deerwood dow center · being occupied by investment grade tenant dow chemical company. the property...

D E E R W O O D D O W C E N T E R

E X E C U T I V E S U M M A R Y

4 4 6 0 H I G H W A Y 2 2 5 , D E E R P A R K , T X 7 7 5 3 6

82% LEASED TO INVESTMENT GRADE

2 | E X ECUTI V E SU M M A RY

HFF, on behalf of Clay Development & Construction, Inc. (the “Owner”), is pleased to

exclusively present the opportunity to acquire the fee simple interest in the Deerwood Dow

Center (Deerwood Glen III), a 98,230 SF office building in Southeast Houston near the Port

of Houston. Delivered in 2016, the Property is 87.3% leased overall, with 82.1% of the space

being occupied by investment grade tenant Dow Chemical Company. The Property boasts

a stable, reliable NOI with a 9.0 year weighted average lease term, while also presenting

to opportunity to add value through leasing more than 12,500 SF. Located in Southeast

Houston, Deerwood Dow Center offers a convenient location for tenants with operations

along the Houston Ship Channel servicing the $50 billion gulf coast petrochemical boom.

E X E C U T I V E S U M M A R Y

2


ADDRESS 4460 Highway 225, Deer Park, TX 77536

NET RENTABLE AREA 98,230 SF

LAND AREA 8.6359 Acres

% LEASED 87.3%

DEVELOPER Clay Development & Construction, Inc.

YEAR BUILT 2016

# FLOORS 2

TYPICAL FLOOR SIZE 49,115 SF

PARKING RATIO 4.0 / 1,000 SF

D E E RWOO D DOW C E NTE R | 3

Deerwood Dow Center is 87.3% leased to two tenants, Dow

Chemical Company and International Cooling Towers USA.

With 82% of the NRA, Dow Chemical’s lease runs through

November 2027. With strong recent performance and an

investment grade BBB S&P credit rating, Dow expects to

continue fueling their growth and expansion after a recent

merger with DuPont to make DowDuPont. The second

tenant, International Cooling Towers USA, which accounts

for just over 5% of the NRA, also has strong supporting

fundamentals including operating since 1958 and a recent

expansion into Mexico in 2015. Between the two tenants,

the weighted average lease term remaining is 9.0 years.


INVESTMENT GRADE TENANCY

DOW EXPERIMENTAL SPACE

I N V E S T M E N T H I G H L I G H T S

D E E RWOO D DOW C E NTE R | 5D E E RWOO D DOW C E NTE R | 5

VALUE-ADD OPPORTUNITYCurrently 87.3% leased, the Deerwood Dow Center presents the opportunity to add value through the lease up of the

remaining 12,517 SF of first generation space in a micro-market that is currently 95% leased. While leasing the space and

building out for the new tenant, new ownership will benefit from long-term, contractual rent growth providing coveted in-

place yield.


NEW CONSTRUCTION IN IRREPLACEABLE LOCATIONThe Deerwood Dow Center is the third phase of a successful

three-building Class-A office development within Clay

Development’s 150-acre, deed-restricted Deerwood Glen

Business Park. The efficient design of large rectangular floor

plates has proven a major draw for engineering/construction

companies that require density and a significant parking ratio.

With the Property delivery in 2016, new ownership will have

nearly full term on all warranties and no near-term capital upgrade

requirements.

SUPERIOR REGIONAL CONNECTIVITY & VISIBILITYAdjacent to the interchange of Beltway 8 & State Highway 225,

the Property is afforded unmatched connectivity to the rest of

Houston as well as the nearby Port of Houston and Houston Ship

Channel. With direct frontage on State Highway 225, the property

boasts exceptional visibility to 88,500 vehicles per day.

I N V E S T M E N T H I G H L I G H T S

SHALE GAS & THE EXPANDING PETROCHEMICAL MARKETHouston is home to the largest petrochemical complex in the nation and the second-largest in

the world. The Houston petrochemical complex represents 25% of U.S. refining capacity and

40% of U.S. petrochemical capacity, and is located along the 25-mile Houston Ship Channel at

the Port of Houston.

In the Texas Gulf Coast region, more than 20 Polyethylene projects worth more than $50 billion

are under construction and are scheduled to open within the coming years, as companies invest

in new ethylene crackers, propylene production units, refineries and other expansion projects.

The primary driver of this activity is that petrochemical enterprises benefit directly from lower

oil and natural gas prices, as this reduces their cost to purchase their primary feed stocks for

producing/refining plastics, resins, and other petrochemical products, and transporting oil and

natural gas across geographies.

