HOUSTON – Greenspoint Place, a 1.5 million square foot office complex owned by a partnership of Hines and the General Motors Pension Fund, has been posted for foreclosure after losing Exxon Mobil as a major tenant.
The foreclosure, slated to be concluded on July 5, is a rarity for Hines, a huge Houston-based development firm established by master developer Gerald D. Hines in 1957.
Hines departure is another stain on the Greenspoint area, a north Houston submarket with 13 million square feet of office space that also faces issues with an aging regional mall and underperforming multifamily.
Owned by Hines and the GM pension fund since the 1990s, Greenspoint Place is a six-building, 1.5 million-SF office complex, originally developed by Friendswood Development, which was the real estate arm of Exxon years ago.
The Greenspoint area, located near Beltway 8 and the Bush Airport, suffered when Exxon Mobil departed for its new campus near The Woodlands, leaving behind 2 million SF of vacant space.
“Exxon, the major tenant at Greenspoint Place, is transitioning out of the campus, bringing the property’s occupancy below 40 percent,” Hines said in a prepared statement. “Considering the average occupancy rate in this depressed (Greenspoint) submarket is only about 50 percent, due largely to the fact the energy market is hurting, ownership of the asset will be turned over to the lender.”
Hines said returning Greenspoint Place to the lender, Northwestern Mutual Life Insurance Co., was a solution reached jointly by Hines, General Motors Pension Fund and Northwestern Mutual.
In June, 2011, when Exxon Mobil announced that it was building a 385-acre campus north of Houston, it was apparent that the move would have major aftershocks across the entire Houston real estate market.
In Greenspoint, ExxonMobil’s departure was particularly painful. The energy firm left 2 million SF of office space behind.
The Greenspoint office was exceptionally tight only three years ago. Oil was booming. Greenspoint’s Class A office vacancy was a microscopic 3.4 percent. But oil prices crashed, ExxonMobil began moving out and vacancy has shot up beyond 30 percent, according to CBRE. The Greenspoint submarket has the highest vacancy rate in Houston.
In 2015, Hines spent several million to upgrade Greenspoint Place, adding a state-of-the-art conference center and a 7,000-SF fitness center. But the outgoing tide was too powerful.
ExxonMobil was not the only firm to leave Greenspoint. Last year, Southwestern Energy moved its headquarters to far north Houston, leaving behind 250,000 SF of vacant space in Greenspoint. FMC Technologies is vacating another 250,000 SF with its move to Generation Park.
Then, American Bureau of Shipping recently announced it was leaving Greenspoint Place for another new building which will be built near the new Exxon Mobil campus.
Losing powerhouse companies like Hines and Exxon Mobil, doesn’t make things any easier for Greenspoint boosters. The challenges facing Greenspoint are formidable.
June 15, 2016
Realty News Report is a Texas-based publication.