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Texas Tower (Block 58) By Hines, 47-Story Office Tower


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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. 

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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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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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5 hours 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.

Make them residential?

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In NYC (which here is all Manhattan, but as a Brooklyn boy I must add that the other boroughs are also going through significant development changes), it is a mixed bag. Older buildings with small floor footprints in areas like downtown are often repurposed to residential. FiDi (Financial District) is now a real neighborhood where 20 years ago it was an area where no one lived. New and bigger developments are going ahead in older rail and industrial areas. The Westside Yards, over an active rail yard, is probably the biggest, but there are others. The city just re-zoned East Midtown (roughly north and east of  Grand Central Terminal) to allow bigger as-of-right buildings. Many of the older office buildings predate the 1959 zoning resolution and are larger than what would be allowed by zoning. The recent change in zoning to a greater FAR will likely spur the complete knockdown and reconstruction for newer, more modern (hi-tech) buildings. (Btw, these new building will be required to pay into a transit fund to increase/improve pedestrian and public transit in the area). This was a major focus for the Bloomberg Administration before they left office. The EIS and approvals were finalized about a year ago. The zoning changes are now in place. There is a large building (1,400 ft tall) going up close to GCT (started before the zoning changes but requiring variances now codified in the new zoning regs, and has been required to fund $200+ Million to pedestrian and public transit improvements at GCT and the surrounding area) and I think that will be finished in a couple of years (https://www.onevanderbilt.com/). Expect similar smarter, newer and shinier buildings in that mode for Midtown.

 

I don't think Houston has a neighborhood that is a Midtown or even Downtown Manhattan counterpart. Maybe older automobile-oriented cities like LA and similar would be a better comparison.

 

I know almost nothing about LA.

 

I know almost nothing about a lot of things.

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43 minutes ago, Brooklyn173 said:

In NYC (which here is all Manhattan, but as a Brooklyn boy I must add that the other boroughs are also going through significant development changes), it is a mixed bag. Older buildings with small floor footprints in areas like downtown are often repurposed to residential. FiDi (Financial District) is now a real neighborhood where 20 years ago it was an area where no one lived. New and bigger developments are going ahead in older rail and industrial areas. The Westside Yards, over an active rail yard, is probably the biggest, but there are others. The city just re-zoned East Midtown (roughly north and east of  Grand Central Terminal) to allow bigger as-of-right buildings. Many of the older office buildings predate the 1959 zoning resolution and are larger than what would be allowed by zoning. The recent change in zoning to a greater FAR will likely spur the complete knockdown and reconstruction for newer, more modern (hi-tech) buildings. (Btw, these new building will be required to pay into a transit fund to increase/improve pedestrian and public transit in the area). This was a major focus for the Bloomberg Administration before they left office. The EIS and approvals were finalized about a year ago. The zoning changes are now in place. There is a large building (1,400 ft tall) going up close to GCT (started before the zoning changes but requiring variances now codified in the new zoning regs, and has been required to fund $200+ Million to pedestrian and public transit improvements at GCT and the surrounding area) and I think that will be finished in a couple of years (https://www.onevanderbilt.com/). Expect similar smarter, newer and shinier buildings in that mode for Midtown.

 

I don't think Houston has a neighborhood that is a Midtown or even Downtown Manhattan counterpart. Maybe older automobile-oriented cities like LA and similar would be a better comparison.

 

I know almost nothing about LA.

 

I know almost nothing about a lot of things.

 

Depends what you mean by counterpart. Downtown Houston is in the same ballpark as Lower Manhattan in terms of office space, at 40+ million SF vs 70-80 million. After that the similarities end. There is no counterpart to Midtown Manhattan except maybe Hong Kong, no point in comparing.

 

 

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This is starting at lightning speed!  It begs the question:  In general, is it more cost-effective to put more people on the job and expedite it, or keep head count low and draw it out?  There is such a wide range of paces on the various projects around town, I’ve often wondered this.

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On 8/6/2018 at 6:28 PM, MarathonMan said:

This is starting at lightning speed!  It begs the question:  In general, is it more cost-effective to put more people on the job and expedite it, or keep head count low and draw it out?  There is such a wide range of paces on the various projects around town, I’ve often wondered this.

 

 

Labor is generally a lot bigger portion size of total construction budget than materials. Allocating 3 shifts a day, 7 days a week will for sure lead to a good chunk of the workers get OT pay, which drives up labor costs a lot. 

