An international development partnership is building Harbour Centre in Aventura, Fla., a $47 million, Class-A office tower in north Dade County, Fla. The partnership will break ground this month on the 11-story building that will include 230,000 sq. ft. of office space. Gilbert Benhamou, Xavier Hawley, Lauris Boulanger and local attorney Mark Rousso are partners in the project. The local office of Dallas-based Trammell Crow Co. is leasing the development.

Located on a four-acre bay-front site, the mixed-use development also will contain 18,000 sq. ft. of ground-floor retail space, a 6,500 sq. ft. outparcel slated for a bank branch and a 1,000-space garage. Harbour Centre's office portion has a 50,000 sq. ft. prelease.

Houston resurgent Like most every city, Houston has experienced its fair share of real estate woes, perhaps disproportionately so. Just when real estate markets across the nation began to rebound from the dismal late 1980s and early 1990s, the price of oil dropped, leaving Houston, a metropolis dependent on the energy industry, in a rut. Throw in the credit crunch of late 1998 and its aftermath, and, well, Houston remained in that rut. The bright side: a dearth of new development during the past five years and tighter lending standards give today's owners the upper hand in Houston's office market.

With Class-A vacancy rates near 4%, downtown Houston exemplifies the city's resurgence. Residential loft conversions, among other factors, lead to inward residential migration, which in turn lead to a number of new restaurants and entertainment options in the area. The advent of a new baseball stadium also perked up the area. The impending return of professional football to Houston, the expansion of the city's convention center and a new hotel to go along with it, and a November ballot initiative that will decide if the city builds a new arena downtown point to an even brighter future.

"It's more than just the vacancy statistics that look good," says Charlie Baughn, senior vice president at locally based Hines. "There are all the other fundamentals of what's going on downtown. People living and eating and playing down here is something we didn't have five years ago, and we'll have more of it five years from now."

In its hometown, Hines is developing Enron's new headquarters, a 1.2 million sq. ft. Class-A building taken entirely by Enron; a build-to-suit in west Houston; the aforementioned convention center hotel; and a 600,000 sq. ft. downtown building that the international development giant is in the process of preleasing.

Enron Tower is the only downtown office building under construction. Even downtown buildings on the drawing board may not be enough to meet the demand for Class-A space, says Steve Montgomery, director of Cushman & Wakefield of Texas.

"We've hit a strange phenomenon in that we have a couple of tenants in the downtown area that are too large for the projected new buildings. That's a real switch in circumstances from anything we've seen in the past 15 years," says Montgomery. "We've got about four `maybe' projects that are yet to be started, but none of those four are big enough for these two tenants. They may well wind up going with build-to-suits of a strange variety, though.

"Around here, there haven't been many 1 million sq. ft. build-to-suit buildings, but that may be how it turns out," Montgomery says.

Overall, Cushman & Wakefield reports a mid-year vacancy rate of 14.4% for Houston's office market, slightly below the end of 1999's figures but significantly below the 20%+ vacancies of four years ago. Net absorption through mid-year was 2.2 million sq. ft., with about half of the absorption occurring in Class-A space. Cushman & Wakefield credits most of the new absorption to new developments that were delivered 80% preleased. Renovation completions totaled almost 1 million sq. ft. of absorption through mid-year.

Other statistics also point to a need for more office development, especially in the CBD. At mid-year, the Houston market had 3.2 million sq. ft. of office space under construction with 85.5% preleased, according to Cushman & Wakefield. Of that total, about 1 million sq. ft. of office space was under construction in the suburban Woodlands-Conroe submarket.

The entire 1.2 million sq. ft. of office development slated to break ground is speculative and in Houston's suburbs.