The office tower that started a tsunami of downtown development on Main Street could make some more history before the end of the year.
The 36-story building at 1000 Main is up for sale. Experts say the winning bid could be near $450 million and set a new record-high sales price for a Houston office tower.
Experts say the winning bid could be near $450 million and set a new record-high sales price for a Houston office tower.
For a building that’s only 11 years old, the 1000 Main has been a big part of Houston’s real estate history.
Before the 1000 Main building was constructed, Main Street itself was a real drag – a Hall of Shame. For the sake of efficiency, transit officials and city leaders had allowed Main Street to become an elongated bus stop.
In the 1980s, a walk down Main Street exposed you to a bunch of low-end retail outlets and obnoxious blasts of hot fumes from noisy buses passing by. This was punctuated by the occasional smell of piss where a wino relieved himself on a vacant storefront.
At least one downtown building owner moved the front door of his office building from Main Street to the other side of his building. Having a Travis Street address instead of a Main Street address made the building much more desirable to tenants, he said at the time.
Then along came Richard Everett of Houston-based Century Development, which developed the 71-story Wells Fargo Plaza years ago. Everett wanted to make the 1000 Main building a catalyst, he told me while I was the real estate columnist for the Houston Chronicle.
"This is the start of the revitalization of Main," Everett said in 2002, while the building was under construction. "Our intent is to change the nature of Main Street."
Main Street did change. It’s on fire. Major new real estate developments are everywhere.
A better place
How much credit should the 1000 Main building get for making Main Street a better place? A lot, says Laura Van Ness, director of business development at Central Houston Inc., an organization that supports downtown improvement.
“Yes, it made Main Street better,” Van Ness says. The new office building, the light rail line and the Main Street Square transit facility all came online about a decade ago and they were transformative for Main Street, she says.
How much credit should the 1000 Main building get for making Main Street a better place? A lot, says Laura Van Ness, director of business development at Central Houston.
Now Main Street is the site of major development activity including Hines’ 609 Main office tower that’s under construction near the Rice Hotel; the new 24-story Skyhouse Houston apartments; the new 328-room J.W. Marriott hotel which opens in late September; the redevelopment of the old Savoy Hotel into a Holiday Inn; Alliance Residential’s 207-unit apartment project at Main and Bell and a lot more. Plus, in 2011, Hines opened the 46-story BG Group Place office tower at 811 Main.
Anyway, when the 1000 Main building actually sells in a month or two, that will make news. But there’s a lot back-story with the building that makes me appreciate this transaction so much.
When the deal goes down, it could be the biggest deal in Houston’s real estate history – at least when you are looking at price on a per-square-foot basis.
The 1000 Main Street building is being marketed for sale and it is expected to fetch more than $440 million or $526 per square foot – an all-time record or a per square foot price for Houston, according to the Real Estate Alert newsletter.
The building, owned by an Invesco Real Estate partnership, is more than 99 percent leased. CBRE is marketing the 837,000-square-foot building, which was formerly known as Reliant Energy Plaza.
Trophy deal
Houston office investment activity has been slower in 2014, as it has been in many parts of the nation. So far this year, there’s been only one trophy deal in Houston over $200 million: AEW Capital’s $426 million purchase of a 90 percent stake in the Heritage Plaza building, according to Real Estate Alert. In 2013, Houston had six trophy deals.
The lack of big-league inventory in the trophy price brackets could push prices upward and the 1000 Main sales price could be surprisingly high – even more than expected.
The lack of big-league inventory in the trophy price brackets could push prices upward and the 1000 Main sales price could be surprisingly high – even more than expected.
There’s just not much left for investors to buy. A lot of the major skyscrapers have been sold in recent years and the buyers aren’t ready to sell them yet. Investors from around the world have been turned on by the Houston economic story and they want to buy buildings here for investment purchases. That high demand and low supply could be a bonanza for the seller of 1000 Main.
Houston’s highest price on a per square foot basis was H&R REIT’s purchase of the Hess Tower in 2011. The 845,000-square-foot tower, which is located near Discovery Green park in downtown, sold for $442.5 million or $524 per square foot. The seller was a partnership of Trammell Crow and Principal Real Estate Investors.
Both the 1000 Main building and Hess Tower were designed by the Gensler architecture firm, by the way. There may be a lesson there from these two highest-dollar deals: it pays to have good architecture.
The Invesco partnership bought the building in 2012 for $355 million. If Invesco gets $450 million for it now, that will represent a fantastic profit on a two-year hold.
The building is located on a block bordered by Main, McKinney, Travis and Lamar, near the center of downtown.
It seems like Richard Everett accomplished what he aimed to do when he developed the building. Main Street did indeed change, like Everett wanted. So, although the 1000 Main building is not that old, it is truly historic in my book.
Ralph Bivins, a former president of the National Association of Real Estate Editors, is founding editor of Realty News Report.
The 36-story buidling at 1000 Main St. is up for sale, and for a structure that's only 11 years old, it has been a big part of Houston's real estate history.
