Houston Developers Land Office Construction Loan

Hanover Company and Local scored a construction loan to build a Houston office building as the market’s pipeline thins out.

The Houston-based developers landed financing to build Autry Park One, a 128,000-square-foot office building that will be part of the mixed-use development Autry Park, according to a release.

JLL’s Colby Mueck, Cortney Cole and Kevin McConn represented the borrower and lined up joint venture equity as well as a syndicated construction loan with two regional banks.

The lenders weren’t identified; nor was the amount of the financing.

Autry Park One, which will rise along Allen Parkway and the Buffalo Bayou, will feature 116,000 square feet of office space and 10,500 square feet of ground-level retail. The building’s amenities will include a rooftop deck, gym and underground parking.

The 14-acre mixed-use development located about 2 miles west of downtown Houston is already home to Hanover Autry Park, a 324-unit apartment building at 811 Buffalo Park Drive, and Hanover Parkview, a 422-unit apartment building at 3737 Cogdell Street, as well as restaurants and high-end retail.
Hanover Company and partner Lionstone Investments refinanced Hanover Autry Park and Hanover Parkview in September. JLL arranged the financing, five-year, fixed-rate loans of an unspecified amount. At the time, Hanover Autry Park was 92 percent occupied, and Hanover Parkview was 95 percent occupied.

The financing comes at a time when office developers are reluctant to start new projects.

Vacancy is high, at 26.5 percent, and the market’s construction pipeline has dried up considerably, with 1.1 million square feet of office space in the pipeline in the first quarter, according to Partners Real Estate. That’s a 63 percent drop from the year before, when there was 2.98 million square feet of office space under construction.

Industry experts hope the decrease in new supply will force office users to cut into the city’s high vacancy rate.