This flurry of petrochemical construction – as firms continue to take advantage of a low cost

feed stock environment – is expected to create tens of thousands of construction jobs in the

short-term and the need for thousands of blue collar jobs in the longer-term. Deerwood Glen has

become the premier office park to support these refinery operations and construction projects.

PORT OF HOUSTON – A MAJOR GATEWAY DEMAND DRIVERThe Port of Houston is ranked the largest port in the U.S. by foreign waterborne tonnage

(20+ consecutive years), import tonnage (25+ consecutive years), U.S. export tonnage, as

well as the nation’s leading break-bulk port (GHP). It is the second-busiest port in the Western

Hemisphere after the nearby Port of Louisiana in terms of total cargo volume, and #16 in the

world. These fundamentals have made the port the 2nd largest petrochemical complex in the

world, behind Rotterdam, and has driven Houston to manufacture 25% of the nation’s plastics.

The port continues to grow as container volumes increased 14% in 2017 over the prior

year. Overall, the Houston-Galveston Customs District handled $157.3 billion in trade

through October 2017, an 18.6% increase over the comparable period in 2016. There are

currently ten major rail companies that connect the Port of Houston to the largest markets in

the Continental U.S., Canada, and Mexico, fueling current expansion. The Port of Houston

is currently undergoing a $333 million investment through 2018 in Post-Panamax cranes,

construction of Bayport Wharf No. 4, and the reconstruction of the Barbours Cut Wharf No. 2.

This investment is a direct response to prepare and serve the Panama Canal expansion.


HOUSTON ECONOMIC ENGINEHOUSTON ADDED 64,400 JOBS IN THE TRAILING 12 MONTHS ENDED JANUARY 2018, RANKING THE CITY 3RD AMONGST ALL MAJOR METROPOLITAN AREAS IN THE US (JUST BEHIND NYC AND DFW) AND ADDED NEARLY 15,000 MORE JOBS THAN ITS 25-YEAR HISTORICAL AVERAGE

Every business sector (except “Information”) posted positive

job growth, a testament to the city’s diversification. Additionally,

125,000 new residents migrated to Houston from July 2015 – July

2016 (2nd in the nation) and the Houston Business Cycle Index has

grown at an annualized 2.2%, suggesting growth in the economy

has returned to historic norms.

Sources: Oxford Economics, Real Capital Analytics, HFF Research, *dots represent the 10 most liquid CRE o�ce markets over the past five years, according to RCA

10-YEAR POPULATION & EMPLOYMENT % GROWTH FORCAST | MAJOR U.S. METROS

AtlantaAtlantaBostonBoston

ChicagoChicago

Los AngelesLos Angeles

New York CityNew York City

San FranciscoSan Francisco

NATIONAL AVERAGE

SeattleSeattle

Washington DC Washington DC

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20

%

Dallas-Fort WorthDallas-Fort Worth

14%

12%

10%

8%

6%

4%

2%

0%

Em

plo

ym

en

t

Population

HOUSTON

(10,000)

Professional Business Services 21,400

9,300

9,200

6,400

5,000

4,600

3,100

2,700

2,200

1,100

(600)

Trade, Transportation, & Utilities

Construction

Leisure and Hospitality

Government

Manufacturing

Financial Activity

Mining and Logging

Other Services

Education and Health Services

Information

10,000 20,000 30,0000

HOUSTON EMPLOYMENT CHANGES (ALL SECTORS GROWING)T-12 JANUARY 2017 - JANUARY 2018

4 5 . 8 M I L L I O N SF Texas Medical Center, the largest medical complex in the world

# 2 in theatre seats nationally, trailing only BroadwayASSET

5 0 , 0 0 0 A C R E S of parks offer more greenspace than any other top 10 metro

M O S T F A V O R A B L Emetro for Science, Technology, Engineering, and Mathematics workers (STEM)

