When America’s largest oil company makes a move, it generates a mighty wake – and naturally, people are talking about the possibility.
Inside the Houston real estate community, there’s a roar of rumor and speculation about Exxon Mobil Corp. and its plans for its Houston real estate.
The stakes are high. Exxon Mobil occupies millions of square feet of commercial space in Houston and has thousands of employees. And Houstonians are hoping that this time our city won’t end up the rejected mutt like it was 20 years ago when Exxon snubbed Houston.
What is the energy giant up to this time?
The pessimistic scenario currently goes like this: Exxon Mobil is going to leave downtown Houston, where it has a skyscraper at 800 Bell Street. This would create a big hole in the downtown office market, putting downward pressure on rents and landlords. Exxon Mobil has offices all across Houston, including a significant presence in the Energy Corridor along the Katy Freeway, and those office markets could get caught in the downdraft, too. Emptied buildings are a nasty thing.
The positive scenario: Exxon Mobil is going to create a new corporate campus in suburban Houston. Hundreds of employees will be relocated to Houston, including a significant number from Fairfax, Va., the former headquarters of Mobil, which Exxon acquired 10 years ago. For Houston’s economy, adding hundreds of new jobs is obviously good news for retailers, restaurants and Realtors.
Exxon Mobil has not disclosed anything of substance. But knowledgeable people in Houston are certain that the oil company has been carefully evaluating huge tracts of land north of Houston for a possible corporate campus near Interstate 45. This will be a Texas-sized facility, at least 300 acres, maybe a lot more.
Most Significant Deal in Years
It would be one of the most significant real estate deals to happen in years. When something like this is brewing, commercial real estate brokers start whispering and investigating, hoping to get in the right position to profit from it.
The narrative circulating in the real estate community is plausible and it goes like this: Exxon Mobil is looking for property along the border between Harris and Montgomery counties, south of The Woodlands. It is considering land which is partially in the flood-plain, so that the undevelopable flood-prone land will lie adjacent to the new Exxon Mobil office buildings. A consultant has been hired to evaluate the land, which is probably west of Interstate 45.
Being a multi-national oil company with a presence in the Middle East, Exxon Mobil is very security conscious. Owning a lot of vacant land as a buffer around its office buildings improves security for the corporate fortress.
The Shaft of ‘89
This is not the first time there have been rumblings that Exxon was planning something big north of Houston. Over 20 years ago, there was evidence that Exxon was evaluating some 1,000 acres south of Conroe. It probably would have been a good time for Exxon to move its corporate headquarters to Houston, but it didn’t.
Exxon eventually left a bad taste in Houston’s mouth. Exxon was ready to leave New York City and move its headquarters to the Lone Star State.
Houston, with its vast talent pool of the best in the energy industry, would have been an excellent location for Exxon’s headquarters. The prestige of having Exxon based in Houston, which already has many of the world’s largest energy firms, would have been an excellent addition to the city’s corporate roster.
Instead, on a day dark in October of 1989, Exxon said it had selected Irving, the Dallas suburb, for its headquarters. Houston business leaders were furious. I interviewed a bunch of business people that day and believe me, the anger was very real.
It wasn’t the number of jobs that made the Exxon relocation so painful. Exxon said only 300 people would be working at the corporate headquarters facility. But the fact that Dallas would be selected over Houston, the Energy Capital of the World, was an insult. It was a prestige thing for Houston business leaders.
Exxon said at the time that it avoided putting the corporate headquarters into a city like Houston where several major divisions were already located. Exxon division heads in Houston might have been intimidated if the Exxon CEO had an office in town, looking over their shoulders daily – or so the story went.
Other people said Exxon was lured by the maze-like D/FW airport because it had better international connections than Houston’s main airport.
Going Down Meek and Quiet
Whatever the reasoning, when Exxon selected Dallas, it was a stinging defeat for Houston. But it was a done deal by the time it got into the press and it was too late for city officials to lobby Exxon.
This time, instead of operating with its Kremlin-like veil of secrecy, perhaps our city leaders, our new mayor and the Greater Houston Partnership should get publicly involved now.
Why can’t our city leaders step forth publicly and say: we hate to see Exxon Mobil abandon downtown Houston? Why won’t the Harris County elected officials protest now -- in advance -- when it looks like Exxon Mobil may be relocating to Montgomery County?
Exxon Mobil is a powerful economic force. If this next deal goes well, it could benefit the pocketbooks of every Houstonian. If it doesn’t, it will sting.
Maybe all we can hope for is that Houston won’t be shunted off to the bottom of Exxon Mobil’s priority list, like we were when Dallas was chosen for its corporate headquarters. The scars from that still hurt.
Ralph Bivins, former president of the National Association of Real Estate Editors, is editor-in-chief of RealtyNewsReport.