Class A Sugar Land Office Property for Sale

Thursday, July 20, 2017

Holliday Fenoglio Fowler, L.P. (HFF), on behalf of the owner, is marketing 3 Sugar Creek, a 154,263-square-foot six-story office building meticulously designed, constructed and maintained in the Houston suburb of Sugar Land, Texas. 3 Sugar Creek is the standard bearer of excellence for Class A office space in Sugar Land, as it was built with a cast in-place concrete structure and features floor to ceiling window lines, 9.5-foot floor-to-ceiling grid heights and column-free corners, allowing for flexible office design. 

The office property enjoys prominent location at 3 Sugar Creek Center Boulevard along Interstate 69 (Highway 59) providing outstanding visibility to more than 224,000 vehicles per day and immediate access to Houston’s vast transportation network via Sam Houston Parkway to the north and Highway 90 and Highway 6 to the south. Sugar Land is one of Houston's top-performing office submarkets due to its 91 percent occupancy and the explosive rent growth it has experienced over the last five years. The building’s Class A finishes and ideal location near the intersection of Interstate 69 and Dairy Ashford Road/Sugar Creek Boulevard have allowed it to attract a nationally recognized tenant roster comprising finance, insurance, merchant/shipping and industrial manufacturing with virtually no direct oil and gas exposure. Investors have the opportunity to realize upside via the lease up of vacant space and mark-to-market opportunities.

Constructed in 2008, 3 Sugar Creek was thoughtfully designed by award-winning architect HKS to appeal to office tenants in Sugar Land seeking a best-in-class office building. The 26,000-square-foot, rectangular floor plates feature a center core and are virtually column free, which grants tenants the ability to customize their ideal workspace. The walls of floor-to-ceiling, dual-pane glass and 9.5-foot floor-to-ceiling grid height provides abundant natural light and a spacious ambiance. The office building for sale was expertly crafted with cast-in-place concrete and an exterior façade, which is a mix of custom masonry, curtain wall glazing and limestone panels. The ground-floor lobby features expansive marble flooring and walls with the elevator bank wrapped in full height custom wood panels designed by Bronstein. All upper floor elevator lobbies have matching granite and marble finishes with drywall coverd ceilings.

Sugar Land has been on the list of numerous "Best Places to Live" surveys, an achievement further validated by a population growth rate of 41.3 percent from 2010 to 2016. Also contributing to Sugar Land’s high ranking is an unemployment rate of three percent and a highly regarded school system, consistently ranked among the best in the nation by the The Washington Post and U.S. News & World Report. Sugar Land has also received Nerdwallet’s highest grade of “most safe” when it comes to crime risk. In 2015, 97 percent of residents in Sugar Land rated their quality of life as “excellent or good.”

Suburban Office Building for Sale Investment Highlights

  • Stability with Potential Upside Opportunities:  3 Sugar Creek’s highly visible location within Sugar Land coupled with its highly efficient design and construction have allowed it to attract best in class office tenants. While the office property is currently 88.5 percent leased with long-term leases in-place, an investor could enhance returns through the lease-up of vacant space and marking expiring leases to market. There are three available spaces totaling 17,883 square feet that range in size from roughly 2,000 to 9,000 square feet with the largest vacancy on the top floor. In a submarket with the average lease transaction averaging 5,200 square feet and explosive rent growth over the last 10 years, the available space at 3 Sugar Creek is ideally positioned to capture future requirements. With overall rents at the property 13.4 percent below market, opportunities to increase expiring rent exist. Over the next five years, approximately 81,140 square feet expire (52.6 percent) with rates that are expected to be 15 to 20 percent below market and with a high probability of renewal at market.
  • Nationally Recognized Tenant Roster:  3 Sugar Creek has attracted a nationally recognized, diverse and balanced tenant roster. The primary business sectors in-place at the property are insurance (23.2 percent), finance (21.6 percent), merchant/commodities (17.7 percent) and industrial manufacturing (14 percent). Furthermore, two-thirds of the tenants have a global or national presence. 3 Sugar Creek’s proven track record of attracting premier, diversified companies bodes well for future leasing initiatives at the property.
  • Dominant Corporate Hub:  Sugar Land is home to numerous high-profile regional and international corporations housed in more than 23 million square feet of commercial space, including Fluor Corporation, Tramontina USA, Inc. and Texas Instruments. Additionally, a growing list of global corporations are thriving in Sugar Land, and many others are relocating there. Among them are First Data TeleCheck Services Inc., a global technology leader in the financial services industry; UnitedHealthcare, the most diversified health care company in the United States; ABM, leading provider of facility services; and Schlumberger, the world’s largest oilfield services company, which is relocating its national headquarters to Sugar Land. The University of Houston Sugar Land is also undertaking new initiatives; a $54 million new facility, which will primarily house the College of Technology, is under construction and expected to be complete in 2019. Sugar Land’s favorable tax climate, community infrastructure, unsurpassed quality of life, strong workforce and international corporate relocations all contribute to a superior business environment.
  • Stable Office Submarket with High Growth Potential:  The Sugar Land office submarket is consistently listed at the top of major Houston submarkets in terms of occupancy. With a Q1 2017 rate of 90.6 percent, the area ranks first among major Houston submarkets. With no deliveries in the last year and very little under construction, that rate is expected to stay well above the 10-year average of 85.8 percent. Rental rates have increased 7.7 percent over the last five years due to healthy leasing momentum, as the submarket saw almost 30,000 square feet of net absorption over the last 12 months. The Sugar Land office submarket will continue to attract corporations due to its highly educated workforce and quality of life.

For more information on 3 Sugar Creek or other Houston-area office properties for sale, please contact Dan Miller or Martin Hogan in HFF’s Houston office. For information on acquisition financing for this property, please contact Susan Hill. To view current real estate investment sales listings, please click here to view HFF’s property search page.

Holliday Fenoglio Fowler, L.P. acting by and through Holliday GP Corp, a Texas licensed real estate broker. 

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