L E A D I N G E X P O R T E Rin the nation due to the Port of Houston

2 0 +museums, galleries, and cultural centers in the Houston Museum District

T E X A S M E D I C A L C E N T E R H O U S T O N ’ S C B D


PASADENA FREEWAY | SH 225


HOUSTON SHIP CHANNELHOUSTON SHIP CHANNEL

DEERWOOD GLEN DRIVE

DEERWOOD GLEN DRIVE

SHELL DEER PARK REFINERYSHELL DEER PARK REFINERY

DEERWOOD GLEN BUSINESS PARK


OILTANKING / STOLTHAVENOILTANKING / STOLTHAVEN

MUSTANG WOOD GROUPSHELL

BURROW GLOBAL


BURROW GLOBAL

HAGEMEYERHAGEMEYER

GEGE

PERFORMANCE CONTRACTGROUP


SERVITECSERVITEC

FLOWSERVEFLOWSERVE

GAYESCOGAYESCO

BROCK HOLDINGSBROCK HOLDINGS

PFTPFT

CODE REDCODE RED

HASTIK BAYMONTHASTIK BAYMONT

ALLTECHALLTECHABRASIVEABRASIVE

SAYBOLTSAYBOLT



HOUSTON SHIP CHANNELHOUSTON SHIP CHANNEL

DEERWOOD GLEN DRIVE

DEERWOOD GLEN DRIVE

SHELL DEER PARK REFINERYSHELL DEER PARK REFINERY



OILTANKING / STOLTHAVENOILTANKING / STOLTHAVEN


BURROW GLOBAL


BURROW GLOBAL

HAGEMEYERHAGEMEYER

GEGE



SERVITECSERVITEC

FLOWSERVEFLOWSERVE

GAYESCOGAYESCO

BROCK HOLDINGSBROCK HOLDINGS

PFTPFT

CODE REDCODE RED

HASTIK BAYMONTHASTIK BAYMONT

ALLTECHALLTECHABRASIVEABRASIVE

SAYBOLTSAYBOLT

PETRO-CHEMICAL OVERVIEWA booming plastics industry that has benefited from an abundant supply of cheap

natural gas – thanks to the Fracking Boom – has spurred over $50 billion in new

petrochemical plants and expansions. Southeast Texas has been, and will continue

to be the benefactor of this significant investment in polyethylene projects. With

most deliveries occurring prior to 2020, millions of tons of polyethylene pellets will be

added over the next couple of years. With an ideal location in Southeast Houston, the

Property is positioned to benefit from this expansion and investment.


# Company City State When Online

1 Total Bayport TX Q4 2017

2 Ineos Sasol Deer Park TX Q4 2017

3 Braskem LaPorte TX Q4 2017

4 ExxonMobil Mont Belvieu TX Q4 2017

5 ExxonMobil Mont Belvieu TX Q1 2018

6 Chevron Phillips Sweeny TX Q2 2018

7 Enterprise Mont Belvieu TX Q3 2018

8 Chevron Phillips Cedar Bayou TX Q3 2018

9 Dow Freeport TX Q4 2018

10 Formosa Point Comfort TX Q4 2018

11 Eastman Longview TX Q4 2018

12 ExxonMobil Baytown TX Q4 2018

13 Ingleside/Occident. Ingleside TX Q4 2018

14 INEOS Chocolate Bayou TX Q4 2018

15 Dupont Orange TX Q1 2019

16 LyondellBasell LaPorte TX Q4 2019

17 Formosa Point Comfort TX Q3 2019

18 Equistar LaPorte TX Q4 2019

19 ExxonMobil Beaumont TX Q4 2019

20 Total Port Arthur TX Q2 2021

21 ExxonMobil/Sabic Corpus Christi TX Q3 2022

8

61413

11

9

12

1915

21

20

12

3, 16, 18

4, 5, 7

10,17

1 0 | E X ECUTI V E SU M M A RY

DEERWOOD GLEN BUSINESS PARKDeerwood Glen is a multi-use, 150-acre business park developed by Clay

Development & Construction Inc. Currently, the park has 350,000 SF of

office space and almost 420,000 SF of industrial space with additional

room for development. With an office occupancy of nearly 90% and

industrial occupancy of 100%, the business park outperforms the Houston

market overall. The park is ideally located to cater to the rapidly expanding

petrochemical industry in the area. Major tenancy in the park includes:

• The Dow Chemical Company

• Siemens Corporation

• John Crane, Inc.

• Universal Plant Services

• Saybolt, LP

• Wood Group

• Brock Holdings III, Inc.

