HOUSTON-During late December 2012, when Trammell Crow Co. and joint venture partner Principal Real Estate Investors launched construction on the 550,000-square-foot Energy Center Three, the office tower was a straight speculative endeavor on Houston's far west side, in a submarket known as the Energy Corridor.
Less than five months later, the office tower at Interstate 10 and North Eldridge Parkway is 100% leased. ConocoPhillips' Lower 48 Business Unit has taken the entire tower, and a goodly chunk of the as-yet unconstructed Energy Center Four.
According to Trammell Crow's Aaron Thielhorn, managing director of the Houston unit, discussions between developer and lessee for the space began as far back as Q4 2012. Thielhorn acknowledges, however, that there was nothing solid at the time. "We moved forward with the project as spec from the beginning," he tells GlobeSt.com. "Given the amount of activity and velocity we were seeing in the leasing market, we felt it would lease up."
Thielhorn goes on to say that, before leasing discussions with ConocoPhillips became serious, other companies were looking at the as-yet-undone space as well. "No huge surprise, most of those looking at the space were energy companies and energy services companies," Thielhorn recalls. "It's pretty consistent with the overall makeup of the Energy Corridor."
With the ConocoPhillips lease, Trammell Crow and Principal Real Estate have a fully leased, formerly spec building, and a 50% pre-leased building next door. Thielhorn says Energy Center Four has different marketability than what typically happens in such situations. "We're obviously in a market with larger tenants," he explains. "Given the size of Energy Center Four, we'll have about 300,000 square feet of space to lease. Maybe this will provide an opportunity for smaller tenants." Another possibility is that ConocoPhillips could expand into that space. And if all that space is taken up, Thielhorn says there's enough room for yet another office tower.
There's still a little time to figure it all, however. Energy Center Three will be ready for occupancy in the second quarter of 2015, while neighbor Energy Center Four, will come online during the early part of 2016.
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