Richard Ellis has purchased a Houston office building on behalf of its CBRE Strategic Partners US Value 5 fund, according to an announcement by the firm. The Los Angeles-based real estate investment manager purchased the property at 2603 Augusta Drive from Behringer Harvard for $24 million, or roughly $99 per square foot, according to information from data provider Real Capital Analytics.
The transaction marks the final acquisition by CBRE Investors on behalf of the CBRE Strategic Partners US Value 5 fund. The value-added fund closed on $1.3 billion in equity commitments in 2008.
The 16-storey, Class A office building is located a half block north of Westheimer Road in the Galleria submarket of Houston. The 242,447-square-foot property currently is 56 percent occupied.
“Houston is a target market for us. We take high-quality office buildings, fix them up, rebrand them, lease them up and then sell them,” Mike Burrichter, principal at CBRE Strategic Partners US, told PERE. “This property fit the bill. It has been relatively dormant for last few years, and we intend to spend quite a bit of money on fixing it up.”
Indeed, Burrichter pointed out that CBRE Investors has a budget of roughly $10 per square foot to launch a significant capital improvement campaign for the property. In addition to upgrading the heating and air conditioning – as well as renovating the elevators and lobby – part of the upgrade campaign includes adding new amenities, which could include a fitness centre, conference centre, deli or combination thereof. CBRE Investors also intends to introduce a “spec suite program,” featuring fully built-out space with clean finishes for tenants seeking a turn-key office option.
Burrichter, who said he had once purchased the property in the '90s when he was with CB Commercial Realty Advisors and therefore “has a history” with it, added that CBRE Investors plans to hold onto the property for four to six years before selling it.