HOUSTON – CBRE, one of the world’s largest commercial real estate firms, is re-drawing its research maps to account for Houston’s “Second Energy Corridor.”
The Second Energy Corridor is developing on the north side of Houston where Exxon Mobil is constructing 20 buildings totaling 3 million sf. Exxon Mobil’s campus, which already has a few buildings operating, is believed to be the nation’s largest private construction project.
A large number of commercial and residential developments are under construction around the 385-acre Exxon Mobil site and in The Woodlands, where Exxon is getting ready to take occupancy on additional 500,000-sf above and beyond its campus office requirements.
“We are proactively planning for the future development expected near the ExxonMobil campus and along Highway 99. The changes allow CBRE to track office development in a meaningful way from day one,” said Angie Bauer-Hamilton, CBRE Research Analyst.
Robust office construction is occurring in Houston, due mainly to a economic expansion spawned by advancements in hydraulic fracturing energy exploration. Oil production in the Permian Basin of West Texas for example, is increasing at a wild pace and this juices the energy business in Houston, known as the Energy Capital of the World.
Houston’s original Energy Corridor, along the Katy Freeway in West Houston has major office facilities from many energy companies big and small and dozens of office projects are under development there. Vacancy in the West Houston Energy Corridor stood at 6.4 percent in the third quarter CBRE reported. But over the last two or three years Class A occupancy in the west Houston Energy Corridor has been at 99 percent or above – and it is a sizable office submarket.
A year ago, CBRE adjusted the boundaries of the west Houston Energy Corridor area to account for the construction boom on the west side.
On the north side of Houston – in the Second Energy Corridor – The Woodlands alone is a formidable submarket with 55 office buildings existing and an additional 900,000 sf under construction.
CBRE explained its restructuring of its North Houston submarkets thusly:
“The continued expansion of Houston’s office market spurred the addition of another submarket, termed North, as well as boundary revisions for the Kingwood and Woodlands submarkets in Q3 2014, according to CBRE Research.
“Houston’s energy sector real estate needs continue transitioning to a campus model, with the latest growth north of the traditional high growth areas in the Inner Loop. Additionally, Houston is adding energy jobs at a faster rate this year than during the same time period last year. CBRE Research suggests this northward movement will likely continue and anticipates distinct trends to appear in each new and revised submarket.
“The continued population growth of Montgomery County and Northwest Houston, coupled with new arteries of mobility linking residential communities to workplace environments is attracting a new set of investors outside of The Woodlands. We are continually impressed with the depth of companies who either want to call North Houston home for a headquarters-like location or simply increase their presence in greater Houston with substantial satellite offices,” said Cody Armbrister, CBRE Executive Vice President.
The North submarket is a result of The Grand Parkway expansion and ExxonMobil’s three-million-square-foot corporate campus development. Other companies are following the population growth in what some are calling the “Second Energy Corridor.” The emerging area is expected to see major growth in the coming years. Buildings in this submarket were reclassified from the Woodlands and FM 1960/Highway 249 submarkets.
The North submarket comprises 12 office buildings totaling approximately 958,000 square feet and is 90 percent occupied. An additional 3.8 million square feet is under construction.
The submarket is between the FM 1960/Highway 249 submarket to the south and the prominent Woodlands submarket to the north.
The Kingwood submarket extended to the north to account for the planned Highway 99 expansion, which will pave the way for additional development, and to the south to include FMC Technologies’ Generation Park under development.
The Kingwood submarket includes 18 office buildings totaling 955,000 square feet and is 87 percentoccupied. Most major tenants in the area are banks.
It is roughly bordered by 1314 on the north, Mount Houston/North Lake Houston Parkway on the south, Lake Houston on the east and Highway 59 on the west. This submarket is a desirable location due to the affluent Kingwood residential section and its close proximity to Houston Bush Intercontinental Airport.
The Woodlands submarket shifted slightly north to define clear boundaries between Interstate 45 north from Sawdust/Rayford Road to Loop 336 West. It includes 55 office buildings totaling nearly 7.1 million square feet and is 92 percent occupied. An additional 826,000 square feet is under construction.”