Firm’s new HQ a positive sign for market
Waste Management inks downtown deal
In the largest office lease signed for a downtown building this year, Waste Management has inked a deal to move its corporate headquarters to Capitol Tower, a soonto-open skyscraper at the corner of Capitol and Travis streets.
The new lease is another positive sign for Houston’s office market, which has seen activity pick up in some areas after years in the doldrums. Large companies are again leasing big blocks of office space and energy firms are in the market for temporary digs for short-term projects, said Rich Pancioli, a broker with the commercial real estate firm CBRE, which represented Waste Management in its new lease.
“Between sublease space coming off the market and demand for project space increasing, in my years of experience, that’s a pretty good indicator that the market is starting to swing the other way,” Pancioli said.
The recent oil bust hurt leasing activity as energy companies retrenched, laid off thousands of workers and put millions of square feet of office space back on the market. Market-wide, the amount of available space fell slightly in the third quarter after reaching a peak of 23 percent in the previous quarter, according to CBRE.
Waste Management will move into nine floors in Capitol Tower in 2020, consolidating employees from two downtown buildings: 1001 Fannin and 1021 Main.
The Houston waste and recycling hauler will occupy 284,000 square feet in the building at 800 Capitol. The company has 1,927 full- and part-time employees in the Houston area, although it did not say how many would work in the new tower.
“This new work space is one of the many ways we are focused on investing in our people,” Jim Fish, Waste Management’s president and CEO, said in a statement. “Additionally, the building will be one of the most sustainable office buildings in Houston, and supports our company commitments to conserving natural resources.”
Capitol Tower, one of the few buildings nationwide designed to meet some of the highest standards in energy efficiency, will use 25 percent less energy than similar facilities, said Skanska, its developer.
The building, designed by the architectural firm Gensler, will feature a 24,000-square-foot green roof; a 50,000-gallon rainwater collection system to be used for landscape irrigation and restrooms; and a chilled water system meant to lower cooling costs.
At completion, the 35-story building will have 754,000 square feet of office space and a 35,000square-foot public space with a restaurant and 9,000-square-foot culinary market called Understory. About 72 percent of the office space is pre-leased.
Aside from Waste Management, Bank of America will occupy 210,000 square feet in the new building. The lease includes space for subsidiaries Merrill Lynch and U.S. Trust. Quantum Energy Partners will occupy the tower’s top floor.
The leasing activity is a testament to the building’s quality and amenities, said CBRE’s Warren Savery, who along with Kristen Rabel, represented Skanska in the lease.
Indeed, new downtown buildings are providing tenants more amenities and services than they had in the past.
Previously, building owners looked to the tunnel or new streetlevel retail projects to help attract tenants.
Now they’re creating some of those things themselves.
“That’s a shift,” Pancioli said. “You have all these self-contained, amenitized buildings that are really changing the landscape of the downtown market. The older buildings are going to have to follow suit.”