Morgan Stanley has given the keys back to Barclays Capital and JV partner Goff Capital, headed by John Goff.
Quick note: Goff’s, Crescent Real Estate Equities, was purchased by Morgan Stanley in 2007. So in a way, the portfolio of properties has come full circle.
The $6.5 billion purchase price for Crescent Real Estate Equities was at the height of the commercial real estate market and during oil’s ascent. In two years time, oil doubled from the 30’s up to the 70’s. But, Morgan Stanley’s purchase was viewed with skepticism by Morgan’s investors. Thus, the purchase was put on the balance sheet of the company. Two years later, the write-offs totaled around $1 billion.
So, with the building’s future in jeopardy and tenants scrambling for answers, the view of grass overgrowing the sidewalks, tenants skipping out on rent responsibilities, mold, graffiti, and theft come to mind…right? Well, in the case of Barclays and Goff, think the opposite. Actually, think the polar opposite.
A few things to keep in mind.
* The Crescent building portfolio is the first of its kind to be surrendered in the Houston market. In other words, demand for office space is still prevalent. Not everyone wants to work at home!
* The buildings are known locally, as well as nationally, as a premier office destination for attorneys, accountants, and financial.
* Goff will improve the property significantly to shed image of Morgan Stanley.
* The buildings have essentially been repriced- significantly below the market. The new ownership is much more flexible in their financial dealings (rents, concessions, space improvement allowances) with tenants.
And what better time to capitalize on this opportunity!
Businesses are in a downsizing mode and need to rid themselves of excess space by moving to other locations that can be built-out to there needs. Rent is becoming burdensome and landlords are doing less to keep their buildings above par. In the CBD, just minutes from Greenway Plaza, office space is marketed at double the rental rate and double the traffic dilemma. With the newly expanded Interstate 59 in Houston, commutes are easier, safer, as well as closer to the homes of decision-makers, most of which live west of the CBD.
This all makes Goff’s Greenway Plaza buildings even more attractive.
Let’s go a step further. A few years from now, once the buildings are fully leased and improved, and risk appetite returns from the commercial real estate investment community- Goff & Barclays will likely sell. And Goff, the savvy investor, will make his second fortune on the same portfolio of buildings he began with at Crescent Real Estate Equities. Kind of neat considering Crescent Real Estate Equities was hemorrhaging when it was purchased in 2007.
As tenant representatives, we locate opportunity. Call us. 832-275-6514 to represent your interests in relocation and subleasing.