Market to be First Tunnel Space That's Almost 24/7

HOUSTON—Understory, the 35,000-square-foot community hub and culinary market at Capitol Tower, will be an experience-based destination that brings the community together through culture, commerce and cuisine. In addition to an abundance of community space and a full-service restaurant, Understory will include a culinary market with seven chef-driven concepts and a cocktail bar.

A central feature of Understory is the open-air blending of the street and tunnel levels, facilitated by the Great Steps, a 30-foot-wide monumental staircase and gathering place that will create the first true street level gateway to the tunnel network. This gateway will be highlighted by an art installation that will be visible from Capitol, Rusk and Milam streets.

Situated at 800 Capitol St. on a prime block in the Central Business District, Understory's location near cultural landmarks such as Jones Hall for the Performing Arts, the Alley Theatre, Revention Music Center, Market Square Park and Wortham Theater, along with a range of amenities ideally position the space to become part of downtown's cultural life. Upon its opening in 2019, Understory will be the first space in the tunnel network to be active seven days a week, from morning to night, with a wide variety of culinary, retail and cultural offerings. The community will have access to high-speed Wi-Fi, mobile device charging stations, art and games, as well as a fitness center for the exclusive use of building tenants.

With a distinctive design by the Michael Hsu Office of Architecture that was inspired by the craft of food, Understory will feature open cooking concepts to create an inviting space with views of the street, tunnel entries and market hall. Kitchens will have artist murals, copper kitchen hoods, wood butcher block countertops and white marble.

In August, Skanska USA Commercial Development announced the first two tenants at Understory–East Hampton Sandwich Co. and Mama Ninfa's Tacos y Tortas. This marks the third area location for East Hampton Sandwich Co., while Mama Ninfa's is debuting its new concept when Understory opens to the public next year. And, Skanska recently reached a lease agreement with Houston-based Boomtown Coffee for space at Understory.

“We are excited to welcome a homegrown coffee purveyor like Boomtown to Understory, a culinary and community destination unlike any other in downtown Houston,” said Matt Damborsky, executive vice president for Skanska USA Commercial Development in Houston. “Boomtown Coffee's local roots and commitment to sourcing only the finest ingredients make them an ideal addition to Understory's eclectic mix of food and beverage offerings.”

This opening at Capitol Tower's Understory will mark Boomtown Coffee's second downtown location, following its first café at 300 Main St. The retailer also operates a café at 242 W. 19th St. in the Heights. Founded in 2011, Boomtown Coffee offers a wide selection of specialty coffee beans including Ethiopian natural-process coffees and a rotating selection of coffees from Kenya, Costa Rica, Sumatra, El Salvador, Guatemala, Mexico and Columbia.

“In the Central Business District, we still see a strong flight to quality as office tenants continue to seek high-quality buildings that offer flexible design, functionality and efficient floorplates, as well as a thoughtful range of upscale amenities,” Damborsky tells GlobeSt.com. “Additionally, the ongoing revitalization occurring downtown, specifically the boom in residential development, has led to a resurgence of retail and a renewed focus on mixed-use spaces like Understory that can accommodate a diverse mix of retail and food offerings.”

When Capitol Tower lights up Houston's skyline in 2019, it will be the most sustainable office tower in Houston, using 25% less energy than typical baseline facilities. Pre-certified under LEED v4 Platinum, one of only four core-and-shell projects nationwide, the 754,000-square-foot sustainable office development will feature a number of green amenities, including the SkyPark, the first and largest green roof in downtown Houston to be open to all building tenants.

Nick Hernandez, Crystal Allen and Lacee Wilke from Transwestern represented Skanska in the Boomtown transaction.

Skanska's other developments in Houston include the first LEED Platinum campus in the Energy Corridor, the two-building West Memorial Place project, which offers direct access to the Terry Hershey Park hike and bike trails. Skanska also developed 3009 Post Oak, a 302,000-square-foot office building in the Uptown Houston location at Post Oak Boulevard and Hidalgo.

JLL reports a 30 basis point drop in office vacancy in third quarter. In years past, this type of drop would not be a significant occurrence, however, this particular occurrence was preceded by 14 consecutive quarters of increases.

During the past 14 quarters, vacancy in Houston nearly doubled from 13.4% in the fourth quarter of 2014 to 24.5% in the second quarter of 2018, largely as a result of the pullbacks in the energy sector, says JLL's third quarter report. Ironically, the drop in vacancy in the third quarter stemmed from an energy tenant, ConocoPhillips, moving into its new 600,000-square-foot Houston headquarters at Energy Center 4. Although it is true that absorption would have been negative without ConocoPhillips' move, even without the move, absorption would have been -160,000 square feet in the third quarter, which is a far cry from the -1.3 million square feet in the first quarter and the -1.1 million square feet in the second quarter to start the year.

Along with the drop in vacancy, several other market indicators pointed to an improving market in the third quarter. The overall net absorption totaled 435,000 square feet, which marks just the fourth positive quarter in the past 14. Additionally, the sublease space inventory decreased by more than 10% to 8.7 million square feet, says the JLL report.

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Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.