HOUSTON – (Realty News Report) – Linde Engineering has signed a lease for 120,454 square feet of office space in The Woodlands, marking one of the largest office transactions in the Houston region since the pandemic began.
This lease provides a positive sign for Houston’s office market, which has faced increasing vacancy rates and softer rents during the COVID era.
Kevin Saxe and Jon Lee with CBRE represented Linde, a global industrial gases and engineering company, in the lease negotiations.
Linde will occupy space in Sierra Pines II, a six-story Class A office building located at 1575 Sawdust Road.
The landlord, VEREIT, was represented by Brad Fricks of Stream Realty Partners.
The lease follows Linde’s merger with Praxair, which created the world’s largest industrial gases supplier.
“Linde had specific operational needs for their space that had to be balanced with a strong focus on employee experience and the work environment. CBRE’s role was to identify the best possible solution. Given Linde’s investment-grade credit, we were able to utilize non-traditional real estate financing structures, resulting in meaningful cost savings,” said Kevin Saxe of CBRE.
In addition to the broader challenges affecting the Houston office market, The Woodlands suffered setbacks after Occidental Petroleum’s acquisition of Anadarko Petroleum, which led to a significant reduction in Anadarko’s large office footprint in the community. The Woodlands is a 28,000-acre master-planned area located about 28 miles north of downtown Houston.
“Linde remaining in The Woodlands and establishing a regional hub at Sierra Pines is a major win for the market,” said Jon Lee of CBRE.
Linde will occupy the second and third floors of Sierra Pines II, a six-story office building developed by Stream Realty Partners.
Designed by Powers Brown Architecture, Sierra Pines II was promoted at the time of construction as featuring “The Tallest Tilt Wall in Texas.” Tilt-wall construction, more commonly used for warehouse projects, involves casting exterior walls on the ground and then lifting them into place. Constructed in 2014, this office building represented the tallest tilt-wall structure built in Texas up to that time, according to Stream Realty.
Despite using tilt-wall methods, the 154,000-square-foot structure was finished as a Class A office building with premium interiors, extensive exterior glass, and a large courtyard and garden with a fountain, Stream Realty noted.
Currently, Houston carries the highest office vacancy rate in the nation, according to a report from Yardi Systems’ CommercialEdge.
In February, Houston’s overall office vacancy rate was 23.5 percent, well above the national average of about 15 percent. The Linde lease, however, represents some positive absorption for the market.
April 5, 2021 Realty News Report. Copyright 2021.
Caption: Photo credit: Courtesy CBRE
File: Positive Absorption in The Woodlands. CBRE. Stream Realty.
For more on Houston development, see the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins.