NAI Partners recently held its quarterly media breakfast at its Houston headquarters in the Galleria area the day after Halloween, but the good news is that the company’s growth, as we as local market activity, is anything but spooky.
Managing Partner Jon Silberman opened the meeting noting that the company has had a strong year, and continues to execute on its strategic plan of diversifying its business lines and goal of becoming a regional firm in the commercial real estate arena. Notably, its Landlord Services division, led by Managing Director Jim Tainter, has continued to add office and retail product to its property management portfolio—including its first-ever assignment in San Antonio—and has also seen its Office Project Leasing team continue to pick up a wide range of unique owner-rep assignments, including the lease-up of the medical office facility at 7501 Fannin; as well as augmenting its landlord capabilities in Austin.
The company’s Retail Services line of business—also under the Landlord Services umbrella—has established itself as one of the most active and dynamic in Houston, as group head Jason Gaines and his team have completed in aggregate of more than 600,000 sq. ft. of retail leasing transactions valued at approximately $30 million in just over a year, and has over 60 exclusive property listings in excess of 1.6 million sq. ft.
And growth has been swift for the company’s newest office locations in Austin and San Antonio. NAI Partners Austin has grown to 8 professionals, while San Antonio has grown to six. Both offices are on track to complete more transactions than they ever have before in 2017.
In the industrial segment in Houston, Vice President Holden Rushing noted that Houston has come to be viewed as increasingly more attractive as a larger distribution market, as several years ago leases greater than 500,000 sq. ft. were fewer and farther between and have since become more common. Rushing went on to state that the product type’s fundamentals were sound, with industrial not overbuilt, and developers being ever more keenly aware of what prospective tenants’ needs are.
Griff Bandy, a partner in the firm and office tenant rep specialist, commented that sublease space finally fell below 10 million sq. ft. for the first time in about two years—a welcome sign for an office market that’s been struggling to find its footing. Bandy also indicated that East Downtown (EaDo) has become an increasingly attractive neighborhood for a certain type of tenant open to repurposed warehouses and a more open floor plan. While available space in that submarket is tight at the moment, there is at least one 50,000-sq.-ft. speculative development that may help meet the needs of more sizable users.
As for retail, Gaines reported that for the most part it’s been “business as usual.” He has seen retailers and his clients react nimbly to consumers’ rapidly changing tastes in their preferred vehicles for consuming and acquiring food, goods and entertainment in part by offering more of a neighborhood-driven experience at the local grocery store in the case of H-E-B; as well as curating more thoughtfully appointed dining rooms featuring better-quality food along with options the customer didn’t even necessarily know it wanted in the case of many newer restaurant entrants. Even with that, retailers will continue to need to find creative ways to get people out of their houses and away from streaming all of their multimedia and having all of their groceries and products delivered.
And lastly, Senior Vice President Andrew Pappas provided an update on NAI Partners’ Investment Fund, sharing that the company’s Fund I is now fully deployed, following three property acquisitions over the past month in Houston and San Antonio, and his team is already raising money in earnest for Fund II.