Devon’s planned departure a down note for downtown
The downtown office market was knocked down a notch last week as Devon Energy announced it was leaving town and vacating Allen Center.
Devon, which grewto be one of downtown’s biggest tenants, leases about 560,000 square feet in the office complex. Most of it is in TwoAllen Center — also known as Devon Energy Tower. At its peak, the company leased about 880,000 square feet there.
While the vacancy is “meaningful,” it isn’t likely to have a serious effect on overall occupancy or lease rates, said Sanford Criner, executive vice president of CBRE in Houston.
Rents downtown have been on an upswing, but demand for space hasn’t been as strong as in west Houston.
“It’s a landlord’s market to an extent, but not to an extreme,” said Laura Van Ness, director of business development for Central Houston.
New office leases during the third quarter were mostlymid- sized deals in the legal and energy industry, CBRE says.
Devon is closing its Houston office and moving the jobs to its Oklahoma City headquarters. Themove is expected to be complete by the end of next year’s first quarter.
The company has about seven years left on its downtown lease, so Devon will likely be looking for companies to sublease the space.
With Devon gone, Two Allen Center will be about 50 percent vacant.
While landlord Brookfield Office Properties will still be receiving revenue until the lease expires, it may also have to compete with Devon for tenants on other space the real estate firm is trying to lease at Allen Center.
Brookfield is marketing about 320,000 square feet of space in Three Allen Center where Hess Corp. was a tenant before moving to a new building on the east end of downtown.
“That’s our biggest focus right now,” said Paul Frazier, Brookfield’s senior vice president for theHouston region. “With market conditions theway they are, we’re optimistic we’ll get it leased.”
Cafe Adobe tomove
Houston- based Hines has purchased the property housing Cafe Adobe, the institutional River Oaks- area hangout at 2111 Westheimer.
The developer is planning an upscale apartment complex on the site that will be “in keeping with the character of the fun River Oaks/ Montrose neighborhood,” spokesman George Lancaster said last week.
Cafe Adobe announced the sale last week with news that partner Bob Borochoff had bought out all of the original investors in the business. The Hines sale also included the adjacent parking lot.
Borochoff said the restaurant will continue to operate until next year when it will relocate to a new site in the same area. Cafe Adobe has three other Houston locations.
Hines, which would not release details on the proposed project, is participating in a growing trend of building high- end rental units in densely populated areas.
There are about 12,000 apartment units under construction and 7,000 of those are in three areas: Montrose/ Museum District, Inner LoopWest, and the Galleria, according to Ryan Epstein, a multifamily executive with CBRE. “We need the product,” he said.
Developers aren’t having to offer deals or concessions. He noted that at one recently completed property, 50 units a month are being leased. The baseline for a normal market would be about 25 units amonth.
Pick a door, either door
Visitors arriving at Village Builders’ newmodel home in Cinco Ranch might think they’re seeing double, but they’re not. The front of the house has two doors.
Themodel is a new line targetingmultigenerational families.
The 2,800- square foot house includes a separate suite about a fifth the size.
The suite is like an upscale apartment. It has a living area, bedroom, bathroom and kitchen. It also has an exterior entrance as well as a door that opens into the foyer of the main home.
The “NextGen” homes, as they’re called, are priced in themid$ 300,000s.
Lennar, owner of Village Builders, said the still- shaky U. S. economy contributed to its decision to roll out the new line. The idea is that homes givemultiple family members the chance to share a mortgage.
But with the local economy and housing
INDIVIDUALLENDERRATES
Themortgage interest rate list represents a sampling of rates quoted by lenders in the Houston market Friday. Rates, whichmay changeMonday, are for 90 percent loans and do not include origination fees. The numbers in parentheses after the rates are discount points. A point is equal to 1 percent of the loan amount. market outperforming the nation, the company is targeting those with a multigenerational lifestyle preference in Houston.
This type of living, the company said, is more common in Asian and Hispanic communities, but it’s growing across the board. The Pew Research Center reported that 49 million Americans are living in a household with at least two adult generations. That’s up from 28 million in 1980.