Wedge Properties buys Sugar Land office building
Houston-based Wedge Properties Management has expanded its local portfolio with the acquisition of the Three Sugar Creek office building in Sugar Land.
Wedge purchased the six-story, 154,263-square-foot building at 3 Sugar Creek Blvd. near U.S. 59 and U.S. 90 from Houston-based Radler Enterprises, which had owned it since 2014. Wedge’s holdings include downtown’s 1415 Louisiana building, formerly known as Wedge International Tower.
“We were not actually looking in Houston,” said Wedge CEO Greg Armstrong, who was impressed by a flyer that showed the building was available. “It was a top quality asset in our backyard that appeared to be counter-cyclical to other energy sensitive holdings.”
The building, which was completed in 2008, is 95 percent leased with Aetna, Regus and Pioneer Bank among its larger tenants. Three Sugar Creek is close to 10 hotels, scores of restaurants and shopping at Sugar Land Town Square and First Colony Mall.
H. Dan Miller and Marty Hogan of HFF represented the seller, along with Tom Radom of Radler Enterprises, and also procured the buyer. Susan Hill and Wally Reid of HFF arranged a 10-year, fixed rate acquisition loan for Wedge.
“It’s a good, stable cash flowing asset that’s in impeccable condition,” Miller said.
HFF had been marketing the property since last summer, touting it as one of the top properties in the region. Another nearby building, the stair-stepped designed Sugar Creek on the Lake building along U.S. 59, was taken off the market by a different ownership group to address damages from Hurricane Harvey.
“The core suburban office buildings are a little bit more challenging to sell across the country,” Miller said. “The majority of the investors out there are looking for more value-add opportunity deals in Houston.”
Houston office investment sales have picked up after dropping off in 2016 following the crash in oil prices, Miller said. After two years of negative absorption in office space, Miller projects demand will turn around this year.
The Sugar Land office submarket is among the Houston area’s top performers. Its vacancy rate of 11.7 percent compares with 18.5 percent for the Houston area overall, according to a Colliers International first quarter report.
Founded in the 1970s, Wedge is a privately-held investment company with a portfolio of seven office properties in Houston, Austin and Irving, seven hotels across the U.S., and urban land for future developments.
A decade ago, Wedge scrapped plans to put a hotel on land it owns next to 1415 Louisiana. Its skyscraper’s garage is now a canvas for the new 13-story Sky Dance mural celebrating Houston arts.
“We decided not to build for a while and let people enjoy the mural for a while,” Armstrong said.