Williams Tower, the iconic 64-story office building adjacent to The Galleria, is being marketed for sale to sophisticated investors around the world. The beacon-topped tower, at one time known as the tallest office building not in a downtown area, was completed in 1983 by Hines, the real estate company founded by Gerald D. Hines.
Williams Tower is expected to fetch between $450 and $470 million, according to insiders in the real estate investment community. That would translate to a significant profit for the seller, a subsidiary of Hines Real Estate Investment Trust, which reportedly bought the property in 2008 from Kuwaiti investors for $271.5 million.
Office space near the Galleria is in high demand. Average leasing rates have risen to $31.14 per square foot, jumping over $1 per square foot in just the last three months.
Williams Tower, designed by Philip Johnson and John Burgee, is the key landmark on Houston’s suburban skyline. The building’s original name, Transco Tower, was changed in 1999 after Williams bought the Transco Energy company.
The 1.4 million square-foot tower at 2800 Post Oak Blvd., had been the epitome of upscale suburban office space over the years. In fact, at one time, some companies shied away from having an office in the tower because the CEOs did not want to appear ostentatious by having such luxurious office space.
Located next to the Gerald D. Hines Waterwall Park, the Williams Tower features a soaring 88-foot-high granite arched entry. It is across the street from the mixed-use Galleria and is in the middle of the closest thing Houston has to a 24/7 environment, which makes it more attractive to investors.
The building is approximately 98 percent occupied and it holds the headquarters for the Hines realty firm, one of the largest real estate development companies in the world. Other tenants include Williams Energy, Quanta Services and the CBRE real estate firm.
Years ago, under Kuwaiti ownership, the building was leased up with rental rates that now seem very affordable. But some of those leases are about to expire, which should be a windfall for the new owners who can lease the space for a lot more money in today’s market.
Office space near the Galleria is in high demand. Average leasing rates have risen to $31.14 per square foot, jumping over $1 per square foot in just the last three months. Two new office towers, the Skanska building and BBVA Compass Plaza are under construction in the area, the first new significant office projects to be built near the Galleria in years.
The Jones Lang LaSalle real estate firm is handling the sale of the Williams Tower. Only a handful of investors have the wherewithal to plunk down over $400 million into a single building. Jones Lang LaSalle will entertain inquiries from around the world.
Unlike years past, Houston has an exceptional reputation right now with out-of-town investors, because energy firms have been expanding and the city has been adding jobs, making the office market very tight.