THE WOODLANDS – (Realty News Report) – Chevron Corporation’s announced acquisition of Anadarko Petroleum for $33 billion could ripple through the Houston commercial real estate market.
Anadarko currently occupies a substantial amount of office space in The Woodlands with two prominent towers named for company leaders: the 32-story Allison Tower and the 31-story Hackett Tower. These waterfront buildings sit along Lake Robbins and The Woodlands Waterway, just west of Interstate 45.
The Anadarko headquarters campus in The Woodlands totals roughly 1.4 million square feet across the two towers. Both buildings are Class A office properties offering high-end amenities, and their premium finishes and features—such as a glass-walled basketball court with wide views—make them attractive to corporate tenants.
At this point it is too early to determine whether Chevron’s pending purchase of Anadarko will create meaningful vacancy in The Woodlands. However, a consolidation of leases or relocations following the merger would not be surprising. Allison Tower contains about 800,000 square feet and Hackett Tower roughly 600,000 square feet, so any change in occupancy could have measurable local impact.
The Patrinely Group, a Houston developer founded by Dean Patrinely, built the Anadarko campus in The Woodlands. The firm is also active in the Permian Basin, where it is constructing a two-building regional headquarters for Anadarko in Midland. That project will provide about 350,000 square feet and is expected to reach completion in the third quarter of this year. The Midland development sits directly across from Chevron’s Midland campus and is near Occidental Petroleum’s facilities—Occidental had been preparing a bid for Anadarko, according to media reports.
Landlords and market-watchers will be watching sublease listings closely. Houston experienced a surge in sublease availability in 2016, peaking near 12 million square feet, and while that level has eased to about 8 million square feet, a large influx of newly available space from a merged Chevron-Anadarko portfolio could pressure vacancy and rental rates.
There is still a possibility the outcome won’t be disruptive—corporate mergers sometimes preserve multiple office locations or result in staggered transitions that limit immediate vacancy. For now, though, it is difficult to see a clear upside for Houston commercial real estate stemming from the Anadarko sale.
Chevron has been consolidating personnel in downtown Houston, where it already owns two former Enron office towers—1400 Smith and 1500 Louisiana—totaling approximately 2.5 million square feet. The company sold its Bellaire campus last year and relocated those employees, and it also owns additional downtown property on Louisiana Street.
Chevron confirmed in a recent news release that it will maintain its 1.4 million square foot headquarters in San Ramon, California. Over the years there has been speculation that Chevron might relocate its corporate headquarters to Houston, often called the Energy Capital of the World; however, like several major energy companies, Chevron operates a significant Houston hub without moving its official headquarters to the city.