Houston-based Parkway — the company formed via a combination Florida-based Parkway Property Investments and Houston-based Midway announced in May — has acquired two prominent office campuses in Houston, purchasing them from Parkway Property Investment’s previous partner.
A Parkway spokesperson said the company sourced new capital to purchase Post Oak Central in Uptown and CityWestPlace in Westchase. Under the terms of the all-cash transaction, the properties are now owned by a newly created Parkway partnership.
Parkway declined to comment on who the previous partner was or how much the two properties sold for.
Global real estate investment bank Eastdil Secured served as the sole adviser to the seller, and JLL Capital Markets acted as buy-side equity adviser, Parkway said.
The all-cash transaction gave Parkway control of nearly 3 million square feet between the two properties.
Parkway said the strength of the submarkets, the institutional mix of the global tenant-base and the redevelopment potential of Post Oak Central were contributing factors in the company's decision to acquire the two properties.
Parkway will continue to operate both properties, and Parkway's development partner, Midway, will oversee the redevelopment of Post Oak Central and the continued development of CityWestPlace, Parkway said.
"Post Oak Central and CityWestPlace are both significant Houston assets that continue to perform, though Post Oak Central has been underappreciated in the market for some time," said Brad Freels, chairman and CEO of Midway and co-executive chairman of Parkway. "We see incredible potential in the iconic property. This deal activates and accelerates our plans, and we look forward to reimagining Post Oak Central for the next generation."
Post Oak Central was designed by Phillip Johnson and was developed by Houston-based Hines between 1975 and 1981.
The three-building development is along Post Oak Boulevard a few blocks north of The Galleria mall and includes 1.2 million square feet of office space and 90,000 square feet of pedestrian-oriented retail.
The 24-story Post Oak Central I, at 2000 Post Oak Blvd., includes 427,495 square feet of office space, with an average floor size of 17,148 square feet.
Post Oak Central II, which also stands 24 stories tall, is slightly larger and includes 470,289 square feet of office space. The building is at 1980 Post Oak Blvd and has average floor size is 18,079 square feet.
Post Oak Central III, at 1990 Post Oak Blvd., includes 469,718 square feet spread across 24 floors. The building has an average floor size of 18,183 square feet.
While the terms of the transaction were not disclosed, Harris Central Appraisal District records said the three buildings had a combined value of $214.8 million as of Jan. 1.
Apache Corp. has been headquartered at Post Oak Central since 1991. The energy company last renewed its 524,342-square-foot lease there for five years until Dec. 31, 2024. However, Apache plans to move all of its approximately 800 Houston employees to One Briarlake Plaza in Westchase in early 2024.
CityWestPlace, meanwhile, is a 39-acre campus, just off the Sam Houston Tollway near the Energy Corridor.
Designed by Keating Mann Jerrigan Rottet and Daniel Mann Johnson & Mendenhall, the office complex was built between 1993 and 2001 and encompasses four buildings with a total of 1.5 million rentable square feet, as well as four structured parking garages with ground-floor amenities.
The campus also includes outdoor spaces, water features, on-site conference space, multiple food and beverage options, two fitness centers, trails, a jogging track and sports fields.
CityWestPlace One, at 2101 CityWest Blvd., consists of 305,828 square feet spread across six floors.
The 20-story CityWestPlace Two, at 2107 CityWest Blvd., has a total of 443,551 square feet.
CityWestPlace Three, at 2105 CityWest Blvd., stands nine stories tall and has a total of 204,893 square feet of office space.
At 21-stories, CityWestPlace Four is the tallest of the four buildings has a total of 518,907 rentable square feet. It is at 2103 CityWest Blvd.
CityWestPlace was fully renovated in 2020 and in 2022, Parkway said. HCAD records said the campus was valued at $329 million as of Jan. 1.
In July, CityWestPlace scored a leasing coup when Virginia-based engineering and construction firm Bechtel Corp. announced it will move its local offices from Uptown to the campus.
In 2021, Honeywell International Inc. (Nasdaq: HON) moved its Performance Materials and Technologies business division to CityWestPlace, where the company's Process Solutions business segment was already based. The move increased Honeywell's Houston headcount to more than 850 employees, the company said.
Parkway was formed earlier this year when Houston-based Midway and Orlando-based Parkway Property Investments entered into a deal to create a new real estate firm, with the goal of capitalizing on investment opportunities across the southern United States.
The idea to form a new company grew out of conversations between Midway and the legacy Parkway company about two years ago. Parkway reached out to Midway to discuss ways to add mixed-use elements to existing properties in its portfolio. But soon the two companies saw the opportunities that could be created by combining Midway’s development experience with Parkway’s experience in raising capital and finding properties across the country worth investing in, the company said in May.
The combined Parkway company offers a range of services, including acquisitions and dispositions, asset management, investment and development, accounting services, property operations and management, construction management, REIT compliance and governance, mergers and acquisitions, marketing and communications, strategic leasing, and portfolio repositioning.
The Midway brand continues to exist and serves as the exclusive developer for the new company.
By Jeff Jeffrey – Senior reporter, Houston Business Journal