By Katherine Feser
While Duke Realty is shedding its suburban office assets across the country, Buchanan Street Partners is in acquisition mode.
The Newport Beach, Calif.-based investment firm has added a third local building to its portfolio with the purchase of Sam Houston Crossing II, a 160,000-square-foot office building at 10344 Sam Houston Park.
The building, completed by Duke Realty in 2013, is fully leased by Forum Energy Technologies, Pemex and First American Title Co.
Distress in the energy sector, as evidenced by a glut of empty office space, has brought values down an estimated 10 to 15 percent from peak levels of 2013 and 2014, said Matt Haugen, vice president at Buchanan Street Partners.
A fully leased building with tenants committed for at least four more years made the Sam Houston Crossing building attractive. Also, the company was familiar with the area, having previously owned nearby Beltway 8 Corporate Centre 3 and 4.
“We were able to get the cash flow in place but don’t have to take any near-term risk,” Haugen said.
Houston’s office market might take anywhere from 18 months to four years to fill the space given back by the energy industry over the last two years, Haugen said.
The company’s other local properties, which cater to smaller tenants, are doing well, Haugen said. The 2100 West Loop building, which has undergone $3 million in improvements, is 90 percent leased. The Offices at Kensington in Sugar Land is 98 percent leased.
Buchanan Street Partners has purchased a number of buildings in Dallas and San Antonio over the last two years, but this is its first in Houston since 2013. The company has invested in all types of real estate in Houston over the last 15 years.
The sale, handled by Jared Chua of CBRE, represents one of the final suburban office buildings to be sold by Duke Realty. It recently sold buildings in Washington, D.C., and Indianapolis while turning its focus to industrial and medical properties. Indianapolis-based Duke Realty owns several industrial properties across the Houston region.
###