Greenway Plaza Submarket Update

The Greenway Plaza submarket is in a great location in Houston. The area is surrounded by strong demographics with easy access to the Interstate 610 loop, five miles west of Downtown. It is home to 11 office properties that make up the Greenway Plaza Campus on a 50-acre site with almost five million square feet of space. This landmark campus consists of Class A office space, retail and restaurants, coworking facilities, and pedestrian-friendly environment.

Market rent in Greenway Plaza is $29.83/SF with a 13.3% vacancy rate. We see steady growth in this submarket with technology tenants moving in and the ongoing success and renovations of the Greenway Plaza campus.

Leasing Opportunities in Post Oak Park Houston

As of 4th Quarter 2019, Green Plaza is sitting at a vacancy rate of 13.3%. The area is performing above the metro Houston average. Some 130,000 SF of space has been absorbed in this submarket in the last twelve months, making Greenway Plaza among the top ten markets for leasing demand.

We see a big trend happening in Greenway Plaza with landlords upgrading space, particularly in four and five-star buildings, to attract new tenants. With these ongoing renovations, we expect the vacancy rate to drop to 12% over the next couple of years. Let’s take a look at some of the more active buildings leasing office space in the last twelve months.

Four- and Five-Star Buildings

  • Nine Greenway Plaza, 9 Greenway Plaza – leased 23,809 SF
  • Wesleyan Tower, 24 Greenway Plaza – leased 11,385 SF
  • Three Greenway Plaza, 3 Greenway Plaza – leased 6,154 SF

Three-Star Buildings

  • 2506 West Main Street – leased 5,313 SF
  • Nitya Tower, 211 Norfolk Street – leased 5,295 SF
  • 3100 Timmons-3100 Timmons Lane – leased 2,696 SF

Asking Rents in Greenway Plaza

Rental rates for office space in Greenway Plaza are $30.00SF which is higher than average. However, given the submarket’s location and choice of high-end office space, those lofty rents are justified. On the other hand, rent growth has remained subdued and as of 4th quarter 2019 was at -0.2%.

We see Greenway Plaza remaining attractive to tenants due to a variety of office buildings choices, varying rental rates, and landlords upgrading properties and adding amenities to keep up with demand.

Construction

ConstructionThe last eight quarters we’ve seen 246,989 SF of space delivered in the Greenway Plaza submarket, with another 303,433 SF of space proposed. Since 2010 there has been around 1.2 million SF of space delivered, with most of that being the Greenway Plaza campus. Both of the proposed developments are mixed-use with office, multi-family, and retail components. The Greenway Plaza submarket needs this update considering most of the inventory was built in the 1970’s and 1980’s.

Let’s take a look at the pipeline for Greenway Plaza.

Recent Deliveries

  • Kirby Collection, 3200 Kirby Drive – delivered 246,989 SF in December 2017.

Proposed

  • Parcel 1, 3120 Buffalo Speedway 303,433 SF – building to be completed in February 2021.

Sales Activity in the Greenway Plaza Submarket

Sales in Greenway Plaza have been slow this past year. There have been less than a dozen transactions so far, almost all between private investors. Average price per square foot is $202 with an average vacancy rate of 6.8%.

Let’s look at some of the largest deals that happened in 2019:

Stockdale Capital Partners purchased 20 Greenway Plaza for $87.9 Million/$203/SF with a vacancy rate of 3.2%.
Lovett Commercial and Urban Meridian Group purchased 2800 Bissonnet Street for $67.6 Million/$270/SF.
3435 Branard Street sold for 1.7 Million/$178/SF.

Greenway Plaza definitely has a bright future when it comes to development and growth. Landlords are investing heavily in renovations and building upgrades, giving tenants multiple options to choose from when deciding on office space. We also see this submarket as a great opportunity for investors to purchase older generation space and make improvements to attract new tenants.

We have a team of experienced brokers that can guide and represent you through the entire leasing process and help decide the best real estate strategy for your business. Contact CXRE today!

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