Houston Office Tower Lands Refi

Two CityWestPlace. Image courtesy of JLL

Parkway Property Investments is refinancing Two CityWestPlace, a 20-story, 443,549-square-foot Class A office tower in Houston’s Westchase submarket, according to JLL Capital Markets, which arranged the transaction. Regions Bank led the five-year, floating-rate loan and syndicated half of it with Citizens Bank.

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Located at 2107 CityWest Blvd., Two CityWestPlace is currently 99 percent leased. The building is situated within the four-building, 29-acre CityWestPlace office complex. The campus is 12 miles west of downtown Houston, along the Sam Houston Tollway and is in close proximity to the Energy Corridor and residential areas such as Briargrove Park, Spring Branch and West Memorial.

Among them, the four buildings offer a wide range of amenities, including conference areas, a dry cleaner, salon, dentist, car detailing and auto service, and multiple food and beverage options. Indoor and outdoor recreational options include two fitness centers, a jogging track, a soccer field, a basketball court, a sand volleyball and a bocce court, along with expansive outdoor space.

The JLL Capital Markets team representing Parkway was led by Senior Managing Director Susan Hill and Analysts Jett Lucia and Sherri Rollins. The deal was secured by HFF before it was acquired by JLL in July 2019.

A softening market

Parkway currently has more than $3.2 billion in assets under management and operates and/or provides accounting services for about 21.7 million square feet of CRE assets in California, Texas, Georgia, Florida, North Carolina, Virginia and Pennsylvania.

Even before the coronavirus pandemic, the Houston office market was slowing as a result of the oil price war and after-effects of the 2015 energy downturn, according to a first-quarter report from Avison Young. Given that, as evidenced by a 16.8 percent direct vacancy in the overall Houston office market, tenants are expected to keep their competitive advantage.

In the Westchase submarket specifically, Class A space is an average of 24.6 percent vacant, on an inventory of nearly 9.8 million square feet. Total absorption in the first quarter was a negative 137,766 square feet, again according to Avison Young.