Whitestone REIT is offloading its last remaining office property, its headquarters, as part of a strategic shift to retail real estate in the Sun Belt.
It listed the 106,000-square-foot Woodlake Plaza, at 2600 South Gessner Road, in the Westchase district. JLL’s Martin T. Hogan is marketing the property; the asking price wasn’t disclosed.
Whitestone hasn’t decided whether to relocate after the sale, said David Mordy, the firm’s director of investor relations.
Whitestone bought the six-story property for $5.5 million in 2005 from a limited partnership with the same business address as LNR Property (a firm that Starwood Property Trust and Starwood Capital Group acquired for over $1 billion in 2013), according to Whitestone’s 2006 annual report. Whitestone moved its headquarters to the building in 2008.
The company intends to refocus its efforts geographically to the Sunbelt region — namely, Texas and Arizona — and strategically toward the retail asset class, Whitestone COO Christine Mastandrea said in a March 7 earnings call.
“We only have one property that doesn’t fit our strategic profile … that property is our headquarters office building, Woodlake. We strongly believe in having a very focused strategy of sticking to our expertise,” she said.
The building has been rocked by vacancies. Occupancy decreased 12 percentage points over the past three years, dropping from 70 percent occupied in 2020 to 58 percent as of December, according to SEC filings. It was 90 percent occupied when Whitestone bought it.
Woodlake Plaza’s occupancy rate is 22 percentage points below the firm’s second-lowest performing property, a retail center in Phoenix. Whitstone’s 55 properties boast an average occupancy rate of 94 percent.
Westchase had one of the metro’s highest submarket vacancy rates in the fourth quarter, hovering around 28 percent, compared to Greater Houston’s 25.5 percent average, according to JLL. Bechtel’s 285,000-square-foot lease at CityWest Place contributed to the submarket recording the largest occupancy gains across the city’s 19 submarkets. In the previous quarter, Westchase had vacancy of nearly 30 percent.
Last month, Whitestone added another asset to its 12-property footprint in Houston, with the acquisition of the 107,000-square-foot Garden Oaks Shopping Center at 3800-3940 North Shepherd Drive. The firm owns about 5 million square feet of real estate across the Texas Triangle and Arizona, worth approximately $1 billion.
Read more
