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Texas Tower: 47-Story Office Tower At 845 Texas Ave.


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3 hours ago, Timoric said:

Good Q&A about this building and MegaTrends for Downtown Houston in general from Ralph Bivin's website - take away the high end market (legal and others) want newer buildings with better lighting, so if you build the right complement of features you can lease those places up and attract new tenants nationally and from aging 80's class A with short ceilings etc. That space is tighter than the 20 percent vacancy rate indicates on the surface.

 

http://realtynewsreport.com/2018/07/23/hines-new-skyscraper-and-the-future-of-downtown-houston-qa-with-tim-relyea-of-cushman-wakefield/

 

"Nine new high-rise office buildings, containing 6 million SF have been completed since 2008 and construction is under way on Skanska’s 750,000 square foot building and construction recently commenced for a new 1 million-SF building the former Houston Chronicle site."

 

Somebody help me out here:

 

1) Hess

2) BG Group Place

3) Hillcorp

4) 609 Main

5) ?

6) ?

7) ?

8) ?

9) ?

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With this upshifting of high end clients, creating a vacancy in the mid range, for lower end clients which will create a vacuum of space in older, but still large commercial buildings, I think that's it inevitable, that some buildings will be converted to residential and/or hospitality options, as downtown living and tourism become more appealing.  I know that most of us would like to see this happen to the Exxon Building (which would be really cool if it did follow in the Humble & Texaco Building's footsteps).  But, I wonder what other buildings are likely to completely vacate and thus be susceptible to transition. 

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1 hour ago, kbates2 said:

 

"Nine new high-rise office buildings, containing 6 million SF have been completed since 2008 and construction is under way on Skanska’s 750,000 square foot building and construction recently commenced for a new 1 million-SF building the former Houston Chronicle site."

 

Somebody help me out here:

 

1) Hess

2) BG Group Place

3) Hillcorp

4) 609 Main

5) ?

6) ?

7) ?

8) ?

9) ?

 

The Houston First/Partnership building is another.  I'm trying to figure this out myself.

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36 minutes ago, Naviguessor said:

With this upshifting of high end clients, creating a vacancy in the mid range, for lower end clients which will create a vacuum of space in older, but still large commercial buildings, I think that's it inevitable, that some buildings will be converted to residential and/or hospitality options, as downtown living and tourism become more appealing.  I know that most of us would like to see this happen to the Exxon Building (which would be really cool if it did follow in the Humble & Texaco Building's footsteps).  But, I wonder what other buildings are likely to completely vacate and thus be susceptible to transition. 

 

As long as they don't end up like that vacated building downtown that no one wants to tear down or renovate. I agree it will be interesting to see how cities across the country deal with the issue of aging towers 40+ floors in height that have no architectural appeal.

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5 hours ago, kbates2 said:

 

"Nine new high-rise office buildings, containing 6 million SF have been completed since 2008 and construction is under way on Skanska’s 750,000 square foot building and construction recently commenced for a new 1 million-SF building the former Houston Chronicle site."

 

Somebody help me out here:

 

1) Hess

2) BG Group Place

3) Hillcorp

4) 609 Main

5) ?

6) ?

7) ?

8) ?

9) ?

Seems like he has to be thinking central Houston, not just downtown.

5. BHP

6. Amegy 

7. 3737 Buffalo Speedway

8. 2229 San Felipe

9. 3009 Post Oak Blvd

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I believe he meant to say 9 existing built in the CBD since 2008 and 2 U/C which the combined total is 6 million SF.  In order of size and rounding size:

1. Block 58 (former Chron site) 1.1 million SF U/C

2. 609 Main 1.1 million SF

3. 811 Main (formally BG Group Place) 972,500 SF

4. Hess Tower 845,000 SF

5. Capitol Tower 778,300 SF U/C

6. Hilcorp Energy Tower 406,600 SF

7. GreenStreet (Retail & Office) 305,000 SF

8. NRG Tower (at GreenStreet) 263,200 SF

9. Partnership Tower 115,000 SF

10. 1712 Pease (small bldg 2009) 20,000 SF

11. 1201 Congress (small) 5,700 SF

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On 7/30/2018 at 10:07 AM, Twinsanity02 said:

I suspect this statement is including Medical Center and Uptown. Why he switched from talking about downtown to other areas I do not know. He is not a scientist so his statements may show excessive flexibility.

