Brookfield Properties is reportedly in the process of “mothballing” one of downtown Houston’s more iconic office towers, The Real Deal has learned.
New York-based Brookfield, the largest landlord in downtown Houston, is asking current tenants at 1600 Smith to move to one of the company’s other 11 properties in the city’s central business district. The plan is to figure out what to do with the 23,500 square-foot, 51-story office tower, a source familiar with the property told TRD.
It’s a fate that has already befallen some of the Bayou City’s other notable office towers which will likely continue into 2023.
It’s not clear what Brookfield has planned for 1600 Smith but the company’s redevelopment of Allen Center and Houston Center might provide a glimpse of what’s in store. Those downtown Houston properties have a heavy dose of retail, restaurant, and office.
Brookfield executive vice president for Texas, Travis Overall, did not return TRD’s emailed request for comment but in a separate email, company spokesman Andrew Brent said the following: “We are exploring a number of options and it’s too early to say more.”
Contacted for comment, some current tenants at 1600 Smith declined and others confirmed they were planning to move to other Brookfield properties while declining to give their reasons.
The move to mothball 1600 Smith was related to oil giant Chevron not renewing its lease at the tower, the source said.
Chevron plans to stay at 1600 Smith at least until the end of 2022 but it’s not clear if the company will remain through 2023. The company sold its 92-acre campus in San Ramon, Calif. and moved some of those workers to Houston in 2022.
In an email to TRD, Chevron external affairs advisor, Kelly Russell said: “At Chevron we continually assess our business needs and work with partners to meet those. Currently, we do not plan to exit HOU160 by the end of this year.”
The rise of remote work and hybrid workplace arrangements amid the COVID-19 pandemic has put the downtown Houston office market in a state of flux, as major tenants relocate to newer or smaller buildings in different parts of the Bayou City.
According to CoStar, downtown Houston has the most office vacancies of any major US city and subleases on downtown Houston office space can be had for discounts of up to 75 percent.
Built in 1984 during Houston’s great oil bust, 1600 Smith was once the headquarters of the former Continental Airlines and was famously depicted as the ominous HQ of the fictional Omni Consumer Products Corporation, which tried to bankrupt and privatize the city of Detroit in the dystopian science fiction film RoboCop 2.
Vacancies in Houston’s downtown office buildings, many of which are of 1980s vintage, have led landlords to contemplate what they will become in their next iteration. The ideas range from multifamily to mixed-use and condo conversions, as the number of people looking for living arrangements in downtown Houston has steadily increased since the turn of the century.
Read more
Commercial
Houston
Starwood Property Trust buys Marathon Oil Tower through foreclosure
Commercial
Texas
Company Relocations disrupting Houston’s office space market
Commercial
Houston
Houston office subleases at 25% to 75% discount