A Houston poster child for the “flight-to-quality” office trend secured a massive refinancing deal.
The 1.2 million-square-foot Texas Tower, which was developed by Hines in partnership with Ivanhoe Cambridge, landed $450 million in fresh financing, ConnectCRE reported. The funding was provided by Wells Fargo and Morgan Stanley. The loan works out to $375 per square foot.
The deal is the first in two years for a multi-tenant office tower outside New York City financed in the CMBS single-asset, single-borrower market, Newmark’s Jonathan Firestone told the outlet.
Firestone, as well as Newmark’s Jordan Roeschlaub, Clint Frease, Blake Thompson, Travis Bailey, Peter Mavredakis and Tim Polglase put the deal together.
The 47-story office building, at 845 Texas Avenue, opened in 2021. The building is the global headquarters for Hines; other tenants include law firms Vinson & Elkins and Clifford Chance, as well as Morgan Stanley and Cheniere Energy. It’s 95 percent leased.
The property features fitness and conference centers and rooftop gardens.
The refi illustrates the bifurcation of the office market in Houston and throughout the country.
Companies returning to the office are luring employees back with space in new buildings with top-of-the-line amenities, leaving behind older properties. As a result, inventory in the Class A segment of the market is tight. Meanwhile, buildings constructed in the 80s and 90s are losing leases and many have become obsolete.
As a result, the Houston office market vacancy rate remains high. It was at 25.7 percent in the fourth quarter, according to the Greater Houston Partnership, citing data from CoStar.
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