 

Rather odd.  Not sure what areas he was including/not including.  I'm not sure there are even 9 in Downtown/Medical Center/Uptown, are there?  On the other hand, if one expands it to the whole city, there were far more than 9.

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On 7/30/2018 at 11:40 AM, thatguysly said:

 

As long as they don't end up like that vacated building downtown that no one wants to tear down or renovate. I agree it will be interesting to see how cities across the country deal with the issue of aging towers 40+ floors in height that have no architectural appeal.

I agree, I’m very interested in how this will play out also. I just don’t see much need for new office space in the future. Communication technology has become so easy to implement and so ubiquitous that I’m starting to really see large effects on our office presence. Just in the last year much of our building has been hollowed out. We haven’t let people go, there’s just no reason for them to come to the office anymore. We don’t even get up to walk down the hall, all business is taken care of via IM and telepresence technology. I’m in control of the floor plan for about 40 peolple. I’m asking the ones who don’t come to the office anymore to give up their space to save us money. Maybe I’m reading too much into this but I can really see a future where traditional office buildings are a rarity. There may come a day when 50+ story office buildings are a thing of the past or at least very rare. I can work just as well from my couch as my office already. I would not be surprised if I stop going to work almost completely within a year. If we don’t lower our real estate costs this way our competitors will and they will put us out of business.

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1 minute ago, jgriff said:

I agree, I’m very interested in how this will play out also. I just don’t see much need for new office space in the future. Communication technology has become so easy to implement and so ubiquitous that I’m starting to really see large effects on our office presence. Just in the last year much of our building has been hollowed out. We haven’t let people go, there’s just no reason for them to come to the office anymore. We don’t even get up to walk down the hall, all business is taken care of via IM and telepresence technology. I’m in control of the floor plan for about 40 peolple. I’m asking the ones who don’t come to the office anymore to give up their space to save us money. Maybe I’m reading too much into this but I can really see a future where traditional office buildings are a rarity. There may come a day when 50+ story office buildings are a thing of the past or at least very rare. I can work just as well from my couch as my office already. I would not be surprised if I stop going to work almost completely within a year. If we don’t lower our real estate costs this way our competitors will and they will put us out of business.

I see similar trends in retail and feel like its days are numbered. So much is purchased on line now.

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Just now, bobruss said:

I see similar trends in retail and feel like its days are numbered. So much is purchased on line now.

 

I feel like some kinds of retail will be OK but I see no reason to ever set foot in a Wal-Mart or maybe even a Target again. 

 

One of the unintended effects of the internet may be a sudden lowering of land value in CBDs. When people no longer need to go to work a lot of them will leave the central city. The urban revival that’s happened over the last couple of decades may suddenly end. 

 

I seriously am hearing talk from our C-Suite of asking a large portion of our company to work from home. That’s a company with 80,000 people. It has me worried that the investment I made in my home inside the loop may have been a mistake. Hopefully the full financial effects of this I’ll be felt after I’m dead. 

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I doubt that CBDs will fall out of favor.  True, some workers may work from home, but many of those people will have to appear at the office periodically and won’t want to drive a long way to get there.  Also, vacant office space created by downsizing will eventually be filled by new companies to the area.   And there will always be an appetite for city culture that will draw people downtown to live.  Houston’s CBD is getting more residential and much more attractive as a home base.

 

I’d liken it to air travel.  While the internet offers plenty of opportunity for video conferencing between remote locations, business travel seems to be alive and well!

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16 hours ago, jgriff said:

I agree, I’m very interested in how this will play out also. I just don’t see much need for new office space in the future. Communication technology has become so easy to implement and so ubiquitous that I’m starting to really see large effects on our office presence. Just in the last year much of our building has been hollowed out. We haven’t let people go, there’s just no reason for them to come to the office anymore. We don’t even get up to walk down the hall, all business is taken care of via IM and telepresence technology. I’m in control of the floor plan for about 40 peolple. I’m asking the ones who don’t come to the office anymore to give up their space to save us money. Maybe I’m reading too much into this but I can really see a future where traditional office buildings are a rarity. There may come a day when 50+ story office buildings are a thing of the past or at least very rare. I can work just as well from my couch as my office already. I would not be surprised if I stop going to work almost completely within a year. If we don’t lower our real estate costs this way our competitors will and they will put us out of business.

