THE LEGENDS OF REAL ESTATE AWARDS 2016 – Ralph Bivins, editor of Realty News Report, selected the most significant people, projects, deals and ideas that shaped the Houston real estate market in 2016. These selections are not necessarily the largest or the first of their kind, but they point to emerging trends, potential opportunities, inspired visions and notable accomplishments across the region.
LEGEND: COMMERCIAL PROJECT OF THE YEAR – 609 Main at Texas by Hines. The 609 Main at Texas tower is the newest addition to Houston’s skyline from Hines, the firm founded by Gerald D. Hines in 1957. Over several decades Mr. Hines helped shape downtown Houston by developing numerous prominent buildings. The 48-story, 1,050,000-square-foot office tower represents a major project for the city and was anticipated to be a crowning achievement when it opens in early 2017.
Designed by Pickard Chilton, the building is distinguished by a diagonal crown that adds a fresh landmark to Houston’s Main Street skyline. The project emphasizes elevated tenant amenities and contemporary standards for high-end office space: rooftop gardens, resort-level finishes in the common areas and advanced building systems. One notable technical investment is an estimated $10 million air-conditioning system intended to deliver superior comfort and efficiency, signaling a new benchmark for Class AA office buildings in the market.
Hines developed the tower alongside financial partner CALPERS and began construction in early 2014 as a speculative project. At the time, the tower ranked among the largest speculative office developments in the nation. Construction, however, coincided with a dramatic downturn in global oil prices: less than a year after groundbreaking, oil collapsed from roughly $107 per barrel to below $30 per barrel. That plunge rippled through Houston’s economy and exerted heavy pressure on the downtown office market.
HONORABLE MENTION: Colvill Office Properties handled leasing for 609 Main on behalf of Hines. When the building opened, it achieved roughly 50 percent leasing absorption, with United Airlines signing for approximately 225,000 square feet. Several law firms and other professional tenants also committed to space in the tower. Given the prevailing market conditions, securing half of the tower’s space at opening represents a meaningful accomplishment.
Houston’s office market was facing elevated vacancies in 2016. The overall availability rate exceeded 20 percent, and more than 12 million square feet of sublease space had been introduced to the market as companies sought to reduce costs. Major energy employers, including Shell Oil and other firms in the sector, were downsizing or relocating operations, which intensified leasing pressure downtown. Restabilizing the downtown office market will likely take time as tenants reassess footprints and demand gradually returns.
The design and delivery of 609 Main reflect several broader takeaways for Houston real estate: long-term confidence by experienced developers, attention to higher-quality building systems and amenities, and the unpredictable timing of macroeconomic forces that reshape local markets. Even in a downturn, ambitious projects like 609 Main can reset expectations for premium office product and influence leasing and development decisions in subsequent years.
Coming tomorrow: Realty News Report’s Legends of Real Estate Award for Residential Project of the Year.
Dec. 29, 2016 Realty News Report Copyright 2016