A New York-based real estate investment trust has sold a major downtown Houston office tower at a significant loss. Net Lease Office Properties, an externally managed REIT advised by affiliates of W.P. Carey, completed the sale of the 40-story building at 601 Jefferson Street for $66 million on January 15, according to a filing with the Securities and Exchange Commission. The deal was confirmed by JLL Capital Markets.
The purchase price is about $62 per square foot for the 1 million-square-foot property, which represents a considerable discount for such a prominent building in Houston’s central business district. Harris County records and industry sources identified Namdar Realty Group and Mason Asset Management, both based in Great Neck, New York, as buyers. The transaction also included an adjacent parking garage at 701 Jefferson Street.
KBR remains the anchor tenant, occupying nearly 900,000 square feet—close to 90 percent of the building’s total space. Overall occupancy stands at 92 percent. The property consists of two basement levels and forty floors above ground.
JLL’s Capital Markets Investment Sales and Advisory team represented Net Lease Office Properties in the sale. 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.”
Public appraisal records show that as of January 1st this year, the property had an appraised value of $120.4 million—highlighting declining valuations for downtown office towers even when they have long-term corporate tenants.
This sale marks a sharp drop from its last major trade: A W.P. Carey subsidiary purchased what was then known as KBR Tower in 2012 for $174.6 million. The latest sale reflects a decline in value of approximately 62 percent.
W.P. Carey spun off 59 office properties—including this one—to Net Lease Office Properties in 2023 as part of efforts to reduce exposure to challenges facing the office sector.
Namdar Realty Group’s acquisition expands its portfolio with another large-format downtown office asset.
