Major expansion by Fluor one of 21 leases at Eldridge in Houston’s Energy Corridor

 

A few months after signing a new regional headquarters lease for an office building in the Energy Corridor, Irving, Texas-based Fluor Corp. (NYSE: FLR) is expanding its new space by a quarter.

The global engineering and construction company in late December signed a 69-month, 104,677-square-foot lease for five floors in the 14-story Two Eldridge, at 757 N. Eldridge Parkway.

Two Eldridge is next to the building for which Fluor signed a 12-year lease last year, Three Eldridge, a 13-story office tower at 737 N. Eldridge Parkway.

The lease expansion brings Fluor’s space at the Eldridge office complex from 308,186 to 412,863 square feet.

Jon Dutton and Andrew Elliott with building owner Granite Properties represented the landlord, and Rick Kaplan, David Guion and Chris Oliver of Cushman & Wakefield represented Fluor.

“Fluor’s projected growth, both locally and globally, has continued to increase as a result of significant new project awards, beyond what was originally envisioned when we started investigating options for our relocation,” Fluor spokesman Brett Turner said.

Fluor plans to move into Three Eldridge by the end of June and into Two Eldridge in September.

For now, Fluor’s more than 1,600 local employees remain in the company’s Sugar Land campus at 1 Fluor Daniel Drive. After growing by 450 employees last year, Fluor plans to hire an additional 350 this year, Turner said.

The company occupies about 250,000 square feet of its Sugar Land campus, which it developed in the early 1980s. While the campus has a total of 1.1 million square feet, it lacks the modernity and workspace flexibility Fluor needs, Devon Rodriguez, Sugar Land’s director of planning and redevelopment, told the Houston Business Journal previously.

Fluor’s lease there expires on June 30, and Sugar Land-based Planned Community Developers plans to redevelop the 53-acre campus into a mixed-use waterfront district with retail, restaurants and entertainment venues; apartments, townhomes and condos; a 4-star hotel with conference center and exhibition hall; boutique office space; and medical and life sciences facilities.

Fluor’s expansion was the last of 21 new leases totaling 564,302 square feet Granite signed in its three Eldridge office towers last year.

That includes Houston-based Diamond Offshore Drilling Inc. (NYSE: DO), which signed a 62,584-square-foot lease at One Eldridge at 777 N. Eldridge Parkway and has since moved its headquarters here from 15415 Katy Freeway, its previous home of 33 years.

Some other 2023 leases include Mexican state-owned petroleum company Pemex (30,891 square feet), Certaurs (15,885 square feet), Piñon Midstream and The Bridge Group real estate agency.

Plano, Texas-based Granite acquired the 824,632-square-foot Eldridge office complex in 2019 knowing that 600,000 square feet of office space would become available, including the offices of London-based BP PLC (NYSE: BP).

Both One and Two Eldridge were built in 1986, but Granite undertook a $10 million renovation of the campus after purchasing it. They are now considered Class A office buildings, and One and Two Eldridge are LEED Gold-certified.

All three buildings have updated lobbies and a new outdoor lounge called The Yard. An area at the center of the complex includes a coffee bar, a fitness center with virtual classes, lockers and showers, and three conference rooms, including a training facility and phone room.

Granite is in talks with restaurant operators for a full-service restaurant on the campus, said Scott Martin, executive managing director at Granite.

Occupancy of the Eldridge office campus is now above 95%, according to the company, including 89% at One Eldridge and 97% at Two Eldridge. Three Eldridge will be fully occupied by Fluor.

Eldridge’s leasing success is indicative of the strong Energy Corridor and adjacent submarkets, which accounted for about half of Houston’s office leasing activity in several recent quarters, according to JLL.

In the fourth quarter, total office vacancy in the Energy Corridor was 23.5%, below Houston’s overall rate of 25.5%.

As the flight to quality continues, the Energy Corridor is benefiting from having about 10 million square feet of high-quality office buildings that were built during the fracking boom.

Martin also credits strength of ownership to attracting tenants to Eldridge specifically.

“What’s unique about Granite and all our assets, but specifically these three, is we have no debt on any of our buildings here in Houston,” he said. “There are not many owners, if any, that can say that.”

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