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Howard Hughes Snaps Up Metro Houston Office Asset

Howard Hughes Holdings has acquired Waterway Plaza II, a 142,400-square-foot office building in The Woodlands Town Center in Greater Houston for $19.2 million. The six-story building is on 3.23 acres and includes a 1,316-spaceparking garage.

Waterway Plaza II is part of The Woodlands Town Center in Greater Houston. Image courtesy Howard Hughes Holdings

The property is currently 55 percent occupied, which Howard Hughes characterizes as providing needed inventory to its office portfolio in The Woodlands Town Center, which is currently 96 percent leased. According to the company, Waterway Plaza II is expected to achieve stabilized net operating income of $3 million in the coming years.

Waterway Plaza II is a LEED Silver and Energy Star certified building near The Woodlands Waterway and the retail, dining and entertainment venues in its vicinity. The Waterway runs from The Woodlands Mall to Lake Woodlands and connects much of The Woodlands. Waterway Plaza II is also near 10 Waterway, an undeveloped office site adjacent to the Waterway Square retail building.


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The Woodlands is a 28,500-acre master-planned community developed by Howard Hughes about 27 miles north of downtown Houston, with a current population of 123,000 residents, and nearly 72,000 people who work in the community. Howard Hughes, which is headquartered in The Woodlands, focuses largely on master-planned communities, holding those and other properties in Texas, New York, Maryland, Nevada, Arizona and Hawaii.

Howard Hughes recently secured $130 million for the refinancing of 9950 Woodloch Forest Drive, a 601,000-square-foot office building in The Woodlands. The company acquired the asset from Occidental Petroleum Corp. in 2019 and relocated its corporate HQ to the building from Dallas.

The Woodlands is a relatively strong office submarket

Office vacancy in The Woodlands submarket came in at 18.5 percent in the first quarter of 2024, according to Colliers, which is higher than previous quarters, but compares favorably to 26.7 percent for the overall Houston area in the first quarter, and some of the other large submarkets in the metro.

The Houston CBD turned in a vacancy rate of 30.8 percent, while the West Loop/Galleria is experiencing 29.7 percent vacancy. At 40 million square feet and 23 million square total office inventory, respectively, those two markets are larger than The Woodlands, which is by no means small at 12.1 million square feet.

Overall in the Houston-area office market, demand continues to lag behind supply, with net absorption dropping to about negative 616,400 square feet during the first quarter of 2024, following the previous quarter’s positive absorption. Firms are reducing their footprints, Colliers reports. One of the larger examples in the first quarter happened to be in The Woodlands, where U.S. Oncology moved out of 200,000 square feet at 10101 Woodloch Forest into about 26,500 square feet in The Woodlands Towers at The Waterway.

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