A New York-based real estate investment trust has sold a major downtown Houston office tower at a significantly reduced price. Net Lease Office Properties, which is externally managed and advised by affiliates of W.P. Carey, completed the sale of the 1 million-square-foot headquarters building at 601 Jefferson Street for $66 million on January 15, according to a filing with the Securities and Exchange Commission.
JLL Capital Markets confirmed the transaction in a news release, as reported by the Houston Business Journal. The sale price equates to about $62 per square foot for the 40-story building located in Houston’s central business district.
Records from Harris County and industry reports identify Namdar Realty Group and Mason Asset Management, both based in Great Neck, New York, as the buyers. The deal also included an adjacent parking garage at 701 Jefferson Street.
KBR remains the anchor tenant of the property, occupying nearly 900,000 square feet—almost 90 percent of the tower—which is currently 92 percent leased overall. The property covers 2.94 acres and includes two basement levels along with its above-ground floors.
JLL’s Capital Markets Investment Sales and Advisory team represented Net Lease Office Properties in this transaction. Managing director Kevin McConn stated: “The building generated tremendous interest from private capital sources due to its immediate yield, including several investors new to the Houston market.”
The Harris Central Appraisal District valued the property at $120.4 million as of January 1. This highlights ongoing challenges for downtown office buildings’ valuations even when they have long-term corporate tenants.
This recent sale marks a significant decrease from its previous purchase price; W.P. Carey bought what was then known as KBR Tower in 2012 for $174.6 million—a decline of approximately 62 percent in value over that period.
In 2023, W.P. Carey spun off a portfolio of office properties—including this one—into Net Lease Office Properties as part of efforts to reduce exposure to difficulties within the office sector.
With this acquisition, Namdar Realty Group adds another large-format downtown office building to its holdings.
