Houston has the largest office vacancy rate for any major American city, and Brookfield Properties, downtown Houston’s largest landlord, owns most of that real estate.
The New York-based real estate investment trust is exploring its options with one of Houston’s notable downtown properties, but it’s also moving forward with plans on another downtown property.
Brookfield Properties is partnering with Industrious, one of the more successful coworking companies in a saturated market, to open a flexible co-working space at 1301 McKinney Street in the 3 Houston Center building.
This deal is timely because in October, Houston’s Downtown Redevelopment Authority issued a call for proposals to develop its “adaptive reuse incentive program” for downtown Houston’s aging office buildings. No doubt, Brookfield and other downtown Houston landlords’ bottom line in Houston will be helped with such a program.
“The economic challenges of conversion will most likely require an incentive program to encourage adaptive reuse in much the same way that historic structures receive tax credits for renovation, or through a program similar to the Downtown Living Initiative that incentivized the residential construction or conversion in the Downtown Houston market,” the Request for Proposal noted.
Industrious’ downtown location, which is set to open in May 2023 will feature 277 seats spanning 23,500 square feet and will offer a range of private offices, shared workspaces for individuals and teams, multiple conference rooms and lounge areas.
Industrious Houston Center will be the company’s second Bayou City location. The company’s other space is on the city’s more suburban west side at CityWestPlace.
“Brookfield’s a long-standing partner of ours, they called us and said we want to do this,” Peri Demestihas, senior director of real estate at Industrious told The Real Deal. “They had a lot of tenants and companies looking for flexible space [in downtown Houston].”
Large landlords and institutional real estate firms turning to companies like Industrious to manage the conversion of space in their Class A office buildings view flexible space as an amenity rather than another tenant, Demestihas said.
“It’s a really good example of where we think this business is going, a tool belt for landlords to attract tenants and retain them,” Demestihas said.
Industrious’ business model differs from other competitors in that it partners with landlords, rather than signing traditional leases. The company, which has agreements with Cushman and Wakefield and others, manages portions of buildings and shares a percentage of revenue with the landlord.
Industrious’ sharing formula with landlords varies on a case-by-case basis. Demestihas declined to disclose the term of Industrious’ agreement with Brookfield.
In keeping with the trend of offices being close to other amenities, Industrious’ Houston Center location is very close to the city’s downtown park Discovery Green. Thes space will also have a luxury gym and locker room connected to the recently-renovated Four Seasons Hotel and be adjacent to The Highlight at Houston Center, a renovated retail area with dining, entertainment, and shopping options connected to the downtown Houston’s sky bridge and tunnel system.
Industrious Houston Center will be the company’s second Bayou City location. The company’s other space is on the city’s more suburban west side at CityWestPlace.
“In reimagining Houston Center, we set out to create a dynamic downtown campus to meet the needs of today’s leading companies, including firms that are seeking out a flexible workspace as part of their broader real estate strategy,” Travis Overall, Brookfield’s executive vice president for Texas said in a media release. “Industrious Houston Downtown will offer an array of thoughtfully designed, full-service offices and suites, and we look forward to opening their doors next spring.”
Industrious Houston Center will be the company’s second Bayou City location. The company’s other space is on the city’s more suburban west side, at CityWestPlace.
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