Glamorous women were sipping flutes of champagne. Influential businessmen in expensive suits chatted about the market. A red carpet was rolled out on the sidewalk and beacons shot blue beams of light across downtown Houston.
The location? Main Street. … Yes, you’ve got it right. Main Street.
Hines was opening its new 46-story BG Group Place and the office tower certainly impresses.
But it was the location of this new building that will send a lasting message to Houston.
The Hines real estate organization, which has built 23 skyscrapers in downtown Houston and hundreds of others around the world, has put its stamp of approval on Main Street.
And what’s even bigger?
The next time Hines does a downtown tower it will also be built on Main Street, says Hines President and CEO Jeff Hines.
“If we do the next building, that’s where we would go,” he says.
Main Street has seen its ups and downs and the downs were pretty ugly. It wasn’t that many years ago that the retailers virtually abandoned Main Street, many places were boarded up and the homeless folks ruled the sidewalks.
A few years back, some efficient Houston bureaucrats had decided to make Main Street into an elongated bus station. Bus riders were crowded onto the sidewalks as loud buses roared by emitting hot exhaust. Buses bullied their way down the Main Street dominating the road while cars and pedestrians cowered in fear. No one wanted to be there.
Things are changing now. There’s a quiet light rail train on Main and people can cross the street without intimidation. At night, dozens of young people gulp craft beers from sidewalk tables outside the Flying Saucer club, a block away from the Hines tower. It feels safe again. Main Street made a comeback.
Decades ago, Hines made Louisiana Street the preferred downtown address for office towers. Other developers followed suit. Every corporation wanted to be on Louisiana Street. But it’s 2011. And Louisiana Street is so yesterday.
With this newest office tower, Hines has done a lot to give Main Street a significant amount of prestige again. Main Street is a first-class business address again.
A Green Skyscraper
Hines’ one-million square-foot BG Group Place tower, 811 Main Street, was designed by the Pickard Chilton architecture firm.
On the 39th floor, the building has a big exterior notch on the corner facing Rusk and Fannin street. The notch creates and place for a “sky garden” and will be counted as one of the best balconies in the city.
On the 11th floor, BG Group Place also has a sustainable rooftop garden with heavy plantings of low shrubs and greenery.
The building’s gardens helped Hines to earn LEED Platinum certification for being a green, sustainable building with high energy efficiency. Platinum is the highest level of certification designated by the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) program.
Tenants Harder to Find
It had been years since a new building was constructed in downtown Houston. Hines completed a 33-story tower at 717 Texas Avenue in 2003. Then things went quiet.
About three years ago, Trammell Crow started the Hess Tower near Discover Green park and Hines started its new office tower on Main Street. Hines broke ground in 2008, not long before the nation’s economy went into the worst recession since the1930s. Leasing office space in the tough economy is not an easy task, so Hines put office leasing veteran Stewart Robinson on the case.
Robinson and his colleagues reeled in the big ones and today the building is over 60 percent leased with more tenants on the way.
The largest tenant is BG Group, a large British natural gas company that leased 354,000 square feet and gained the naming rights to the tower. The Latham and Watkins law firm and KPMG are major tenants. And Frost Bank will be opening in the building with a lobby on Main Street.
The vacancy rate has been rising in downtown Houston. At year-end, Houston’s prime Class A buildings in downtown were 7.29 percent vacant, definitely worse than the 6.1 percent vacancy rate of a year earlier, according to the CB Richard Ellis real estate firm.
Big companies are expected to vacate downtown office space in the coming months. Devon Energy and Shell Oil are both expected to empty large chunks of office space — more than one million square feet combined — in Allen Center, Pennzoil Place and 2 Houston Center.
However, some companies, such as Plains Exploration and TransCanada Corp., may be expanding in downtown.
The downtown office market will decline somewhat in 2011. But there are always companies looking to expand and it takes a long time to plan and construct a skyscraper.
So we asked Jeff Hines, how long will it be until another office tower is built in downtown Houston. A decade or two? … Not hardly.
“I think it could be surprisingly quick,” Hines says. “We’re seeing a real upsurge in activity. We’ve talked to quite a few large tenants. It’s hard to say because we’ve just come through some hard times. But I think it could be surprisingly quick that we could we see a new building.”
Ralph Bivins, former president of the National Association of Real Estate Editors, is editor-in-chief of RealtyNewsReport.com.