HP started to consolidate its locations in third quarter 2006, focusing on reduced greenhouse emissions. It consolidated 85 data centers worldwide into six facilities in Atlanta, Houston and Austin. HP also eliminated hundreds of CRE locations to create a smaller core to reduce IT spending and real estate costs.

The EDS takeover is the largest in the IT services industry since HP bought Compaq Corp. in 2002, when it inherited the Houston campus at 20555 State Hwy. 249. In July 2007, HP sold 487,591 sf on a 44-acre tract of the campus to Dallas-based Macfarlan Capital Partners and Buchanan Street Partners of Newport Beach, Ca. Six months later, HP put more on the sales block and reserved the southern part of the campus for itself. HP's five-million-sf footprint is assessed at nearly $200 million.

HP is holding a contract to sell 1.95 million sf in five class A office buildings, four parking garages with 6,022 spaces, 128,998 sf in common buildings, 19.8 acres of raw land and a 5.4-acre redevelopment tract. It's no secret in Houston that Capital Commercial Investments Inc. of Austin is winding up due diligence on the package developed between 1989 and 1999. The deal is expected to close in mid- to late September.

HP will vacate the buildings in stages through year's end, retreating to 2.5 million sf of office, data and tech space, according to Ken Gilbert of Liberty-Greenfield California Inc. in San Bruno, CA. He and Stewart Robinson with Houston-based Hines were leading the hunt for a buyer.

The sales price is off limits, but Gilbert did say the four-month marketing process ended in a best and final with four offers on the table. And, it definitely wasn't a play for a traditional deep-pocketed investment group. "The challenge is it's a very large block of space that will very soon be empty," he tells GlobeSt.com. "Even in a market that's robust like Houston, two million sf is a large block. It wasn't for the institutional market."

The HP-EDS merger creates a company with 210,000 employees in 80-plus countries. The combined 2007 revenue totaled $38 billion. EDS is being branded as an HP company, which will remain headquartered in Plano. EDS' chairman, president and CEO Ron Rittenmeyer is president and CEO of the new group. The plan calls for HP's technology solutions group to shift outsourcing services' operations to EDS along with pieces of its consulting and integration activities. How those plans will shake out with the real estate is only privy to insiders at this stage of the game.

Instant Insights /

CRE Main Moving Target for $14B HP-EDS Merger

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