Dhanani buys Galleria Park offices at steep discount
Suburban-focused real estate firm is taking a risk on the urban office market
A Houston real estate firm that specializes in suburban properties is dipping a toe into the urban market.
Dhanani Private Equity Group purchased a 30-percent occupied office and retail complex in Uptown, the Houston Chronicle reported. California-based Acore Capital sold the 11-story, 400,000-square-foot Galleria Park complex at 5251 Westheimer Road.
Amid high vacancy rates and a continued push for remote work, Dhanani Private Equity CEO Nick Dhanani said the company paid significantly less than the estimated $62 million value of the property. In other words, less than $155 per square foot.
“This is our first trophy asset in the Galleria market and it’s an institutional-quality asset, which for a small company like us — we’ll be holding it, and we’re proud of that,” Dhanani told the outlet. Rick Goings, Ryan Olive, Bailey Black, Susan Hill and Marty Hogan of JLL marketed the property.
Dhanani said his firm will be able to offer rents below Galleria market values because the purchase price was so low. The developer is working to land a high-end steakhouse and a sushi restaurant for vacant retail spaces and plans to court office tenants with reduced rents.
Commercial real estate data firm CoStar found that Houston has had about $5.8 billion worth of office deals over the past year.
“Given the uncertainty over the near-term leasing environment, investors in Houston are favoring deals with minimal leasing risk and stable cash flows and continue to pay above-market pricing for certain newer assets leased to credit tenants,” Itziar Aguirre, director of market analytics at CoStar, told the outlet. “I expect this trend will continue into next year.”
Dhanani Private Equity also recently bought 50 acres of what used to be a prison outside of Houston. The firm bought the property off the U.S. Highway 59 and University Boulevard in Sugar Land, from Irving-based Fluor Corporation for an undisclosed price last month.
— Victoria Pruitt