NRG moving offices into One Shell Plaza
Consolidation of downtown offices will be city’s largest sublease deal since oil slump began two years ago
NRG Energy will move its downtown offices into more than 18 floors of One Shell Plaza as part of the city’s largest sublease deal since the oil slump began more than two years ago.
NRG Energy will move its downtown offices into more than 18 floors of One Shell Plaza as part of the city’s largest sublease deal since the oil slump began more than two years ago.
The move will begin next spring and place all of NRG’s downtown employees under one roof, senior vice president of administration Jennifer Wallace said Wednesday. It will consolidate workers from three other buildings.
The merchant power company will vacate its Houston headquarters at GreenStreet, where more than 1,500 employees work, and space at 1000 Main and 1300 Main. NRG maintains a second headquarters in Princeton, N.J.
The move into 431,307 square feet in One Shell Plaza could be one of Houston’s biggest sublease deals ever, added lawyer Pat Sharkey of Jackson Walker, who worked on the deal on behalf of NRG. It comes at a time when vacancy rates in Houston are reaching levels not seen since the 1980s oil bust. A report earlier this month found more than a fifth of Houston office space, about 46.7 million square feet, is empty — the highest rate among the nation’s 20 biggest cities.
The deal far eclipses the previous biggest recent sublease by Breitburn Energy of 109,476 square feet at downtown’s Heritage Plaza, commercial real estate firm Transwestern said.
The One Shell Plaza deal will run through Dec. 31, 2025, when Shell Oil Co.’s lease there expires.
Shell has put a substantial portion of its namesake building at 910 Louisiana on the sublease market as it consolidates offices in west Houston. Shell, which leases about 800,000 square feet at One Shell Plaza, anticipates being out of the
building by year-end.
Shell spokeswoman Natalie Gunnell said the oil giant will maintain 9,800 employees in Houston.
Naming rights to the building were not part of the sublease deal.
NRG occupies the 11-story office tower at 1201 Fannin in GreenStreet, but project owners Midway and Lionstone were not able to not able to meet NRG’s new space requirements for the consolidation. They said NRG will maintain a presence in GreenStreet until 2019 and then sublease the space until its lease expires at the end of 2020.
“We are pleased NRG will stay downtown, and we wish them continued success,” Midway and Lionstone said in a joint statement.
The sublease at 910 Louisiana took at least three months to complete, with parties from Busycon Properties, Hines, Colvill Office Properties, Cushman & Wakefield, Jackson Walker, NRG and Shell working on the deal.
“They were able to consolidate all those by pulling all the landlords of all the buildings together to get them to work in a unified manner to facilitate the consolidation of NRG employees into One Shell,” Sharkey said.
The building, owned by Busycon Properties, is 98 percent leased.
Earlier this week, law firm Porter Hedges, a longtime tenant of NRG at 1000 Main, announced through the firm’s real estate broker that it had switched its sublease from NRG to the building’s landlord.
Last month, NRG announced it plans to divest up to $4 billion in assets. In early August, the company began nationwide layoffs, although it would not disclose how many people lost their jobs.
NRG said the planned office move is unrelated to the downsizing.
Sharkey and Amanda Sheneman of Jackson Walker advised NRG on the sublease deal along with in-house lawyer Scott Thomas. Chris Oliver and Trey Strake of Cushman & Wakefield represented NRG in the sublease. Tim Relyea, Joe Peddie and Morgan Relyea with Cushman & Wakefield represented Shell.
The deal paves the way for more physical changes at GreenStreet. Owners Lionstone and Midway contracted Gensler and Streetsense to help design the interior and exterior renovations for the four-block-long development.