Leasing Clips Along at 2 Houston Center
Following the headquarters lease by Direct Energy, the largest footprint at 2 Houston Center to date at 105,578 square feet, Gensler announced it will also take two floors in its Houston office relocation.
HOUSTON—Leasing continues at a dizzying pace at the downtown class-A office tower, 2 Houston Center, what with two large leases being inked there in recent weeks. In the larger of the two, Direct Energy LP signed a lease for its corporate headquarters to be located at 909 Fannin St.
Under the terms of the agreement, Direct Energy will have the largest office footprint at 2 Houston Center to date, leasing 105,578 square feet of office space on floors six and seven, as well as space on P1, according to Brookfield Properties. Direct Energy will relocate its 930 employees to 2 Houston Center in April 2021.
“The energy behind the Houston central business districts’ downtown revitalization plan, along with Brookfield Properties’ commitment to the redevelopment of 2 Houston Center, offer us the opportunity for a more engaging and collaborative work environment amid one of the most active parts of the Houston metro area. We are confident that becoming a member of this vibrant community, with first-rate live, work, play options, will help us retain and continue to attract the top talent essential to drive business growth,” said A. Ron Lewis, head of real estate and facilities management, Direct Energy.
In January 2019, Brookfield announced plans for a major redevelopment of Houston Center, including a new arrival experience along McKinney Street with a new central plaza and greenspace, monumental stair connection to landscaped terraces, two-story glass facade, and reclad skybridges to foster street-level restaurant and retail activity. Construction began last month.
“Direct Energy’s decision to move to Houston Center reinforces the strength of the downtown submarket and the keen desire for a collaborative workplace located in an area with ample amenities for employees and guests,” said Travis Overall, executive vice president and head of the Texas region for Brookfield Properties. “Houston’s diversified economy and business climate continue to attract new companies to our city’s urban core, and we’re pleased with the opportunity to serve these great businesses.”
Direct Energy was represented in lease negotiations by Brandon Clarke, Paul Penland, Ryan Roth, Josh O’Rear and Mark Reilly of CBRE. Brookfield Properties was represented by Doug Little, David Baker, Kelli Gault and Jack Scharnberg of Transwestern, and Clint Bawcom of Brookfield Properties.
“The renovations at Houston Center played a significant role in convincing Direct Energy to move from a suburban office location into the central business district. Direct Energy also cited having Brookfield Properties as the owner as a key factor in the decision,” Little tells GlobeSt.com. “With a proven track record in the central business district, Brookfield will transform Houston Center into a premier class-A-plus office complex that will enhance workplace environment and productivity for Direct Energy employees.”
Following the lease by Direct Energy, M. Arthur Gensler Jr. & Associates Inc. announced it will relocate its Houston office to 2 Houston Center. The architecture and design firm will move into two floors at the property in late 2019.
“As the project architect on the recently announced Houston Center renovation, having Gensler office at 2 Houston Center speaks highly of the capital investment we are making in the project and in downtown,” said Overall. “Upon completion, downtown’s largest asset will be a vibrant destination for tenants and visitors alike.”
Gensler was represented in lease negotiations by Tim Relyea of Cushman & Wakefield and Craig Beyer of CBRE. Brookfield Properties was represented by Little, Baker, Gault and Scharnberg, along with Bawcom and Bill Neeson of Brookfield Properties.
There was continued improvement across the market as direct vacancy fell for the second consecutive quarter and availability also recorded a decline in the fourth quarter, according to Transwestern’s latest report. Direct vacancy declined 20 basis points to 16.3% for all classes of property. Class A was the primary beneficiary of activity as the property sector posted the largest quarterly decline since 2010, down 70 basis points to 15.4% (flat year-over-year). Class B increased 50 bps during the quarter (up 100 basis points year-over-year), to 18.4%.
In total, 22 of 33 submarkets registered decreases in direct vacancy with Katy Freeway West (down 160 bps during the quarter) and Greenway Plaza (down 150 bps during the quarter) leading the way. Total availability also showed improvement in the period, ticking down 20 basis points to 23.8%. Year-over-year, this metric is still on the rise, up 130 basis points from year-end 2017. Class A total availability declined by 50 bps during the quarter, (while up 130 bps year-over-year) ending 2018 at 25.1%, says Transwestern.