UPDATE: Long-Time Tenant's Restructured Deal Nets 15-Year Term

The nine-year Allen Center tenant will end up occupying eight full floors at 500 Dallas St. Kinder Morgan, now filling 159,276 sf, will take down the extra room in two phases within 18 months, says Paul Frazier, vice president of office leasing in the Southwest for owner, Chicago-based Trizec Properties Inc.

Aaron Howes and Kyle Kelley with CB Richard Ellis Inc. in Houston represented Kinder Morgan. "We surveyed the market carefully," Howes says. "Driving the transaction were economics and potential growth opportunities."

Howes says the CBD search was narrowed to the 1.2-million-sf Heritage Plaza at 111 Bagby St., 1.4-million-sf Pennzoil Place at 711 Louisiana St., 1.36-million-sf First City Tower at 1001 Fannin St. and 1.3-million-sf 1301 McKinney along McKinney Street. "We were able to restructure the current lease, which saved the company money through December 2008," he tells GlobeSt.com. "That, combined with Trizec's ability to provide them with the growth they needed, were the driving factors concerning why they stayed."

Howes believes the eight floors are enough to accommodate Kinder Morgan's growth, at least for now. "My guess is they'll continue to take down more space, though," he adds. "Their growth is steady. It's coming internally as well as through acquisitions."

The deal pushes the 884,422-sf high rise to 88% occupancy, with two full floors available for lease once Kinder Morgan takes down its extra space. Frazier says the energy company's extra space includes a floor that's leased until the second quarter, but empty due to a company buyout. The other floor, he says, was occupied by Equiva Services, a gas-and-oil firm, that vacated awhile ago.

Lease and build-out rates aren't available. However, local experts point out rates for CBD class A office buildings are running in the low $20 per sf, with build-outs averaging from $25 per sf to $40 per sf.