HOUSTON – Skanska USA’s Capitol Tower will make its appearance on Houston’s downtown skyline in record time, perhaps with building being completed before the start of 2019.
Work appears to be starting now on the 35-story, 750,000-SF tower. Construction cranes have been erected, a sure sign Skanska is serious.
Typically, a 35-story office tower will take two years to complete. But Skanska poured the foundation for the building in August 2015, just before oil prices took a nosedive and took the Houston office market down with it. A parking garage also has been completed on the Skanska site, bounded by Capitol, Rusk, Milam and Travis streets.
So instead of waiting two years for the building to be finished, the Capitol Tower could be finished with “core and shell” construction in 18 months.
We asked the hypothetical question to Michael G. Scheurich, CEO of Arch-Con Construction of Houston. “On a 35-story building with the excavation and foundation work done, I would say you are saving four to six months,” says Scheurich.
Why does this matter?
The Houston office market is in recovery right now. Houston has the highest office vacancy rate (21.5 percent) in the nation, according to a recent report by Marcus & Millichap. Houston leads the nation in sublease office supply – over 11 million SF, CBRE reports.
So with Skanska’s new building hitting the market, the supply of downtown space will be even more bloated. And Skanska’s tower is coming quickly.
Several large downtown tenants, including Bank of America and Vinson & Elkins, are reportedly looking for space in a new building, such as Skanska’s new tower. If they move, they will leave behind sizable blocks of empty office space.
Even as activity intensifies on its downtown site, Skanska’s PR department is not particularly verbose. Asked for an update at the end of last week, Skanska only recycled its statement from earlier in March.
“The mobilization of equipment at the Capitol Tower site signals our optimism that the marketplace will present new opportunities for the project as we move through 2017,” says Beth Miller, head of communications for Skanska USA Commercial, in a prepared statement. “We have had interest from a variety of prospective tenants drawn by the appeal of Capitol Tower’s distinctive offerings and premier downtown location, so we hope to begin construction in the near future.”
Erecting construction cranes on a job site is no minor line item.
Renting and operating a construction crane costs about $45,000 a month, or about $675,000 for 15 months of use on a typical office tower job site, says Scheurich of Arch-Con.
Even without the operating labor and power costs, the recently erected construction cranes on Skanska’s site will cost more than $100,000 a month.
So we go back to Scheurich for another hypothetical question and answer. “The arrival of a crane is a definite sign that construction is preparing to start. Due to the cost of a crane, we never want a crane sitting on the project,” he says. “You want that crane operating every day and the minute you don’t need it, it goes down.”
Although there is no official statement, it’s fair to speculate that a big tenant has been signed and construction is beginning on Capitol Tower. The time clock is running.
Ready or not, Houston is getting another skyscraper. And it’s coming fast.
April 5, 2017 Realty News Report Copyright 2017