Meet The New Neighbors: Skanska Buys 4 Parcels Blocks From Astros' Home
As the Houston Astros kick off the World Series at Minute Maid Park and the Houston Rockets prepare for the first game of the 2019-20 season just blocks away at Toyota Center, a new neighbor is entering the area with a $55M purchase of 3.5 acres.
Skanska purchased four parcels, including one full city block, altogether totaling roughly 152K SF adjacent to the award-winning Discovery Green park, boarded by the Houston Rockets’ Toyota Center, the George R. Brown Convention Center and the Houston Astros’ Minute Maid Park. Skanska’s plan is to develop a mix of office, multifamily and retail for the surrounding community.
Skanska opened Bank of America Tower in Downtown early this year, where the bank houses 600 employees in a 205K SF space.
Skanska confirmed that the city block it purchased was the surface parking lot bordered by Dallas, Lamar, LaBranch and Austin streets, between the Four Seasons and Embassy Suites, with three other adjacent surface parking lots included in the deal. Those four properties were all owned by MIPS Investments and MIPS Parking, according to the Harris County Appraisal District, which values the combined parcels at $30.6M.
Skanska hasn't announced any specific plans or a development timeline for the site yet.
“We are excited about this next endeavor for Skanska Commercial Development in Houston. For this project, Skanska will tap our global expertise in multi-family, office and retail development as we consider the best uses for these sites advantageously located in the city’s front yard at Discovery Green,” Skanska Executive Vice President Matt Damorsky said in a statement to Bisnow. “These prime acquisitions include a full city block, which will be transformed into sustainable, high-quality space in the urban core. We look forward to advancing the master planning process so we can begin creating this dynamic community reflecting the vibrant cultural fabric of Houston.”
Skanska paid $55M, which comes out to approximately $361 per SF, a hefty price for downtown real estate. Just five years ago, land in Downtown Houston was topping out at $275 per SF, according to CBRE research.
“When Hess Tower sold, it sold for the highest square foot price of any building in the city of Houston at the time, and we took complete credit for that,” Discovery Green President and Park Director Barry Mandel joked at Bisnow Houston’s Future of Downtown event earlier this month.
When it sold in 2011, the 844K SF Hess Tower garnered a reported $523.81 per SF.
The costly real estate is likely one of the best undeveloped locations in the entire city. Sports are a major draw for the area and a major factor in the land’s value. Skanska’s deal is a continuation of more than two decades of concentrated efforts to turn the area into the buzzing heart of Houston.
“You can really feel the difference in where we are in Downtown right now,” Houston First President Bob Eury said at the event. “It’s all about living, eating and drinking, including going to playoffs, championships and World Series in Downtown.”
That’s no accident. In the 1990s, city officials made monumental efforts to bring the city’s beloved sports franchises into the central business district. It started with the Astros. In 1996 Harris County voters narrowly approved a bond to fund a new ballpark at the historic Union Station, bringing the Astros from the world-famous Astrodome southwest of the city. With the help of a new Sports Authority to finance the project, signed into law by then-Gov. George W. Bush, work began on what would eventually be known as Minute Maid Park.
Not long after, similar efforts began to move the Rockets from the Greenway area west of Downtown into the city’s core. Fearing losing the franchise altogether, the Sports Authority reached a deal with the Rockets in which the city would purchase land for the arena and an adjoining parking garage.
Things didn’t stop there. The city committed a further $35.5M to bring the MLS soccer team the Houston Dynamo just east of Downtown at BBVA Compass Stadium.
“Houston is one of few major cities in America with three major stadiums in or adjacent to Downtown,” Eury said at Bisnow’s Future of Downtown event.
Topping things off, in recent years the George R. Brown Convention Center has received $176M in renovations.
The combined effect on commercial development is easy to see. Before and after aerial photos of the area are nearly unrecognizable. Green Street, One Park Place, Marriot Marquis, Catalyst, 500 Crawford, East Village ... the high-profile projects that have come to the area in the last 20 years goes on and on. Over $6B has been invested in the last decade alone, according to the Downtown District.
By the end of the year, Downtown Houston will have 8,400 hotel rooms at 28 properties, up from 4,500 in 14 properties when Houston hosted the Super Bowl in 2004, according to Eury.
While we wait to hear what Skanska's plans on adding to the area, let's hope our Astros can add more hardware.
