Real Estate Rumblings
Major oil company quietly downsizes its downtown operations as an iconic tower is revamped
Shell Oil is vacating a huge block of downtown office space in Two Shell Plaza and in the wake of that pending vacancy, Hines is planning a major renovation of the storied building.
The renovation of the 26-story Two Shell Plaza will be a powerful marketing tool as Hines leases up the office space Shell will vacate at the end of 2014. Shell will move out of all but two floors in Two Shell, leaving behind some 400,000 square feet of vacancy — one of the biggest blocks of vacant prime office space in Texas.
Two Shell Plaza will be renamed after its new address, 811 Louisiana. The main entrance for the tower will be moved onto Louisiana Street, replacing its current front door on Walker.
The 565,538-square-foot structure contains 17 office levels (two subterranean) and 12 parking levels.
The renovation work will begin in early April. The lobby will be expanded and improved. The exterior of the first four floors of the building will be re-clad in Virginia Mist granite, an dark natural stone that contrasts with the existing travertine on the upper levels.
The tower put the rest of the world on notice — Houston had become the Energy Capital of the World.
Balfour Beatty is the general contractor and construction will be completed by the spring of next year. Two Shell is currently 93 percent leased, but that percentage will drop significantly when Shell leaves. Hines has retained Chip Colvill, a veteran heavy hitter in Houston’s office leasing business, to lease the building back up again.
One Shell Plaza and Two Shell Plaza launched Gerald Hines toward his career as the premier developer of high-rise office buildings. Hines Interests, founded in 1957, was mostly developing warehouses and small office buildings (the tallest had been 16 stories) until the Shell Oil deal came along in 1967. That’s when Gerald Hines, himself, signed up Shell to occupy the project and the rest is history.
From then on, the downtown skyline of Houston became a canvas for Hines’ masterworks: the 75-story JP Morgan Chase Tower, Pennzoil Place, Bank of America Center and more.
Houston History Rises
One and Two Shell Plaza, designed by the legendary Bruce Graham of Skidmore, Owings & Merrill, opened in the early 1970s. One Shell Plaza was the tallest building in the city and importantly, the tower put the rest of the world on notice — Houston had become the Energy Capital of the World.
“We have been committed to downtown Houston since the founding of the firm more than five decades ago,” says Jon Cogdill, senior property manager for Hines. “Having managed 811 Louisiana since its inception, we are pleased to be on the team that ownership has assembled to re-launch the property into the upper tier of Class A buildings in the CBD.”
About two years, Shell re-upped at Two Shell, signing a 15-lease for 471,934 square feet in the building. At the time Shell also renewed its lease for 804,000 square feet in the nearby One Shell Plaza for a total of 1.3 million square feet — the largest office lease in the world during 2011. But since that time, Shell’s need for office space changed and the oil company decided to downsize in downtown Houston.
Since the lease was signed, the buildings changed hands. In one of Houston’s biggest realty deals ever, Hines sold Shell Plaza One and Shell Plaza Two in 2012 to Busycon Properties LLC for $550 million. Hines continues to manage both buildings.
Two Shell Plaza sits on the block bounded by Louisiana, Milam, Rusk and Walker streets. The name of One Shell Plaza will not be changed, Cogdill says. Two Shell, though, will be given a new name, a new look and new tenants.
Ralph Bivins, former president of the National Association of Real Estate Editors, is founding editor of Realty News Report.
