Greenspoint: Will it Sink or Swim?
Exxon has begun to exit Greenspoint (a process that will continue through 2018). Q1 research shows some concerning fundamentals largely as a result, but brokers working in the submarket say it won’t fare as badly as people fear.
Exxon vacated 385k SF in Q1, says Transwestern director of research Rachel Alexander (here with hubby Logan). Greenspoint suffered significant negative absorption in both Class-A and Class-B space this quarter, and Transwestern reports it’s lost 950k SF in the last 12 months, dropping occupancy dramatically to 78.4%. Greenspoint received some major blows besides Exxon; Southwestern Energy, Noble Energy, FMC and Schlumberger have all turned over space or have big blocks up for lease. There are currently 13 blocks over 100k SF available throughout the submarket, Rachel says, and 22 blocks free over 50k SF. More are being vacated later in 2015 and over the next few years.
But Colvill director of leasing Richard Barbles and VP Damon Thames say the submarket has plenty working in its favor and will rebound. Its big hurdle, they tell us, is overcoming outsider perception. Companies that take space there tend to stick around long-term: Exxon was in Greenspoint for 30 years, and there have been some big recommitments to the submarket recently. Nabors renewed and expanded to 314k SF in Q4, and Swift Energy’s new 114k SF lease last month was just a relocation within the submarket—both companies have been in the submarket more than 15 years. Greenspoint has become the center of the Houston metro, between Downtown and The Woodlands and the Energy Corridor and the Port. Plus, it’s home to the airport and has great fiber connectivity.
Greenspoint has a number of Class-A properties of the same caliber as any other submarket, the Colvill pair say. As Richard put it, they were good enough for Exxon, and the only way it could do better was building its own state-of-the-art campus; they’ll be good enough for another Fortune 500 company. Richard and Damon are leasing Greenspoint Place (pictured), which is taking the biggest hit from Exxon—the gents are marketing 800k SF of availability—but they’re not worried. They already signed that 114k SF lease with Swift to backfill some of it, and say Exxon’s rolling out of the property slowly over a couple of years.
Meanwhile, Hines is updating Greenspoint Place and the team is being realistic about what it will take to get a lease signed, i.e. more concessions. (That’s a trend across the submarket, Richard and Damon say.) To combat outside perception, Hines has been continually upping security—it just fenced off the campus and added more 24/7 patrols. It’s also packing in the amenities—the 2M SF property now has 12 on-campus dining options, an optometrist and a dentist. A new fitness center (rendered here) and 10k SF conference center will deliver this summer. And it’s all at a discount to other hot submarkets, which Damon says is not going unnoticed—he and Richard have been getting calls from tenants in The Woodlands who are coming out of long-term leases and don’t want to swallow rent hikes there. All told, they’ve had 550k SF of inquiries in the last six months.