By Nancy Sarnoff
The former Spring Branch Medical Center property has been sold to developers who visualize a mixed-use real estate project on the nearly 18-acre site, with housing, shops and perhaps other uses.
The group that purchased the property said the hospital structure is in “excellent condition,” and could be saved and reused as part of a new development.
“There’s a lot of value there,” said Bruce Phillips, one of the investors.
The investment group, led by Houston-based BlackSwan Investment Partners, closed on the site last week. It purchased the property from a New York financial institution that had foreclosed on the development in July. The price was not disclosed.
The Spring Branch area has seen a large amount of growth in housing and retail. Gregory Pappas, a principal of BlackSwan, said the location near the West Loop, the Katy Freeway and Beltway 8 is a major draw.
“It’s got great accessibility to all employment centers around Houston, and Spring Branch ISD is a great school district and attracts a lot of young families to the area. That’s a trend that seems to be continuing,” Pappas said. “It’s happened in other parts of the city like in the Heights and Garden Oaks. This area seems to be undergoing that kind of a transformation.”
The sale likely marks the end of the property’s longtime medical use.
The hospital was founded in the 1950s and was closed by HCG Gulf Coast in April 2010 because of operational losses. It reopened under new ownership in 2011, but closed again last year.
The property, at 8850 Long Point between Bingle and Campbell, contains nearly 300,000 square feet and once had 299 beds and 19 operating rooms. Much of it was built in the 1980s.
The partnership that purchased the site also includes Tim Delgado, president of Read King Medical Development. Phillips is co-founder and principal of Houston-based PinPoint Commercial.
Bravery in recession
Jonathan Farb was one of the few developers who thought the recession might be a good time to build apartments. Now, he’s awfully glad he did.
His City Place development in Midtown filled up within five months of opening, and Farb is about to open the second phase of the complex.
City Place opened two years ago when there weren’t many new apartments to compete with.
“The market is cyclical,” said the grandson of the late Houston builder Harold Farb. “Just because you’re starting in a bad market doesn’t mean you’re going to end up in a bad market.”
Rents in the complex at 2700 Brazos are almost 25 percent more today than when it opened.
In the second phase, rents are expected to range from $1,400 to $2,650 a month. The size of the 96 units will average 775 square feet. That’s smaller than the first phase, which had “too many two-bedroom units,” Farb said.
“My new mix is a little more appropriate for the market,” he said.
The new phase of City Place will have its own amenities: a fitness center, media room and salt- water pool. The only thing it will share is a leasing office.
The design team included Steinberg Design Collaborative. D-Crain did the landscape architecture. Davis Brothers General Contractors built the complex, which has four stories of apartments above two parking levels.
Leasing office space near companies like Chevron Corp., Kinder Morgan and Enterprise Products doesn’t come cheap.
Downtown’s Louisiana Street – where those and other energy companies have addresses – was ranked among America’s most expensive streets for office space, according to a recent report from commercial real estate firm Jones Lang LaSalle.
Rents on Louisiana were up 11.8 percent over 2011 to an average of $38.82 per square foot per year. The street ranked No. 16 on the list.
Sand Hill Road in Menlo Park, Calif., topped the list at nearly $111 per square foot. Fifth Avenue in New York City followed with $102 per square foot.
The booming oil and gas industry is driving up the rents in Houston, the report said.
“This year’s results are particularly interesting because, not only do they demonstrate the standard real estate rule that location is everything, but they also reflect the overall office space demand trend in the U.S.,” John Sikaitis, managing director of office research at Jones Lang LaSalle, said in a statement. “We are seeing a slight uptick in occupancy rates as a result of the rate of business growth in the economy combined with a lack of new development.”