Fuller Realty buys $147M Houston Energy Corridor portfolio from Skanska USA

Skanska USA sold its Houston Energy Corridor portfolio to Fuller Realty Investments for $147 million as the Houston office market struggles with high vacancies.

The sale consists of two properties spanning 715,385 square feet in Houston’s Energy Corridor about 27 miles west of downtown, the Houston Chronicle reported. Built in 2016, the office buildings at 15375 and 15377 Memorial Drive are near the popular Terry Hershey Park and a 5,000 square foot restaurant called District7.

The complex, known as West Memorial Place I and II, has a 64.7 percent occupancy with big-name tenants such as BP’s onshore shale division, BPX Energy, Siemens and engineering and construction firm IHI, among others.

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Stephen Darnall, partner at Fuller Realty, said his company was attracted to the location and quality of the buildings. He said the firm has been active in the Houston suburban office market since the 1990s and manages 5.1 million square feet in its portfolio spread across Houston, San Antonio, Fort Worth and College Station.

Most of the vacancy in the buildings is shell space that has never been occupied, Darnall said. West Memorial I, a 331,404 square-foot building, is 81.5 percent occupied. West Memorial II, a 384,531 square-foot building, is only 50 percent occupied.

The sale comes as Houston struggles with one of the weakest office markets in the country, with total vacancies around 28 percent, according to real estate firm JLL. In contrast, Texas cities like Houston are leading the country in housing market growth.

“We understand that [lease up] may not happen overnight but we feel like we’re in a good position and have a great opportunity,” Darnall said.

[Houston Chronicle] – Maddy Sperling