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Situation
In September 2011, Stream partnered with DRA Advisors to purchase 2323 S. Shepherd, a Class B office building located in the Inner Loop adjacent to the upscale River Oaks neighborhood. Stream saw extreme demand for office space inside the loop and an immediate opportunity to create value at the building due to in-place rents being over 35% below the existing market rate for the area. Additionally, the building, originally constructed in 1984, suffered deferred maintenance and a general lack of attention from previous ownership groups. Due primarily to an excellent location, the building was 92% leased when purchased, but had a negative perception in the market.
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Strategy
Upon taking over leasing and management at the building, Stream immediately initiated a comprehensive re-branding strategy at the project, which included changing the building name to The Bellevue and engaging HOK architects to plan extensive renovations:
- new elevator systems and cabs
- lobby renovations
- common corridor improvements
- restroom upgrades
- exterior landscaping
- installation of an EMS system
- new fire panel
- garage lighting
- and building access controls
Throughout 2012, Stream managed the renovation project to create an up to date, Class A opportunity that fit the high-end market demand from Inner Loop tenants. Stream strategically developed a plan for existing vacancies to maximize their marketability to fit the demand in the market, which included combing adjacent suites and building out spec-suites. In addition, Stream studied the market and created a targeted list of prospects in order to maximize value at the project through a diversified, high-credit tenant mix.
Within 30 days of the acquisition, the leasing team met with every tenant to establish a relationship and explain the change in ownership and upcoming improvements at the building. Stream also initiated negotiations with every tenant rolling in the next twelve months to communicate and educate on rental rate increases 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 the transformed opportunity available at The Bellevue.
Results
At the close of 2012, Stream successfully completed the comprehensive renovation project at the building and upgraded its classification to Class A. In conjunction with pushing rates, the leasing team has focused on improving the tenant mix by executing new leases and renewals with firms in the oil, gas, law, wealth management and software industries. Working directly with the marketing team, the leasing agents have engaged the community and created renewed interest in the project, which is now viewed as a truly viable Inner Loop destination offering highly sought-after Class A space.