 

As for whether thats offset by the sooner profitability of the land owner is dependent on their loan, what theyre making money on, and how many tenants they have in waiting. 

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I am very surprised that Hines spent all that money on paving this lot, what?, six months ago?  Only to dig it up now.  It seems that something important must have popped to change the speed of this development.  Perhaps they got a great loan, or a specific tenant commitment, or they were concerned about interest rates or.... or..... or......  but, to me, something happened to jump start this project.

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3 hours ago, UtterlyUrban said:

I am very surprised that Hines spent all that money on paving this lot, what?, six months ago?  Only to dig it up now.  It seems that something important must have popped to change the speed of this development.  Perhaps they got a great loan, or a specific tenant commitment, or they were concerned about interest rates or.... or..... or......  but, to me, something happened to jump start this project.

Well, yeah.. they got Vinson and Elkins to sign on as an anchor tenant (+200,000 sqft of 1 million) and their current lease is up in 2021.  

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17 hours ago, MarathonMan said:

Visible progress is going to slow down for awhile.  They’ve got a big foundation to chisel apart.

 

It looks pretty serious down there. Residents in the Rice, Aris and MST are going to need to get used to the sound of jackhammers for a while. 

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On 8/21/2018 at 2:34 PM, Nate99 said:

 

It looks pretty serious down there. Residents in the Rice, Aris and MST are going to need to get used to the sound of jackhammers for a while. 

Um, yeah, somebody kill me... never experienced anything like this in NYC. My neighbors have joked we never loved a surface parking lot more... but that silly transition was a respite between the sanity loss of the Chronicle demolition and the next several years of this buildup. 609 Main was no picnic either for Rice's east/south residents. But this? Along with block 42? And maybe 43? I think it will take a residential occupancy hit. Hearing a jackhammer for 12 hours a day, 7 days a week for years is not worth the overly priced rents and all the views about to be lost. Anyone on here with much more knowledge of foundation chiseling length, please tell me how many months of jackhammering we're looking at...

 IMG_2932_V2F_2018-08-23_13-36-18_442.png.4b18a789510aba44a1648ee715924592.png

 

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4 hours ago, AmyP said:

Um, yeah, somebody kill me... never experienced anything like this in NYC. My neighbors have joked we never loved a surface parking lot more... but that silly transition was a respite between the sanity loss of the Chronicle demolition and the next several years of this buildup. 609 Main was no picnic either for Rice's east/south residents. But this? Along with block 42? And maybe 43? I think it will take a residential occupancy hit. Hearing a jackhammer for 12 hours a day, 7 days a week for years is not worth the overly priced rents and all the views about to be lost. Anyone on here with much more knowledge of foundation chiseling length, please tell me how many months of jackhammering we're looking at...

 IMG_2932_V2F_2018-08-23_13-36-18_442.png.4b18a789510aba44a1648ee715924592.png

 

 

That my friend is the sound of progress!

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On 8/24/2018 at 5:54 PM, AmyP said:

Um, yeah, somebody kill me... never experienced anything like this in NYC. My neighbors have joked we never loved a surface parking lot more... but that silly transition was a respite between the sanity loss of the Chronicle demolition and the next several years of this buildup. 609 Main was no picnic either for Rice's east/south residents. But this? Along with block 42? And maybe 43? I think it will take a residential occupancy hit. Hearing a jackhammer for 12 hours a day, 7 days a week for years is not worth the overly priced rents and all the views about to be lost. Anyone on here with much more knowledge of foundation chiseling length, please tell me how many months of jackhammering we're looking at...

 

 

 

EDIT: *double post*

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12 hours ago, Luminare said:

 

That my friend is the sound of progress!

Oh I love progress. I've been downtown for almost 10 years and seen it – still a long way to go. Folks always think new buildings and construction is cool, until they live next door to it or have their business affected by it. "I think I'll like Houston if they ever get it finished," said Oveta Culp Hobby in 1946 (former publisher of the Houston Post.) 

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2 hours ago, AmyP said:

Oh I love progress. I've been downtown for almost 10 years and seen it – still a long way to go. Folks always think new buildings and construction is cool, until they live next door to it or have their business affected by it. "I think I'll like Houston if they ever get it finished," said Oveta Culp Hobby in 1946 (former publisher of the Houston Post.) 

 

In the long run, said business will gain from the new construction thanks to more employees; residents in Downtown. 

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  • Highrise Tower changed the title to Texas Tower (Block 58) By Hines, 47-Story Office Tower

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