PROVEN PERFORMANCE
-
Situation
- Stream saw an extreme demand for office space on the north side of the Galleria and an immediate opportunity to create value at the building due to in place rents being more than 25% below the existing market rate for the area.
- Additionally, the building had dated common areas, restrooms and landscaping and suffered from a general lack of attention from previous ownership.
- Due primarily to an excellent location, the building was 91% leased when purchased, but lacked an identity in the market.
-
Action
- Upon taking over leasing and management of the building, Stream immediately developed a comprehensive strategy, which included integrating marketing to enhance the building image, refreshing high impact areas and developing strong relationships with existing tenants.
- Stream recommended and managed selective improvements in high impact areas including the common areas, restrooms and landscaping.
- Due to tenant perception, market conditions and investor sentiment, Stream recommended that all renewals and new deals be converted from a “Gross” rent structure to a “NNN” rent structure.
- Stream met with existing tenants and initiated negotiations with every tenant rolling in the next twelve months to communicate and educate on rental rate increases, conversions to “NNN” leases and address any concerns related thereto.
- At the same time, Stream’s in-house marketing team developed compelling collateral that has been distributed through email, direct mail and the press to educate tenant rep brokers and end users about 4900 Woodway.
Results
- In the first year, without losing one tenant, the leasing team successfully renewed seven tenants and signed two new tenants.
- While converting from a “Gross” rent structure to a “NNN” rent structure, the leasing team increased rates.
- With the completed renewals and new deals, Stream quickly increased in-place rents at or above the market level, thereby providing a strong list of rent comps in the building and justifying a new floor for future renewals and new leases.
- Stream successfully managed a renovation project focused on high-impact areas, which allowed for continued appreciation in market perception and rental rates.