 

It'd be nice to see 800 Bell redeveloped into a mixed use structure. Imagine, office, hotel, residential, and retail all in one bldg.

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17 hours ago, jgriff said:

I agree, I’m very interested in how this will play out also. I just don’t see much need for new office space in the future. Communication technology has become so easy to implement and so ubiquitous that I’m starting to really see large effects on our office presence. Just in the last year much of our building has been hollowed out. We haven’t let people go, there’s just no reason for them to come to the office anymore. We don’t even get up to walk down the hall, all business is taken care of via IM and telepresence technology. I’m in control of the floor plan for about 40 peolple. I’m asking the ones who don’t come to the office anymore to give up their space to save us money. Maybe I’m reading too much into this but I can really see a future where traditional office buildings are a rarity. There may come a day when 50+ story office buildings are a thing of the past or at least very rare. I can work just as well from my couch as my office already. I would not be surprised if I stop going to work almost completely within a year. If we don’t lower our real estate costs this way our competitors will and they will put us out of business.

 

To your point:

 

http://realtynewsreport.com/2018/07/31/50-million-square-feet-vacant-in-houston-worst-vacancy-rate-in-30-years-nai-reports/

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1 hour ago, H-Town Man said:

 

I love reading articles this detailed about the Houston economy:

 

Quote

HOUSTON – (By Ralph Bivins, Realty News Report) – The office vacancy rate in Houston hasn’t been this ugly in 30 years.

And there is no miracle cure, no magic bullet that can bring a timely healing. Energy companies – the backbone of Houston office tenancy for almost a century – are not expanding. Many are shrinking.

There will be no bailout from Amazon HQ2 and its 8 million SF office requirement. And it’s been so long since Houston scored a major league win in the corporate relocation game, it’s hard to hold hope that economic development can do anything substantive about Houston’s vacancy problem.

Fifty million square feet of office space lies vacant in Houston, according to NAI Partners’ second quarter report.

“We are seeing historically high vacancy, continued negative absorption including ongoing large-scale lease dispositions and an occupancy rate at its lowest level in 30-plus years,” NAI said.

The “direct vacancy rate” (which does not include sublease space) hit 19.2 percent in the second quarter, up from 18.3 percent a year earlier, NAI reported.

JLL, in a second quarter survey that includes direct and sublease space in Class A and B only, says the vacancy rate reached 24.5 percent. It’s the fourteenth consecutive quarter that vacancy has increased.

JLL reports leasing demand is “stagnant.” Houston has lost ground in 2018, with 2.4 million SF in negative absorption year-to-date, JLL says.

Colliers International is forecasting more negative absorption and higher vacancy in the coming months. The sublease space supply has been reduced from the 11 million SF a year ago, but it’s still very high at 9.4 million SF, Colliers reports.

So in the midst of these conditions, Hines announced earlier this month the start of a new 1 million SF building in downtown on the former Houston Chronicle site on Texas Avenue. The 47-story tower is significantly preleased with Vinson & Elkins taking 212,000 SF and Hines moving its own headquarters into 155,000 SF. A major accounting firm is also taking a hard look at the new building, which is being leased up by Michael Anderson of Colvill Office Properties.

With Houston awash in vacant space, why start a new skyscraper?

The new Class AA office buildings are the bright spot in the Houston office market. The “flight to quality” of the new buildings has momentum, says office-leasing broker Jason Presley, first vice president of CBRE.

The average rental rate for downtown’s Class A building is $44.92 per SF, CBRE says. Some new  downtown buildings quote more than $50 per SF.

The new buildings give the tenant companies an edge in employee recruitment and retention and efficiencies that make new space worthwhile.

 

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29 minutes ago, Houston19514 said:

Someone should coax Ralph in off the ledge.

 

Agreed...

 

This a good thing - office space is becoming highly competitive. Which means, new buildings will be built to draw renters away to better space. Inferior space will either renovate or drop rent... potentially new business will come with the attractive low rents to help them be successful. it is a cycle. I think certain markets will be harder hit than others. Houston is too big to lump it all together and call it by one name.

 

I can't believe the article ended like that... 

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11 minutes ago, Avossos said:

 

Agreed...

