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Looking for bottom: State of the Houston office market
Unpacking the top sales of 2023 as office investors search out a new floor
![Houston’s Biggest Office Sales of 2023](https://static.therealdeal.com/wp-content/uploads/2024/03/Houstons-Biggest-Office-Sales-of-2023-m-1-1400x875.jpg)
“Adjustment” was the word in Houston’s office investment sales market last year.
Sales volume dropped 86 percent. An estimated $322 million in properties changed hands, compared to $1 billion in 2022, according to Partners Real Estate, which cited data from CoStar. The average price was $85 per square foot, and the average cap rate was 7.7 percent.
Office leasing also took a nosedive in Greater Houston, reaching a five-year low.
In Dallas this year, office space has gone for $74 per square foot. And in Chicago, a building sold for under $8 per square foot.
Low occupancy and diminished demand sparked by remote-work trends have led to crashing values nationwide. In one of the first high-profile cases last year, Brookfield let two office buildings in downtown Los Angeles go back to the lender via deed-in-lieu of foreclosure in February, after defaulting on $784 million. Brookfield wound up defaulting on more than $1.1 billion in debt connected to its L.A. portfolio.
In Houston, owners of the 11-building Greenway Plaza office complex — CPP Investments, Nuveen Real Estate and Silverpeak Real Estate Partners — defaulted on a $465 million loan in 2022. Things are looking up for Greenway Plaza since a court-appointed receiver hired Cushman & Wakefield for leasing and Lincoln Property Company for management at the end of last year.
More recently, Expansive defaulted last month on a $7 million loan tied to the Scanlan Building, at 405 Main Street, in downtown Houston.
There are some bright spots, however. Nitya Capital in October managed to extend its loan maturity after defaulting on $42.5 million note tied to One Westchase Center, a 12-story, 466,000-square-foot building at 10777 Westheimer Road.
And earlier this month, M-M Properties scored a $252 million refinancing from Starwood Property Trust for the iconic TC Energy Center, at 700 Louisiana Street.
These were the top office sales in Houston in 2023, according to Newmark.
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