Continental HQ Flys to Chicago

by CoyDavidson on October 3, 2010

Jeffery Smisek, United Continental Holdings chairman & CEO says airline will maintain a large operation in Houston

Done Deal — Continental Airlines Inc. and UAL Corp. closed on their merger Friday and have become United Continental Holdings Inc. The new company’s corporate and operational headquarters will be in Chicago, with a significant presence in Houston, the company’s largest hub.

As for job cuts, Smisek said that “the affects on the front line will be minimal” due to the fact that there was very little overlap between the two companies. In terms of the corporate positions, he said that the company “is being careful and considerate in the process.”

What’s the Impact on the CBD?

Continental leases approximately 680,000 square feet in Houston’s Central Business District (CBD) where 1600 Smith served as its corporate headquarters in a lease that expires in 2014. Continental has publicly said the merged company will maintain a significant presence in Houston but that decisions on office-space needs haven’t been made yet. The question is my mind is what is Continental-United’s definition of significant presence? Does that mean 100,000 square feet or 300,000 square feet of office space or front line operational facilities? I suspect once we see how much sublease hits the market in the Central Business District, assuming they take that approach to space disposition, we will understand the airline’s definition of significant.

In the end even if Continental vacated every square foot of space they occupied in the Central Business District it would not have a dramatic impact on a submarket with 37.9 million square feet. However, at a time when very few office tenants are expanding and many with excess space currently under lease, losing a high profile corporate headquarters such as Continental will only serve as an additional drag on office market fundamentals downtown.

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