Chase Tower Owner Purchases Chase Center

Houston Chronicle

In what could be a show of confidence in Houston's commercial real estate market, the owner of downtown's 75-story JPMorgan Chase Tower has purchased the JPMorgan Chase Center across the street.

The new owner is an entity affiliated with a company once led by late Lebanese billionaire and former prime minister Rafik Hariri.

Located at 601 Travis on the block bounded by Capitol, Travis, Texas and Main, Chase Center contains 12 levels of parking and about 450,000 square feet of office and retail space.

‘Good news'

While it likely was a strategic move for the downtown property owner to buy the building next door, “I also think it's a bit of good news when people are willing to put capital at risk again,” said Russell Ingrum, executive vice president of commercial real estate firm CB Richard Ellis in Houston. The firm was involved in financing the transaction.

Tight credit

Indeed, sales of office buildings and Houston apartments have fallen off considerably since the credit markets tightened last year.

Investors have been waiting on the sidelines for prices to drop to levels at which they feel safe buying.

While the price of the Chase Center transaction was not disclosed, “I would assume it was going to have to be attractive to the purchaser,” Ingrum said.

“In a difficult environment, you don't overstretch” he added.

Hines will manage

Hines, which developed and completed the building in 1982 and announced the sale late Monday, will manage and lease the 20-story property.

Over the years, Chase has used the location as a data processing and operations center, but most of the bank employees who worked in the building already have been relocated.

For the last couple of years, the company has been consolidating workers to 712 Main and 1111 Fannin, both downtown.

Chase still owns 712 Main, but the property has been up for sale since at least August.

‘Not being a landlord'

“We'd rather spend our time and resources being the best bank we can be and not being a landlord,” said Greg Hassell, a spokesman for Chase in Houston.

Upon Chase's departure, 250,000 square feet will be available for lease, Hines said. The bank will retain 26,000 square feet in the building. The Bank of New York Mellon also leases space in the building.

Hines and Clifford Chance US LLP of New York represented the buyer. Texas Tower Limited, in the transaction. Mark Russell at Studley represented Chase.

Downtown healthy

Even with the bank vacating space, the move won't do much to affect downtown's office market, which is still relatively healthy.

But the worst is not over for the overall market.

Vacancy rates are expected to inch up as the local job market contracts.

At 15 percent, the area's overall office vacancy rate will likely reach close to 20 percent sometime next year, Ingrum said.