Real Estate Round-up
Update: What will Exxon Mobil's Woodlands move mean for Houston's real estatemarket?
UPDATE June 7: Exxon Mobil confirmed Tuesday that it will move to a new complex located on a 385-acre wooded site at the intersection of I-45 and the Hardy Toll Road, starting in early 2014. The move is expected to be completed by 2015. It will contain multiple low-rise office buildings, a laboratory, conference and training centers, child care facilities and a wellness center.
What’s that giant sucking sound? It could be Exxon Mobil reshuffling the Houston real estate market.
The company is expected to move thousands of employees to its new north side campus just south of The Woodlands. When it migrates to the woods, there’s going to be a lot of vacant office space left behind vacant.
The official announcement will be coming out pretty soon. Exxon Mobil has been “evaluating” its office needs for over a year. There’s also been a lot of equipment moving dirt on the company’s 400-acre campus site, which is west of Interstate 45, near the Hardy Toll Road. But the company keeps a tight lid on information about the project, so exactly what’s going on remains a topic for speculation.
Industry experts expect Exxon Mobil to build more than 20 buildings, some three million square feet of office space on the site. The move is also expected to mean that Exxon Mobil will be moving hundreds of employees from Houston from Fairfax, Va., the former location of the Mobil headquarters before it merged with Exxon.
“We are just about to conclude the study,” says Alan Jeffers, a spokesman in the company headquarters in the sprawling Irving community in north Texas. “We are just looking what are doing with our U.S. offices. Hopefully we’ll have something to say on it soon.”
But Alan, there’s a lot of work going on there, a lot of earth being moved. This is a lot more than just clearing out a little underbrush.
“We own that land there and they were doing some prep work as part of the study,” Jeffers says. “But I’ve got nothing formal to tell you today, at all.”
Exxon Mobil’s headquarters
Today, Exxon Mobil has employees in almost 30 buildings in Houston and its massive local workforce could fill quite a few skyscrapers. This a very large company and if it only sneezes, it can trigger an avalanche in the real estate market.
“Clearly, we have a lot of people and a lot of operations in Houston – our entire upstream and chemical headquarters - it’s about 14,000 to 15,000 if you count the employees at the refinery in Baytown,” Jeffers says “It’s an important area to us, obviously.”
Houston may be important to Exxon Mobil. But Houston is not going to be the new corporate headquarters of the world’s largest energy company, Jeffers says.
The rumor has been persistent for months. Exxon Mobil’s undisclosed plan for the new corporate campus includes a truly noteworthy building — an impressive “crown jewel” that is obviously meant to house Exxon Mobil’s top brass, or so the story goes.
Jeffers says it’s just not true. He says Exxon Mobil is not considering moving its headquarters from Irving to Houston.
So, Alan, once again, just to make sure -- there is no plan to move the corporate headquarters?
“No. What we are doing is just evaluating and looking at our U.S. office needs in a real estate study. One of the things that was never included in that study was the headquarters,” Jeffers says.
Exxon Mobil’s headquarters was moved from New York to Irving (a suburban garden spot between Dallas and Fort Worth) over 20 years ago. Houston business leaders were upset about it back then. How could this energy giant pass up the chance to relocate to Houston? “For Pete’s sake, Houston is the energy capital of the world,” a Houston businessman moaned at the time.
The corporate headquarters facility is not huge, really. Reportedly, it just has 300 or 400 employees. But the prestige of being home to the world’s largest energy firm carries a lot of weight with Houston’s civic leaders and they would love to get the headquarters here.
Weighing the Impact
If the campus move goes down as anticipated, Houston will gain some jobs out of the deal, though. The new campus will also provide a boost of the housing market in The Woodlands and the surrounding area. Remaining to be answered is how many of the new buildings will be filled with people who already work in Houston and how many will be out-of-towners relocating from Virginia or other parts of the country.
And what will become of Exxon Mobil’s downtown building, a 40-story tower at 800 Bell? The building, constructed in the early 1960s, would be marginally competitive in today’s office market – a Class B building, at best.
It’s not connected to the downtown tunnel system, which is something many office tenants demand these days. Exxon Mobil owns the 800 Bell building, which is topped with Petroleum Club, an old-school institution where you expect to see J.R. Ewing buying an oil well while swigging a shot of Jack Daniels.
When the Exxon Mobil real estate study finally is released, maybe we will learn that Exxon Mobil will just sell-off its downtown tower to the highest bidder. So long downtown.
We should note Exxon Mobil has a dominant presence in the Greenspoint District, west of the Bush Airport.
“They have about 2 million square feet of office space in Greenspoint. That’s about 16 percent of our space,” says Jack Drake, president of the Greenspoint District. “While we love all of our tenants, we welcome the opportunity to invite new corporate tenants that want the same thing that brought Exxon Mobil here.”
At the same time, Greenspoint has several positive things going on, Drake says. Moran Shipping and the Mazak tool making firm both have new buildings in the works there.
In 1982, presidential candidate Ross Perot coined the “giant sucking sound” phrase as he debated the jobs lost to Mexico because of NAFTA. And it looks likely that Exxon Mobil will be sucking jobs from somewhere and moving them to the north Houston campus. And some cities, or some office buildings landlords, could be hurt.
But Exxon Mobil could make the relocations slow and gradual, phase them in over three, five or seven years. The slow-and-gradual method might be less painful for the places losing jobs at a measured pace. On the other hand, it might be slow and painful, like the torturous “death from a thousand cuts.”
Ralph Bivins, former president of the National Association of Real Estate Editors, is editor-in-chief of RealtyNewsReport