 

This a good thing - office space is becoming highly competitive. Which means, new buildings will be built to draw renters away to better space. Inferior space will either renovate or drop rent... potentially new business will come with the attractive low rents to help them be successful. it is a cycle. I think certain markets will be harder hit than others. Houston is too big to lump it all together and call it by one name.

 

I can't believe the article ended like that... 

 

Ralph has written many doom and gloom articles over the years. 

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22 hours ago, allthingshouston said:

I believe he meant to say 9 existing built in the CBD since 2008 and 2 U/C which the combined total is 6 million SF.  In order of size and rounding size:

1. Block 58 (former Chron site) 1.1 million SF U/C

2. 609 Main 1.1 million SF

3. 811 Main (formally BG Group Place) 972,500 SF

4. Hess Tower 845,000 SF

5. Capitol Tower 778,300 SF U/C

6. Hilcorp Energy Tower 406,600 SF

7. GreenStreet (Retail & Office) 305,000 SF

8. NRG Tower (at GreenStreet) 263,200 SF

9. Partnership Tower 115,000 SF

10. 1712 Pease (small bldg 2009) 20,000 SF

11. 1201 Congress (small) 5,700 SF

 

Except 7, 10, and 11 are not highrises (and he explicitly said "high-rise office buildings").

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1 hour ago, Houston19514 said:

Someone should coax Ralph in off the ledge.

 

I didn't realize hot takes were published and thought of as great and informative journalism...wait. 

 

All sarcasm aside, I think it would be great to see where all of this space is. For example, how much of the available office space in in the vacated office buildings around Greenspoint? That space will probably be available for a long time. How much of the space is in the energy corridor? etc.

 

There is a reason more buildings are being built downtown/centrally. That is where young people and now even older generations want to be. Even if they are not going to work in the CBD. 

Edited by urbanize713
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2 minutes ago, urbanize713 said:

 

I didn't realize hot takes were published and thought of as great and informative journalism...wait. 

 

All sarcasm aside, I think it would great to see where all of this space is. For example, how much of the available office space in in the vacated office buildings around Greenspoint? That space will probably be available for a long time. How much of the space is in the energy corridor? etc.

 

There is a reason more buildings are being built downtown/centrally. That is where young people and now even older generations want to be. Even if they are not going to work in the CBD. 

 

Good questions.

 

Another thing Ralph should be more careful about... Sublease space is not the same as "vacant" space. For example, the 800,000+ square feet Oxy has put on the sublease market is very much occupied and is not even available until 2020.

 

But to your questions:

 

Cushman Wakefield shows 44 million square feet of space "direct available" and 9.4 million square feet of sublease space "available".

 

Downtown (which according to C&W has 20.13% of the metro area's multi-tenant office space) has 2.5 MSF of sublet available and 8 MSF of direct available.

 

North Belt (which has about 6% of the metro office space) has 97,000 square feet of sublet and 6 MSF of direct available.

 

West Loop/Galleria (which has about 13.7% of the office space) has 800,000 square feet of sublet and 4.8MSF of direct available.

 

Katy Freeway (about 16.3% of the metro office space) has 2.4 MSF of sublet and 8.6 MSF of direct available.

 

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Serious question:

 

What do they do in NYC or DC or Chicago with old, out of date office buildings? I imagine if they are in the city core, they will be re-purposed or torn down.

 

Any light on this would be great for comparison.

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From the little knowledge I have it's all of the above. I would think it varies by real estate value and the structure. Point in fact, NYC just demolished 3 "historic" buildings to build One Vanderbilt  and JPM plans to demolish their 50's style tower to build a more substantial modern tower. Other buildings, especially the turn of the century examples, have been office, hotel, residential, to now boutique hotels. I stayed in such a building just this year. 

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24 minutes ago, Avossos said:

Serious question:

 

What do they do in NYC or DC or Chicago with old, out of date office buildings? I imagine if they are in the city core, they will be re-purposed or torn down.

 

Any light on this would be great for comparison.

 

Chicago is similar to Houston in that there is a fairly high vacancy rate overall (11% downtown, 13% suburbs), but they keep building new Class AA towers for the upper echelon tenants. Houston is 19% downtown, 16% suburbs, but with a significant sublease overhang that will keep those percentages high for awhile.

 

Right now there is a lot of activity from outside investors buying Houston buildings expecting to see the occupancy go up in coming years. So the more drastic measures (converting downtown towers to residential, converting suburban buildings to public storage) are not imminent.

 

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