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Groundbreaking set for next month, 324-unit apartment tower as phase I:   @CREguy13 @swtsig   https://www.costar.com/article/858316108/developers-prepare-to-break-ground-on-houston

Hanover Square Block E is a 8 story mixed-use residential/retail mid-rise project located at Tirrell St. and Allen Parkway. The project consists of 421 luxury apartment units, approximately 10,500 SF

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Full Costar article:

Timber Office Project Planned Near Houston's Buffalo Bayou

Local Partners to Develop Mid-Rise Project at Autry Park

A boutique office project is tentatively set to break ground next year in what could be Houston's first office building constructed of cross-laminated timber. (Local Partners)

A boutique office project is tentatively set to break ground next year in what could be Houston's first office building constructed of cross-laminated timber. (Local Partners)

By Marissa Luck
CoStar News

November 20, 2020 | 5:09 P.M.
 

Developers behind a 14-acre mixed-use project overlooking Houston's Buffalo Bayou Park are betting on a boutique, sustainable office design to gain a competitive edge to attract tenants in a tough leasing environment.

 

The office project is part of Autry Park, the newly named mixed-use project being developed by Hanover Co. and Lionstone Investments.

 

At full build-out, the project is expected to include 1,400 apartments, 350,000 square feet of office space and 100,000 square feet of retail space near Allen Parkway at the corner of West Dallas Street and the future Buffalo Park Drive.

 

Local Partners is developing the office portion of the project and plans to include two office buildings: one 20-story building built with traditional concrete and one six- or seven-story building built with cross-laminated timber.

 

The mid-rise office building with cross-laminated timber for the floor and ceiling decks in combination with a steel frame is the first publicly proposed cross-laminated timber office project in Houston. Another unrelated timber project, involving apartments, was announced earlier in the city.

 

However, it is "very likely other developers are considering this technology" in the city as the nascent building technique gains traction, said Shon Link, managing partner at Local Partners. Link previously worked at the Houston real estate firm Midway before breaking off to form his own development firm two years ago.

 

Cross-laminated timber consists of glued together strips of wood in prefabricated slabs and is touted as a more sustainable building material than steel or concrete. While research into the material's sustainability varies, at least one study published in the Journal of Sustainable Forestry found that using mass wood for buildings and bridges could cut greenhouse gas emissions between 14% and 31%.

 

“We wanted to create a unique experience on the office floors. You can tour plenty of properties that use lay-in ceilings or exposed concrete, but this exposed wood ceiling is something really unique and something really beautiful,” Link said in an interview.

 

The cross-laminated timber building could be between 75,000 square feet and 90,000 square feet, depending on demand. Construction is slated to start in 2021, if a tenant signs on, and the shell of the building could be complete by mid-2022.

 

Link said the team is hoping the unique design as part of a major mixed-use project will make the office building appealing enough to compete in a tough leasing environment.

 

“I think the amenities and the connection to Buffalo Bayou Park is just a very special opportunity,” Link said.

 

While a couple of developers in Austin and San Antonio have used cross-laminated timber for office projects, the material is still rare in Texas and nationwide. That could help it stand out in Houston, the fourth-largest U.S. city by population, which has one of the highest office vacancy rates in the country that has been made worse by the pandemic and energy downturn.

 

"Given the overhang in office supply in Houston, this shows that developers are trying to gain a competitive edge to attract tenants," said Justin Boyar, CoStar's Houston director of market analytics.

 

The proposed Houston office building would follow the lead of a few other timber structures around the state. Earlier this year, Hixon Properties completed construction on a cross-laminated timber office project in San Antonio called The Soto.

 

The Soto, located at 711 Broadway St., is believed to be the first office project in Texas that used mass timber not only for the floors and ceilings but for all the beams, columns and everything structural above the concrete podium, said Andrew Herdeg, partner with Lake Flato, the architecture firm who designed the project.

 

While there are more mass timber projects in the Pacific Northwest, Herdbeg said the fairly rare building material is starting to crop up in more projects in the East and the South as the technology advances.

 

The architecture firm now has seven office projects either in construction or in design using mass timber across Texas, Colorado and Pennsylvania, he said.

 

Lake Flato also worked on the first mass-timber boutique hotel in Texas, the Hotel Magdelena, which recently completed construction in Austin’s South Congress neighborhood and used dowel laminated timber — a slightly different technology than cross laminated timber — he said.

 

The firm also designed the 39,000-square-foot Sarah Campbell Blaffer Foundation Center for Conservation for the Museum of Fine Arts’ in Houston that used dowel-laminated timber for the ceiling and opened in 2018.

 

“Mass timber is relatively unusual still. I think the technology has really advanced so that it is quite cost competitive now, if you know how to design within the system. It’s just a matter of education and priorities. Some clients would rather have a steel or concrete building for other reasons, but if you’re interested in an interior environment that is warm and tactile, if you’re interested in driving down your carbon footprint, if you’re interested in substantiality in general , it’s quite cost competitive and creates a wonderful environment in which to work,” Herdbeg said.

 

Elsewhere in Texas, Endeavor Real Estate and Pegalo Properties used cross-laminated timber in an East Austin project at 901 E. Sixth, which sold for a premium to Clarion Partners last year. Like the Autry Park project in Houston, the Austin project also used cross-laminated timber for floor and ceiling decks with steel framing.

 

Lionstone Investments was an equity partner in the 901 E. 6th project and saw first-hand how using the unique building material could attract tenants and buyer interest, Link noted. As a codeveloper of Autry Park, Lionstone Investments is also involved with the office portion of the project.

 

Houston has had at least one other significant cross-laminated timber project proposed but it is an apartment project, not office. Rice University is planning a five-story student housing tower out of cross-laminated timber in a project expected to break ground in May or June, a Rice University spokesman said in an email.

 

Houston-based developer Hines, which has developed several timber office buildings around the country, has hinted it was interested in building a timber office project in Houston but solidified plans have not been revealed.

?url=http%3A%2F%2Fcostar-brightspot.s3.amazonaws.com%2Ff5%2Fda%2F4d2bcf7d4737b11c09c701381184%2Fautry-park-rendering-1.jpeg A newly unveiled rendering of Autry Park, the 14-acre mixed use development by Hanover and Lionstone where Local Partners is building its new office project. (Hanover)

 

Beyond the boutique office building, the Autry Park development is planned to include a larger 20-story, 275,000-square-foot office building featuring views of Memorial Park and downtown Houston.

 

The larger office tower's use of traditional concrete building materials is because it incorporates a parking structure, Link said. He expects leasing on the larger office tower to take longer than the mid-rise.

 

“For the most part, those [big] tenants are being strategic and any kind of movement has slowed down. There are some that need to make a move but not as many. They are going to be strategic, but they’re probably going to start coming back into the market in early 2021,” Link said.

 

Local Partners plans to wait to have one or two office tenants committed to the project before it breaks ground on either building, Link said. Right now, Local Partners is doing direct outreach and marketing for tenants but expects to hire an undisclosed brokerage to assist with leasing in the future.

 

There are several high-rises proposed or underway near the emerging submarket that stretches along Allen Parkway near Buffalo Bayou Park.

 

DC Partners is planning additional office high-rises directly across from the park at its 6-acre mixed-use project where condominium and retail buildings are currently under construction. Radom Capital is redeveloping the historic Star Engraving Co. building, where technology company Thrasio leased about 17,000 square feet as part of its headquarters relocation from the Boston area to Houston, a spokeswoman told CoStar News in an email.

For the record

 

The Autry Park office design team includes Munoz+Albin and Kirksey Architecture.

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