DML Capital Buys Houston Office Asset After Seller’s Upgrades

An office tower near Greenway Plaza has traded hands for the second time in less than two years, after the seller repositioned it amid a choppy market.

DML Capital bought the 15-story tower at 3555 Timmons Lane, a 227,000-square-foot building in the Greenway-Upper Kirby submarket at the beginning of August. JLL Capital Markets secured acquisition financing from an unnamed insurance company for DML Capital, the Houston Business Journal reported. Terms weren’t disclosed, but Harris County appraisal records peg the Class A property’s taxable value at $19.9 million.

The seller, Dallas-based Novel Office, acquired the building in December 2023 and invested at least $1.4 million into upgrades. Those improvements paid off in terms of leasing. Occupancy jumped from 55 to 95 percent, with 17 tenants signing leases since renovations began. Notable deals include Goode Company Restaurants relocating its headquarters into more than 9,000 square feet, and law firm Hicks Davis Wynn expanding its footprint to over 13,000 square feet.

Anchored by the Houston-Galveston Area Council, which takes up roughly a third of the building, the building’s roster has diversified with tenants in energy, real estate, tech, law and wealth management. The building, completed in 1982, underwent a major renovation in 2017. Novel’s most recent work included a lobby overhaul, restroom and corridor upgrades, two new chillers and an enhanced conference center.

As older commodity towers struggle with vacancies, buildings that have been refreshed and repositioned in strong submarkets are luring tenants and attracting capital. The tower is “a building with excellent bones that has been thoughtfully upgraded to meet modern workplace standards,” JLL broker Michael Johnson said.

For DML Capital, the deal adds to a growing portfolio of Houston offices. In June, the firm acquired 3250 Briarpark Drive, a 200,000-square-foot Westchase property that serves as Mattress Firm’s headquarters.

The back-to-back trades highlight a rare case of value creation in Houston’s office sector, where most sales have been distressed in recent years.

— Eric Weilbacher