benefit with great access to not only Austin’s metropolitan statistical areas, but the rest of the state. The JLL capital markets team representing the seller for this offering is led by senior managing director Rusty Tamlyn, managing director Davis Adams and director Garrett Gilleland. “The completion of SH 45 N in 2007 divided this section of the family’s property from the remaining +/- 7,000 acres,” said Adams. “Because the site is isolated from the core of the family’s holdings, coupled with the strong interest they have received regarding the property, the Robinson Family has decided to begin marketing this site for sale, joint venture or ground lease.”

NAI Partners Arranges Sale of Industrial Manufacturing Campus in Pearland, Texas

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14800 Jersey Shore Drive, LLC recently sold its former industrial campus in Pearland, Texas at 320, 322 and 324 Riley Road which consisted of approximately 105,664 square feet between three industrial buildings on over 32 acres of combine land area. BHVA Real Estate Holdings, LLC acquired the property for an undisclosed sum. Clay Pritchett, SIOR and Zane Carman, of NAI Partners represented 14800 Jersey Shore Drive, LLC on the sale transaction while Matt Rogers with Oxford Partners represented the buyer, BHVA Real Estate Holdings, LLC.

Draper and Kramer Expands Texas Portfolio with Purchase of 121-Unit Adriatica Senior Living

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Draper and Kramer, Incorporated has added to its national portfolio of multifamily properties with the purchase of Adriatica Senior Living, a 121-unit, amenity-rich rental community for active seniors in McKinney, Texas, a suburb located 30 miles north of Dallas. Terms of the transaction were not disclosed. Located at 375 Adriatica Parkway, Adriatica Senior Living offers large one- and two-bedroom units with luxury finishes. The community is part of Adriatica Village, a mixed-use development modeled after a Croatian fishing village with Mediterranean-style buildings, quaint cobblestone streets and a mix of boutiques, restaurants and entertainment within walking distance of residences. Draper and Kramer also owns and manages a neighboring multifamily property within Adriatica Village, St. Paul’s Square, which it acquired in 2019. “With our current presence not only in the Dallas market but also in Adriatica Village itself, this acquisition was a natural addition to our portfolio and aligns with our strategic focus on high-quality assets in growth markets,” said Blas Puzon, chief investment officer with Chicago-based Draper and Kramer. Built in 2017, Adriatica Senior Living offers units ranging from 806 to 1,370 square feet. Apartments feature open plans with nine-foot ceilings, plank-style flooring in living rooms, plush designer carpet in bedrooms, built-in bookshelves, crown molding and private patios or balconies. Gourmet kitchens have granite countertops and stainless-steel appliances. Select units also have deep soaking Roman tubs with a separate shower, kitchen pantries, linen closets and double sinks. All residences offer a connection for a full-size, in-unit washer/dryer. Common area amenities include a community dining room, resident lounge for socializing, beauty salon, business center, movie room, wellness studio and game room. In addition, there is a private covered garage for all residents. As part of the acquisition, Draper and Kramer will assume management of Adriatica Senior Living. One of the largest property management firms in Chicago, Draper and Kramer has a residential management portfolio of more than 8,000 rental units across Chicago, Dallas, St. Louis and San Antonio. The Dallas-Fort Worth-Arlington metropolitan area grew by 1.2 million people between 2010 and 2019, more than any other U.S. metro area, according to the U.S. Census Bureau. “With baby boomers retiring by the millions each year, luxury senior rental housing remains a smart investment,” Puzon said. “Adriatica Senior Living is a Class A property, offering beautiful finishes and rich amenities as well as a walkable lifestyle not always easy to find in the suburbs. We think its attractiveness, plus the synergies we will realize in owning and managing both it and St. Paul’s Square, will make this a very solid investment.” Adriatica Senior Living is Draper and Kramer’s fifth acquisition in Texas, where in addition to St. Paul’s Square, the company also owns and manages Crest at Las Colinas Station, a 374-unit luxury rental community in Irving, a northwest suburb of Dallas, as well as two luxury multifamily properties in the popular Stone Oak area of San Antonio: The View at Encino Commons, a 324-unit rental community, and Sonterra Blue, a 342-unit apartment property.