HOUSTON – Over the weekend, Skanska USA installed a construction crane in downtown Houston, signaling that the company expects to begin vertical construction on a long-planned office tower, according to the Houston Chronicle.
Skanska first announced plans several years ago to build a 35-story office tower on the block bounded by Capitol, Rusk, Milam and Travis streets. The foundation was poured in August 2015, but a sharp downturn in the energy sector and a resulting increase in office vacancy put the project on hold.
The proposed building, a roughly 750,000-square-foot office tower known as Capitol Tower, remained on the back burner. Last fall, however, Skanska hired CBRE to market the building and seek tenants, a move that indicated renewed momentum.
In recent months there have been reports that Bank of America has been negotiating to lease more than 200,000 square feet in Capitol Tower. A lease of that size would likely justify resuming construction atop the foundation completed in 2015. Skanska and Bank of America – which would vacate space at the downtown Bank of America Center at 700 Louisiana if the deal proceeds – declined to comment on the potential lease.
The appearance of the crane suggests a major tenant, possibly Bank of America or another large corporate occupant, may have committed and that vertical construction could start soon.
“The mobilization of equipment at the Capitol Tower site signals our optimism that the marketplace will present new opportunities for the project as we move through 2017,” Skanska USA spokeswoman Beth Miller told Katherine Feser of the Houston Chronicle.
Skanska’s optimism comes despite challenging statistics for the Houston office market. A recent report from Marcus & Millichap placed Houston’s office vacancy rate at 21.5 percent—the highest in the nation. CBRE has also reported that Houston leads the country in sublease office availability, with more than 11 million square feet on the market.
Skanska operates differently than many other developers. As the U.S. arm of a large, Sweden-based global construction and development firm, Skanska often funds projects internally with corporate capital, allowing it greater flexibility in timing and development decisions.
Earlier this year Matt Damborsky, executive vice president of Skanska USA Commercial Development’s Houston office, told Realty News Report that the company continued to advance the downtown project.
“Capitol Tower is still under development and we are continuing the phasing of the project as planned,” Damborsky said. “Despite market trends over the last year or so, we are optimistic about the current leasing market and look forward to going from ‘in development’ to ‘under construction.’”
Skanska has shown patience throughout the project timeline. In October 2014, the 18-story Houston Club building was demolished to clear the site for the new tower, and the foundation was completed in August 2015.
With the crane now in place, the long pause may be ending and construction could soon proceed upward from the prepared foundation.
March 21, 2017 Realty News Report Copyright 2017