Real Estate Rumblings
Energy Corridor booms: Swedish giant plans major office building on west side
Skanska USA’s parent company, Skanska AB, is a giant global construction and development company based in Stockholm. The company is mentioned in chapter one of the best-selling fictional book, Girl with the Dragon Tattoo, by Steig Larsson.
The building is not a “spec” or speculative project. A large tenant, Petroleum Geo-Services,will occupy 122,000 square feet of the 12-story building, called West Memorial Place. The 325,000-square-foot building will be completed in the first quarter of 2015. HOK is the architect.
“Are you telling me Skanska don’t do speculation?” — from Girl with the Dragon Tattoo
Skanska acquired the site in February 2012 and is financing 100 percent of the development costs with internal Skanska funds. It is extremely rare for a real estate firm to internally finance a project of this magnitude, at least for domestic real estate companies. Usually a typical developer relies primarily on borrowed money to build office towers. But Skanska is a very deep-pocketed European company. The parent company took in $19.5 billion in revenue in 2012.
The firm has other projects in Houston – a new office tower at 3009 Post Oak Blvd., right across the street from the Water Wall in the Galleria, and the downtown redevelopment of the Houston Club site at 811 Rusk.
With the Energy Corridor building, Skanska is taking no great risk. Class A office space in the Energy Corridor is over 99 percent occupied and rents are strong. Occupancy rates that high are incredible, a rarity around the world. But the commercial real estate market has been enjoying a boom thanks to the energy industry, which has been expanding partly because because fracking exploration methods have taken off wildly in the United States.
Skanska says its new building will green and classified as LEED Gold in the sustainability rankings.
We are thrilled to welcome PGS (Petroleum Geo-Services) as the first tenant to our new sustainable development,” says Mike Mair, executive vice president of Skanska USA Commercial Development in Houston. “With expanses of green space throughout the property, direct connection to Terry Hershey Park and easy access to I-10, as well as the Energy Corridor’s hotels, restaurants, retail and support services, it is an ideal location for our newest development.”
Another Skanska company, Skanska USA Building, will be the general contractor, handling the construction of the new building. A rendering of the building also shows a second tower, which Skanska will pursue in the future based on market demand.