GE Cordons Off 78,000-SF, Class A Office in Galleria

HOUSTON-A division of General Electric Co. has inked a 10-year lease for 78,000 sf of contiguous office space at Park Towers in the Galleria/Post Oak submarket. GE Energy hopes to move into the class A space in first quarter 2005.

The transaction represents an expansion and relocation for GE, which has several offices scattered around Houston, primarily in the North Loop area, says Robert Parsley, CEO at Colliers International's local office and GE's rep. The company spent more than a year searching for suitable space in surrounding suburban markets before settling on Park Towers' South Tower, Parsley tells GlobeSt.com. Tops on GE's wish list: easy access to freeways and space for future expansion. The 545,000-sf, 18-story twin towers at 1233 and 1333 W. Loop South offer both, he says.

"GE has a big facility on the east side of town near the ship channel and so they liked the accessibility and the freeway that allows them to get down to that manufacturing site quickly," Parsley says. "The lease also has rights to expand and provides the flexibility to take additional space if the need arises." The company had never considered a CBD location, he notes.

Grant Herlitz and David Weinreb with Park Tower's management company, TPMC Realty Corp., out of Dallas, negotiated the long-term lease for the building owner. Parsley, guarding what GE paid, says the complex's average rents range from average $21 per sf to $24 per sf. "Our rate is somewhat below that," he says. Occupancy in the complex now stands at close to 90% with the completion of the GE lease, he adds.A complete finish-out "from the ground up" has started on GE's space. "We are moving forward quickly on construction," Parsley says.

Although both buildings are considered class A structures, they emerged from a thorough renovation in 2000 in order to take that designation. The towers were developed in the 1970s, then sat vacant nearly a decade before TPMC affiliate, Post Oak Partners Ltd. LLP, bought them in 1999. "They took them down to the slab, stripped them down to concrete and totally rebuilt them," Parsley says. That renovation added about 60,000 sf of office space and a six-story parking garage to connect the two buildings. After reopening the buildings, TPMC brought in Southtrust Bank, United Healthcare, Prudential Securities, AT&T and Houston Business Journal.

The GE lease is a bright spot in an otherwise dismal leasing picture in the submarket. According to Colliers International second-quarter research, the Galleria/Post Oak area--Houston's second-largest business district--has suffered year-to-date negative office absorption of about 707,000 sf.