Baker Hughes to Shrink Houston Office Footprint

Oilpatch giant Baker Hughes is downsizing its office footprint in Houston, selling or leasing 364K SF and moving to a smaller HQ in the city.

The company will vacate its current headquarters at 17015 Aldine Road as well as office space it occupies in Spring Branch as it prepares to move into a new 130K SF HQ at Energy Center II at 575 Dairy Ashford Road. The new HQ is scheduled to open next year.

Baker Hughes attributed the adjustment to its adoption of hybrid work and said that 1,400 of its employees would be affected by the shrinking office footprint, according to a report in the Houston Chronicle.

“The hybrid environment that people have come to work in over the pandemic years really is allowing us to think differently about the workspaces we have in our office environment,” Deanna Jones, the company’s chief human resources officer, told the Chronicle.

“Like a lot of other organizations, we’ve been looking for ways to create a work environment for our people that is modern, flexible and innovative,” Jones added.

Last month, Bechtel, the Virginia-based engineering and construction company, announced that it would move out of a 440K SF building at 3000 Post Oak that the company has leased in its entirety for more than 40 years.

Bechtel, which inked a deal for 250K SF of office space at Building 3 in CityWestPlace in Westchase, also adopted a hybrid work model prior to the decision to shrink its footprint.

Baker Hughes’ new office at Energy Center II, located at 575 Dairy Ashford Road, incorporates collaborative space that is designed for a flexible, hybrid model.

Houston’s office market posted negative net absorption of -224,211 square feet in Q2, with the overall average vacancy rate hovering slightly above 23%, according to Colliers’ quarterly report.

Houston’s overall average full-service rental rate for Class A office space was $36.29 per square foot in Q2, with leasing activity encompassing 2.9M SF. Class A offices continue to show strong absorption trends in Houston, as they have in other cities in the flight to quality by office tenants.

“Many of the legacy Class A assets have undergone, or are in the process of, large capital projects to provide or improve the amenities tenants have come to expect from Class A buildings,” the Colliers market report stated.

“In addition, many landlords are providing concession packages that enhance their attractiveness to existing occupants to maintain their tenancy as well as attract new potential users considering a different location,” the report said.