In August 2007, Stream recognized a particular class of tenancy that is heavily under-served within The Woodlands, Houston’s only submarket that was experiencing supply constraints due to availablity of land and utilities. In short, there was an opportunity to provide value-conscious tenants class A office space that is at a discount – all located along the Waterway.
Stream identified one of the few sites within The Woodlands that was not owned by The Woodlands Development Corporation. As is the case for all sites not controlled by The Woodlands Development Corporation, this particular site lacked utilities, but Stream engaged a nearby municipal utility district (MUD) willing to provide facilities to the site. Stream negotiated an agreement with the MUD to construct 1.5 miles of water and sewer infrastructure, which necessitated a singular bond offering, board approval and a pre-determined reimbursement formula.
In June 2008, Stream broke ground on The Reserve at Sierra Pines, a 175,076 SF class A office building.
The Houston commercial real estate market felt the impact of The Great Recession starting in October 2008, and the building is delivered with 9% occupancy at the height of the recession.
By February 2010, Dover Corporation (S&P investment-grade rating) relocated from their class B building to Sierra Pines and signed as the first tenant for 8,726 SF. BHC Marketing followed suit and signed for 12,134 SF. Praxair (Fortune 300 Company and S&P investment-grade rating) then decided to relocate from Greenspoint and took a total of 32,984 SF for 10 years. The building was then 31% leased. Four months later, Praxair expanded by 27,919 SF.
In June 2011, The Woodlands submarket began to strengthen and the lack of supply directs Mott Macdonald ($1.0+ B in assets) to Sierra Pines in order to gain efficiencies.
By July 2011, Sierra Pines was 57% leased and space was beginning to become scarce. Praxair found value in the building environment and decided to relocate more employees from Connecticut and Germany, taking an additional 45,546 SF. Strike, LLC took the remaining 31,381 SF for seven years.
By February 2012, the building was 100% leased.
Stream sold The Reserve at Sierra Pines to CapLease LP, a publicly traded REIT based in New York.
Exxon Mobil is developing their global headquarters 1.5 miles south of Sierra Pines, which is the closest class A office building.
Sierra Pines’ eastern border, Sawmill Road, will be extended by 2016 to the main entrance for The Woodlands residents into the Exxon campus.