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November 20, 2019  

CalSTRS Paying Top Dollar for Houston Tower

California State Teachers has struck a deal to buy Bank of America Tower in Houston from Skanska USA at a record per-foot valuation for the city.

The transaction values the 780,000-square-foot office building at about $695/sf, or $542 million. That far exceeds the current $528/sf record for a large office property in the city.

Market pros said the seller, the U.S. unit of Swedish developer Skanska, may retain a stake in the vicinity of 10%. Eastdil Secured is brokering the sale. CalSTRS is being advised by Boston-based Beacon Capital.

The deal is welcome news for Houston’s investment-sales market, which has struggled since oil prices collapsed in 2014, dragging down the city’s energy-dependent economy.

The 35-story building, which was completed this year, was originally dubbed Capitol Tower. It was renamed in May after Bank of America leased 210,000 sf, or 27% of the space. Other major tenants include Waste Management (284,000 sf), Winston & Strawn (63,000 sf), Quantum Energy (32,000 sf) and Skanska itself (12,000 sf). The occupancy rate was 90% as of June.

Skanska touted the LEED-platinum property as one of the most sustainable in Texas, saying it uses 25% less energy than a typical building its size. The property, at 800 Capitol Street, has a 40-foot atrium, a culinary market, restaurants, a 10,000-sf conference center that can accommodate private events, and five connections to the city’s underground tunnel system.

Houston’s current $528/sf record for an office trade was set in 2015 when Spanish investment shop Masaveu paid $172 million for the 326,000-sf BBVA Compass Plaza, at 2200 Post Oak Boulevard. HFF advised the seller, a partnership between L&B Realty and Stream Realty, both of Dallas.

Another current listing is expected to also surpass the current record, but fall shy of the pending deal for Bank of America Tower. The 1.1 million-sf skyscraper at 609 Main Street could attract bids of about $660/sf, or $700 million. A partnership between Calpers and Houston-based Hines has listed the 48-story building with Cushman & Wakefield.