A batch of office and retail buildings are under construction by various developers along Beltway 8, and many are expected to start leasing within the next year. In the Cy-Fair area of Beltway 8—from around Hwy. 249 to Hwy. 290—there are two major office park projects underway, two expansions of existing office parks and dining and retail developments in the works.
Realtors say it was only a matter of time before the space along the Beltway started being bought up as developers realized the location offered access to the growing markets outside of city limits, said Dan Broyles, a Realtor with NAI Houston.
"The nice thing about this quadrant of the Beltway is that companies can draw from residential areas in north Houston as well as in west Houston," he said. "With all the development going on in the energy corridor along I-10, occupancy in that area is starting to max out. It's only a natural progression for people to start moving north."
Office demand
The surge to the Beltway may have seemed inevitable, but the Cy-Fair area was not always a hotbed for business activity because of its reputation as a bedroom community and limited transportation options, Broyles said. However, after oil, gas and energy companies started targeting the area for new sites and relocations, other development quickly followed.
"The availability that once existed in terms of developable land sites is not there any more," said Tom Radom with Radler Enterprises, the firm behind the Beltway Lakes expansion at Hwy. 249. "We've seen our land values skyrocket and we've seen a tremendous amount of interest in our new product from major companies."
Although office space is in demand all over the city, there is a particularly intense demand for office/industrial flex space in Cy-Fair, according to officials with Panattoni Development Company. Panattoni is developing Beltway Crossing Northwest—a 125-acre industrial development on N. Gessner Road with plans for 2 million square feet of warehouse and distribution space. Industrial vacancy in the submarket is about 5 percent.
New projects
Developers are being drawn to the Cy-Fair area for these types of projects for two reasons, Broyles said. Space within the city of Houston has become extremely limited, and movement from companies such as ExxonMobil, Baker Hughes and Noble Energy has helped paint the northwest area as a hotspot for businesses.
"I feel this is a trend that we are going to see continue," he said. "We've seen tenants that have looked in this area and were pulled from the Greenspoint area."
The average rates to lease office space in the northwest and Champions submarkets—which cover northwest Harris County south of the Beltway and north of the Beltway, respectively—are lower than in most other parts of Houston. A 2013 NAI report found rates of $19.67 per square foot per year in Champions, compared with $31.85 downtown and $28.58 in The Woodlands. Rates in the northwest submarket average $19.08.
Business parks underway include Panattoni's Beltway Crossing Northwest, as well as the 22.7-acre Sam Houston Business Park north of Fallbrook Drive, which is also targeting companies looking for industrial space. Panattoni is adding a three-story office building to its property at the Beltway 8 Corporate Center on West Park Boulevard. Meanwhile, an expansion at Radler's Beltway Lakes at the southeast corner of Hwy. 249 and Beltway 8 involves building two nine-story Class A office buildings and a 14,000-square-foot amenity building.
"The master plan for Beltway Lakes includes approximately 2 million square feet of office space and a full-service hotel," Radom said. "The twin nine-story towers are the hallmark of the projects development."
Retail and dining
The race to pick up what little remaining space is left along the Beltway has been joined by developers looking to create dining and retail options as well. The most prominent ongoing project is West Eight Crossing at the northwest corner of Beltway 8 and West Road.
NewQuest Properties—the developer behind the project—broke ground at the site in early 2013. Since then, it has attracted interest from restaurants including Potbelly, Salata, Chipotle and Smoothie King, which are all coming soon, said David Meyers, senior vice president at NewQuest.
"Industrial and office projects have really exploded in the past 24 months and there's just a large population of people we felt were underserved," he said. "We wanted to bridge that gap, and so far it's been great."
A nail salon and a dental practice will also be going into the space. All available lots have been leased, and based on the volume of traffic at the nearby Chick-fil-A and Whataburger, Meyers said he thinks the new businesses will see early success.
"If we could buy more land in that area, we would," he said.
