Why an Office Tenant Might Want to Relocate from the Uptown Area to CityCentre

 

By CARA SMITH

HOUSTON – There are several reasons why a Houston energy company — or any tenant — would relocate from the Uptown area to CityCentre.

Factors such as traffic, road construction and cost of living are all contributing to Houston-based Marathon Oil Corp. (NYSE: MRO) mulling plans to relocate to a new office tower in CityCentre, experts say.

In October, the Houston Business Journal reported that Marathon Oil was in talks with Midway and Hines to relocate to a new, 600,000 square feet of office space on a roughly three-acre tract of land at Interstate 10 and Beltway 8 in CityCentre. Marathon Oil’s Houston headquarters is currently at the company’s namesake building, Marathon Oil Tower, at 5555 San Felipe St. in the Uptown-Galleria area.

Pat Duffy, president of the Houston office of Seattle-based Colliers International, said the rationale behind Marathon’s move is pretty simple. Duffy is not involved in the Marathon Oil deal.

“You’ve seen a few of those lately — Transocean going into the (tower) on Eldridge, you’ve got Oxy announcing they’re going out to Dairy Ashford to the old (ConocoPhillips) campus,” Duffy said. “I think, to some degree, most of their employees live out west and it cuts back on their commute. I doubt it’s any more complicated than that.”

Duffy’s referring to Transocean’s relocation from Greenway Plaza to a vacant tower in the Energy Corridor, and Occidental Petroleum’s headquarters relocation from Greenway Plaza to ConocoPhillips’ former campus in the Energy Corridor. Duffy also cited the ongoing bus lane construction on Post Oak Boulevard as a factor, as well.

“Road construction at Post Oak and (Interstate) 610 has everything all bottlenecked, and sort of adds insult to injury,” Duffy said.

Construction is scheduled to be completed on the bus lanes in December 2018, per the project’s website. It’s taking place on Post Oak Boulevard from Richmond Avenue to San Felipe Street.

Charlie Neuhaus, a principal at Avison Young’s Houston office, said Marathon’s possible relocation could serve as a strong recruiting tool as the energy markets bounce back and oil and gas companies look to hire. Neuhaus is also not involved in Marathon Oil’s potential move.

“It’s easy to get to and you have a ton of amenities,” Neuhaus said of the CityCentre location. “Drive times aren’t going to be as one-sided as (they would be) if you moved way west or way north. For a location, I think it’s as good as it gets.”

As of February, Marathon Oil occupied roughly 744,000 square feet at 5555 San Felipe St., per CoStar data, and its lease expires in 2021. The 41-story building contains 1.2 million square feet and was built in 1988.

If Marathon Oil vacates the tower at 5555 San Felipe St., it’ll be a tough property to reposition, Neuhaus said.

“You’re a ways from any freeways so, from a big users’ standpoint, it’s going to be tough, but the building itself is a great asset,” Neuhaus said. “It’s going to be a little bit of a challenge, and hopefully aggressive deals will solve that.”

Houston-based M-M Properties owns Marathon Tower and didn’t return requests for comment. The building’s value was appraised at $230.9 million as of January, according to the Harris County Appraisal District.

For the complete article, please go to:
https://www.bizjournals.com/houston/news/2018/11/07/why-an-office-tenant-might-want-to-relocate-from.html