The Year In Culture

Demolishing the doldrums: Office towers somehow keep rising in Houston

Demolishing the doldrums: Office towers somehow keep rising in Houston

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Montrose Boulevard is a small niche market. The big buildings are on the north side of the Montrose area, along Allen Parkway.
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Midway Development's rendering of M Fifty Nine, the proposed 13-story building on Montrose Boulevard near Southwest Freeway Courtesy of Midway Development
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Hines could construct a significant office building in Ed Wulfe’s BLVD Place development and bring in a major energy firm as the tenant. Photo by Ralph Bivins
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A rendering of Skanska USA's proposed a 19-story, 320,000-square-foot building on Post Oak at Hidalgo
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The Galleria will be the roost of at least one construction crane in 2011. Courtesy of Greater Houston Convention and Visitors Bureau
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The 37-acre mixed-use CityCentre in the Memorial area has turned out to be a popular place for office space. Photo by Ralph Bivins
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The pool at the award-winning 240-room Hotel Sorella in CityCentre Courtesy of Hotel Sorella
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The Galleria/Uptown area hasn’t has a new office building built there in almost 30 years.
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The Main Place project Photo by Ralph Bivins
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Construction on Main Place Tower in july 12, 2010 Photo by Ralph Bivins
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The Hess Tower, far right, a 29-story building at 1501 McKinney next to Discovery Green park Courtesy of Greater Houston Convention and Visitors Bureau
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The year 2010 was not a year for robust real estate markets. But those who could keep their chin up may have noticed something on the skyline — new office buildings.

The year also brought us several announcements of future office towers that will be started in 2011.

A significant real estate company has even proposed building a new office tower on Montrose Boulevard. That is a rarity.

New buildings are going up in downtown. Proposals have been floated for new towers in the Galleria area and in West Houston.

Make no mistake. This is not the building boom of the early 1980s. Today’s new construction is only a trickle, compared to the pace of the past. But it’s a miracle that any new buildings are moving forward, given the fact that financing has been hard to get and so many companies (read: office building tenants) are reducing the size of their offices in this down economy.

Montrose Tower Power

M Fifty Nine, a 13-story tower, has been proposed for a small site on Montrose Boulevard, overlooking the Southwest Freeway (Highway 59).

The developer of the Montrose project is the Midway Co., the developer of the CityCentre mixed-use project in west Houston. Midway has been seeking tenants for the proposed 75,000-square-foot building, which will be located at 4503 Montrose.

Montrose Boulevard is a small niche market. The big buildings are on the north side of the Montrose area, along Allen Parkway.

But the heart of the Montrose market has no huge towers for large corporations. Developer John Hansen has made his mark with the Campanile office projects, spawned by his redevelopment of the beautiful old Central Church of Christ building, 4100 Montrose, near Richmond Avenue. Claude Wynn Interests has also been a dominate player in Montrose office space.

So maybe Montrose is ripe. The M Fifty Nine building, designed by Munoz + Albin architects, is an endorsement of the Montrose office market. Midway Cos. is a sophisticated developer and this project would not be proposed unless this was a very promising play. Construction won’t start unless some tenants are signed in advance.

New Building for the Galleria? 

The Galleria/Uptown area hasn’t has a new office building built there in almost 30 years. So it makes sense that developers are getting serious about new construction there.

Three or four years ago, a number of developers were floating proposals for new towers in the Galleria area. The economic crash wiped them off the drawing board.

But the Hines organization is eyeing a site at San Felipe and Post Oak in Ed Wulfe’s BLVD Place development. Hines could construct a significant office building there and bring in a major energy firm as the tenant.

In addition, Skanska USA has proposed a 19-story, 320,000-square-foot building on Post Oak at Hidalgo. The building, designed by the Kirksey architecture firm, will be financed with internal funds from Skanska, which is an arm of a large Swedish construction and development firm. Expect to see Skanska start construction early in 2011 and finish the building late in 2012.

The Galleria will be the roost of at least one construction crane in 2011.

CityCentre

The 37-acre mixed-use CityCentre in the Memorial area has turned out to be a popular place for office space.

The CityCentre project, located near the intersection of the Katy Freeway and Beltway 8, has mix of retail space, office space, restaurants, apartments and the 240-room Hotel Sorella.

The developer of CityCentre, Midway Cos., reported the existing 184,000 square feet of office space there is virtually 100 percent leased.

So Midway is moving ahead with plans to develop the next round of office space — CityCentre Three, a twin-tower project that will have 250,000 square feet.

The overarching message: mixed-use projects can be highly successful in the suburbs.

Downtown
Two major office towers are under construction in downtown Houston — the 46-story Main Place and Hess Tower, a 29-story building at 1501 McKinney next to Discovery Green park.

The Hess building is fully leased.

The Main Place, 811 Main St., recently landed the BG Group, a natural gas firm that will be an anchor tenant, occupying 164,000 square feet. The building is being developed by Hines.

The two downtown buildings, to be completed in 2011, may be the last new towers you will see in downtown for a few years.

Downtown Houston is going to get softer. Corporate expansions have been inching along at a slow pace. And several downtown giants — Continental Airlines, Shell and Devon Energy — are expected to downsize their office space.

Houston’s downtown softness won’t be as bloody as the 1980s, but 2011 may be uncomfortable for some downtown landlords.

Ralph Bivins, former president of the National Association of Real Estate Editors, is editor-in-chief of RealtyNewsReport.com.

Editor's note: This is second in a series of articles CultureMap will be running this last week of 2010 on The Year in Culture. The stories in this series will focus on a few key points, things that struck our reporting team about the year rather than rote Top 10 lists or bests of.

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