Energy Mega-Tenants Stir Up the Houston Office Market

by CoyDavidson on January 19, 2010

Exxon Mobil and Shell, two of Houston’s largest office tenants have the commercial real Estate market buzzing about potential blockbuster real estate moves.

The Exxon Mobil Rumor Appears to be Reality

The hottest rumor among the Houston Commercial Real Estate Community over the past few months has been that Exxon Mobil, the world’s largest publicly traded international oil and gas company planned to buy roughly 400 acres in the Houston area to consolidate thousands of employees from Houston and Fairfax, Va.

Speculation has centered upon a large acreage site along the west side of Interstate 45 at the Hardy Toll Road just South of The Woodlands. According to a story in the Houston Business Journal; Deed records show an entity purchased a large amount of acreage late last year at the Interstate 45 site, bordered on the north by Spring Creek. The entity, believed to be connected to Exxon, purchased 400 acres of vacant land from New York-based Coventry Development Co., which owned as much as 1,500 acres in the area through affiliate Springwoods Realty Co.

In addition residential real estate sources active in the Woodlands area have indicated a number of home sales from buyers from Fairfax, Virginia as well as from Houston based Exxon executives. The typically secretive Exxon Mobil Corporation has made no public statements on their long-term real estate plans, although anonymous Exxon employees believed to be familiar with deal have reportedly confirmed the campus project is happening.

The lottery winner in this developing story is sure to be The Woodlands one of Houston hottest areas which is certain to see even more demand for residential and commercial development with thousands of Exxon employees housed at its doorsteps. The apparent big loser in this real estate play is certainly the Greenspoint area where Exxon leases two million square feet to accommodate 6,000 employees.

Update: Exxon Mobil is considering a move

The Shell Rumor

While the Exxon Rumor over the past few months has dominated the discussion amongst commercial real estate types, there have been rumblings among Houston office brokers that Shell Oil was evaluating their office space needs and the CBD office space market. Last September, I posted on this blog, the buzz that Shell was negotiating to take the Reliant Energy sublease space at 1000 Main. (Shell to take Reliant Resources Sublease Space in Houston CBD?) Ironically, back in September Shell also announced it plans to lay off thousands of its global workforce. Since then, the rumors about any imminent transaction by Shell in the CBD subsided and no deal was announced.

Yesterday, long time Houston real estate journalist Ralph Bivins reported in an article on the website Culturemap Houston that Shell could be moving out or, or at least shrinking its presence significantly in One Shell Plaza downtown. (It’s One Shell of a building, but will giant oil company stay put?)

Once again the former Reliant Energy Plaza at 1000 Main is the center of speculation as a potential relocation candidate for Shell Oil.

2009 was a year with relatively few Blockbuster deals for the Houston commercial market. We are not even three weeks into 2010 and Houston’s two largest office tenants have stirred the market up and given us plenty to talk about at cocktail parties and broker industry events. After 2009, all of us in the commercial real estate industry are hopeful for a more prosperous year. That remains to be seen, however if the rest of the year is like the last couple of weeks, at the very least it’s going to be more interesting.

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