In the News

Triten Real Estate Partners sells downtown Houston office tower to Harris County

June 21, 2021 | Houston Business Journal

by Jeff Jeffrey

Just months after paying an undisclosed amount to acquire 1111 Fannin Street, Houston-based Triten Real Estate Partners has sold the downtown office tower to Harris County.

The county paid an undisclosed amount to buy the 17-story, 428,629-square foot tower.

Triten, also known for the M-K-T mixed-use development in the Heights and The Mill redevelopment coming soon in Houston’s East End, purchased 1111 Fannin with New York-based Taconic Capital Advisors and had been conceptualizing a redevelopment plan for the property prior to being approached by Harris County about a potential sale. Harris County plans to use the building to centralize its operations in Houston.

“We were thrilled to be able to partner with Taconic on this asset. Their knowledge of the market and conviction on the property allowed us to move quickly on a dynamic sales process,” said Scott Arnoldy, managing partner at Triten Real Estate Partners. "They knew the long-term intrinsic value of the asset and had the ability to be patient for the best outcome.”

The building features a podium-style design with center-core floor plates that average 31,500 square feet. On-site amenities include a conference center, card key access, 24/7 security and an attached parking garage. The property has direct access to Houston’s tunnel network, which features more than seven miles of underground, climate-controlled walkways with retail and dining amenities.

When Triten Real Estate Partners acquired the building, it was one of the most high-profile office acquisitions of 2020.

At the time, Arnoldy said the deal was too good to pass up. The property is located at the corner of Fannin and Dallas streets, a prime location in the city’s central business district. Its previous occupant, JPMorgan Chase, had invested in significant upgrades to the building's technological infrastructure before deciding to vacate the space.

The building was 100% leased to JPMorgan Chase when Triten acquired it in December. The financial giant signed a 250,000-square-foot lease in the JPMorgan Chase & Co. Tower in July, and the building's owners later revealed that JPMorgan Chase would relocate its 1,500-employee Houston Technology Center from 1111 Fannin to the 75-story tower. However, the company will keep an office across the street at 712 Main St. JPMorgan Chase has nearly 6,000 employees in Houston.

Arnoldy also told the HBJ in an interview that his company was able to acquire the building at a “very attractive” price, though he declined to disclose how much Triten and Taconic paid for 1111 Fannin.

The property was valued at $44.6 million as of Jan. 1, according to Harris County Appraisal District records.

Triten Real Estate Partners had already brought on Chicago-based HPA Architecture to design the remodel of the property, prior to its sale to Harris County. Arnoldy said he got to know HPA Architecture while working in real estate in Chicago.

Triten’s acquisition of 1111 Fannin Street raised eyebrows last year because it came at a time when Houston’s office market has struggled under a surplus of space for the past several years.

The city’s 20.5% vacancy rate shifted the market heavily in tenants’ favor. However, amid Covid-19, new leases became few and far between. Many tenants that had been considering a move opted to sign short-term leases in an attempt to wait out the uncertainty caused by the pandemic.

Elsewhere in Houston, Triten also recently sold three of its industrial properties near the Port of Houston to affiliates of New York-based Lexington Realty Trust (NYSE: LXP). The properties total nearly 740,000 square feet and are each leased to a single tenant.