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In the Wake of Exxon Mobil’s Departure: Pain Felt; Patience Required

HOUSTON – (By Ralph Bivins) – On June 7, 2011, Exxon Mobil formally announced what Houston’s real estate community already knew – the energy firm purchased 385 acres for a 3 million square-foot campus north of Houston.

Everybody knew the new campus would reshape the Houston real estate market.

But the Houston real estate market was so strong, there wasn’t much talk about the potential downside. Exxon Mobil occupied millions of square feet of office space in the Energy Capital of the World and most folks assumed other companies would rush to get the office space that Exxon Mobil was abandoning. But that was before oil prices crashed.

Now that Houston’s office market has taken a tumble and the remnant of Exxon Mobil’s real estate holdings don’t gleam so much anymore.

Greenspoint, a business district near Bush Airport, suffered as Exxon Mobil vacated 2 million square feet to move to the near campus. The vacancy rate for the entire Greenspoint submarket soared. And now Greenspoint Place, a 1.5 million square foot office project owned by Hines and General Motors Pension Fund, says it is letting the project go into foreclosure on July 5.

In downtown Houston, Exxon Mobil sold its 45-story skyscraper to Shorenstein Properties for $50 million. Shorenstein commissioned Ziegler Cooper Architects to create redevelopment plan for the building, which was constructed in 1962 at 800 Bell. But the plan has been put on hold until the Houston office market recovers.

In Northwest Houston, the 24-acre Exxon Mobil Brookhollow campus did not sell so quickly. At one time, some had wildly speculated that the Brookhollow campus, located near the intersection of Highway 290 and Dacoma Street, would sell for $40 million. It finally sold for $11 million this spring to a partnership affiliated with Houston real estate investor Khaled Salem of Williamsburg Enterprises and Alan Hassenflu of Fidelis Realty Partners. The site may be redeveloped for retail use.

In the Energy Corridor in West Houston, ExxonMobil Chemical’s 35-acre office campus on the south side of Interstate 10, adjacent to Terry Hershey Park was sold to Third Palm Capital for $72 million. Third Palm, an affiliate of Dart Enterprises of the Cayman Islands, had an ambitious plan to develop a 2.6 million-SF mixed-use project called Republic Square there. But the new development is now on-hold and Third Palm is going to transform an existing building on the site to co-working office space.

The real winner in the Exxon Mobil move was North Houston, where there’s been considerable growth.

The 1,800-acre Springwoods Village where the Exxon Mobil campus is located, mushroomed with new construction. And the new leg of the Grand Parkway near Exxon Mobil has opened up huge swaths of North Houston for future development.

But with the downturn in the energy industry and Houston’s softer office market, the real estate Exxon Mobil left behind has been problematic for some and taxed the patience of others.

June 19, 2016

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