S I T E P L A N


± 23.8 ACRES

JohnCrane33,750

SF

Siemens160,000 SF

LiftingGear Hire

50K SF

Prop. DeerwoodOf�ce #478,000 SF

Dow ChemicalOf�ce #378,000 SF

DeerwoodOf�ce #188,000 SF

DeerwoodOf�ce #274,695 SF

PFT15K SF

Code Red20K SF

ElasticBaymont15K SF

Alltech20K SF

Abrasive15K SF

40K SF

Nolan P.15K SF

4K

Hou.Pilots13.5K

Sayb

old

38K

SF

7K

Available15,000

SF

± 6.1 ACRES

± 15.6 ACRES

S t a t e H i g h w a y 2 2 5

W e s t 1 3 t h S t r e e t

M i t i g a t i o nM i t i g a t i o n

de

ten

tio

n p

on

d

bo

gg

y b

ay

ou

AVAILABLE LEASE SPACE

AVAILABLE LAND/PROPOSED BUILDING

LEASED/SOLD BUILDING

AVAILABLE LAND

SUBJECT PROPERTY

KEY

1 0 | PRO PE RT Y PRO FI LE

D E E RWOO D DOW C E NTE R | 1 1

George BushPark

LakeHouston

State Park

ArmandBayouPark

WilliamP. HobbyAirport

George BushIntercontinentalAirport

HARRISCOUNT Y

LIBER T YCOUNT Y

FOR T BENDCOUNT Y

MONTGOMERYCOUNT Y

BRAZORIACOUNT Y

GALVESTONCOUNT Y

Greenspoint

The Woodlands

69

69

69

Westpark Tollway

Katy Frwy

Southw

est F

rwy

Northwest Frwy

North Frw

y

Ea

stex

Frw

y

NorthLoop

LoopSouth

We

st L

oo

p

Ea

st L

oo

p

Sam Houston Tollway

Sam Houston Pkwy

ExxonMobilCorporate Headquarters

Pasadena Frwy

Baytown East Frwy

So

uth

Frw

y

Fo

rt

Pkw

y

Gulf Frw

y

Proposed

GrandPkwy

Proposed Grand Pkwy

Westheimer Rd

Beaumont Hwy

Ben

d

Grand Pkwy

LakeHouston

San Jacinto

Bay

SheldonReservoir

GalvestonBay

BayportTerminal

SmithersLake

ClearLake

Barbour’s CutTerminal

DEERWOOD IIICBD

EnergyCorridor

The GalleriaUptown District

Westchase

TexasMedical Center

Port of Houston

CONTACT INFORMATIONTRENT AGNEW, SIORManaging Director

T. 713.852.3431

[email protected]

CHARLIE STRAUSSReal Estate Analyst

T. 713.212.6574

[email protected]

FOR FINANCING INQUIRIESTYLER FORDManaging Director

T. 713.852.3517

[email protected]

HFF L.P.

9 Greenway Plaza

Suite 700

Houston, TX 77046

T. 713.852.3500

F. 713.852.3490

hfflp.com

This Offering Memorandum has been prepared by HFF for use by a limited number of recipients. All information contained herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes

any representations or warranties, expressed or implied, as to the accuracy or completeness of the information contained herein. Further, the Offering Memorandum does not constitute a representation that no change in the business or affairs of the property or the Owner has

occurred since the date of the preparation of the Offering Memorandum. All analysis and verification of the information contained in the Offering Memorandum is solely the responsibility of the recipient. HFF and Owner and their respective officers, directors, employees, equity

holders and agents expressly disclaim any and all liability that may be based upon or relate to the use of the information contained in this Offering Memorandum.

Additional information and an opportunity to inspect the property will be made available upon written request to interested and qualified prospective investors.

Owner and HFF each expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers regarding the property and/or terminate discussions with any entity at any time with or without notice. Owner shall have no legal commitment or obligations

to any recipient reviewing this Offering Memorandum or making an offer to purchase the property unless and until such offer is approved by Owner, a written agreement for the purchase of the property has been fully executed, delivered and approved by Owner and its legal counsel,

and any obligations set by Owner thereunder have been satisfied or waived.

The recipient (“Recipient”) agrees that (a) the Offering Memorandum and its contents are confidential information, except for such information contained in the Offering Memorandum, which is a matter of public record, or is provided from sources available to the public (b) the

Recipient, the Recipient’s employees, agents and consultants (collectively, the “need to know parties”) will hold and treat it in the strictest of confidence, and the Recipient and the need to know parties will not, directly or indirectly, disclose or permit anyone else to disclose its

contents to any other person, firm, or entity without the prior written authorization of HFF and the Owner, and (c) the Recipient and the need to know parties will not use or permit to be used this Offering Memorandum or its contents in any fashion or manner detrimental to the

interest of the Owner or HFF or for any purpose other than use in considering whether to purchase the property. The Recipient and the need to know parties agree to keep this Offering Memorandum and all confidential information contained herein permanently confidential and

further agree to use this Offering Memorandum for the purpose set forth above. If the Recipient has no interest in the property, or if in the future the Recipient or owner discontinue such negotiations, the Recipient will return this Offering Memorandum to HFF. 4.18

deerwood dow center · being occupied by investment grade tenant dow chemical company. the property...

Documents