Prime Houston complex headed to market

Real Estate Alert, March 31, 2004

A Japanese consortium will soon market a Houston office complex valued at more than $250 million.

The 1.8 million-square-foot Four Oaks Place, which is 85% leased, will likely appeal to core and core-plus players. The four-building complex could attract bids of $150/sf, or $263 million. At that price, the buyer's initial annual yield would be about 8%, although the yield would climb to 9.5% if the vacant space were filled.

Four Oaks, considered one of the Houston's finest office properties, is owned by a Japanese group that includes Mori Building Development of Tokyo. The partnership is advised by L&B Realty Advisors.

The property was built in 1983 by local developer Interfin, which sold a majority stake to the Japanese consortium in 1989. The complex is located at 1300-1400 Post Oak Boulevard, in the Uptown/Galleria district. It consists of the 30-story Union Texas Petroleum Center, twin 25-story buildings known as Wells Fargo Tower and BHP Tower, and the 12-story Interfin Building. The three taller buildings have distinctive exteriors of reflective blue glass. The 18-acre complex was designed by renowned architect Cesar Pelli.

The occupancy rate is in line with the 28 million-sf submarket's 84% average. There is limited tenant rollover through 2008. Asking rents average $22/sf, down from a peak of $24/sf in the late 1990s.

The lead tenants are Aon, BRP and law firm Beirne Maynard. The complex, which includes 25,000 sf of fully occupied restaurant space, has parking for 4,500 cars.

The owners have retained Holliday Fenoglio Fowler to handle the marketing, which is not expected to begin for several weeks.