In a hotly pursued assignment, NewQuest Properties has been selected by North Carolina-based Extended Stay America to market trophy locations in Houston and Austin, a quartet of rare redevelopment opportunities in both cities.
Leading the charge will be Brad LyBrand, senior vice president with NewQuest, and Glenn Dickerson, vice president, who were up against leading brokerage firms near and far for the exclusive listing of 2300 W. Loop South and 4701 Westheimer Rd., both in the prestigious Uptown Houston/Galleria submarket; 7979 Fannin St., which is adjacent to Texas Medical Center, the world's largest with 50 million square feet and a $35 billion estimated regional economic impact; and 507 S. 1st St. in the South Central Waterfront District of Austin's urban core, the nation's second-best market for jobs and the Southwest's "tech nexus."
"Extended Stay has identified a few properties where the land is far more valuable than the improvements on the property. These are being sold for the land value," Dickerson says. "The seller specifically wanted a land broker and we won due to the strength of our pitch and market knowledge."
Extended Stay acquired the four properties in the early 1990s and built midrise hotels on each from 1995 to 1998. During that time, the value of the land in each respective market skyrocketed.
The Galleria sites – 2.32 acres and 1.66 acres – are situated a half-mile apart in one of the city's highest barrier-to-entry submarkets with 16 million square feet of class A office space and 2,000+ companies. The going rate for dirt in the corridor is $250 to $350 per square foot.
Extended Stay America's 3.23-acre tract is located in an opportunity zone at the split of Fannin Street and Greenbriar Drive. It is bordered by Texas Medical Center and Reliant Park with a Metrorail station on its doorstep. The corridor is controlled by institutional investors. It's the only available redevelopment site in the three- to five-acre size in the area. Land prices in the area command $175 to $200 per square foot. Negotiations are underway with a prospective buyer, but no contract is in hand.
The Austin property, totaling 2.9 acres, is located within walking distance of Lady Bird Lake and adjacent to the 15-story River South mixed-use development. The South Central Waterfront District has 118 properties under the control of 32 private owners, most of whom are unwilling to part with their assets. The going rate for dirt ranges from $300 to $400 per square foot.
"Very rarely has anything of this size become available in any of these markets," LyBrand says.
The Houston-based NewQuest team has set Jan. 31 as the call for offers, excluding the Fannin Street site. Each property is free and clear of encumbrances. In all cases, the hotels are surrounded by significantly taller buildings, a telling factor for redevelopment flexibility in such extraordinarily high-barrier-to-entry markets.
"These listings are all based on land value and present a buyer with a generational opportunity to secure strategic positions in two of the most dynamic cities in the U.S," LyBrand says.
NewQuest Properties, founded in 2001, is a privately owned, full-service commercial real estate firm specializing in development, land brokerage, leasing, tenant representation, investment sales and property management services. Headquartered in Houston, NewQuest owns a portfolio encompassing more than 60 retail and mixed-use projects valued at $2.2 billion and provides leasing services for more than 12 million square feet of commercial space in Texas, Louisiana and throughout the U.S.
