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Backfilling a Class AAA Office Tower

The Woodlands Tower at the Waterway – formerly known as the Anadarko Hackett Tower, 9950 Woodloch Forest Drive in The Woodlands is being leased by Colliers International. Image: Colliers International.

THE WOODLANDS – (By Ralph Bivins, Editor of Realty News Report) – A 30-story office tower located 30 miles north of downtown Houston goes vacant.

The analysis template prompts the knee-jerk responses: crisis alert – punch the red emergency button.  

While it’s true that the overall view of the Houston office market shows softness (20 percent vacancy, give or take). And it’s true that the suburban office market has some ugly spots.

But the broad brush doesn’t always paint the true narrative.

Yes, the 30-story tower formerly known as the Anadarko Hackett Tower, is going to be vacated by Occidental Petroleum. However, this won’t be an ugly panic-filled backfill situation.

The 595,854-SF office tower, 9950 Woodloch Forest Drive, has been renamed The Woodlands Tower at the Waterway. Colliers International has been retained to lease the building.

Right off the bat, the owner of the building, the Howard Hughes Corp., has announced it will move its headquarters into the tower later this year.

Howard Hughes Corp. owns develops The Woodlands, Bridgeland, The Woodlands Hills and other master planned communities around the nation, including Summerlin in Las Vegas.

Howard Hughes will occupy around 60,000 SF, perhaps even more in the building formerly known as Anadarko Hackett.

In addition, The Woodlands office market is pretty strong, compared to some other suburban submarkets. The average Class A rental rate is around $40 per SF and almost 400,000 SF of positive absorption was recorded in 2020, according to Colliers.

Yes, there has been some setbacks in the northern suburban office market. For example, in its new building in Springwoods Village, Southwestern Energy dropped 290,000 SF onto the sublease market.

Paul Layne, the Houston real estate veteran who was recently elevated to CEO of Howard Hughes Corp., noted that his firm’s sizable office portfolio in The Woodlands had been 94 percent leased. So having some prime vacant space to lease is not necessarily a horrible fate in Layne’s view. Plus, in Howard Hughes recent acquisition of the Anadarko properties (which also includes the 800,000-SF Anadarko Allison Tower that has been leased by OXY for another 13 years) gave Howard Hughes Corp. ownership of a nine-acre building site fronting Interstate 45, for future office construction.

Bob Parsley, co-chairman and principal of Colliers International in Houston, says his firm is pumped-up about getting the listing to lease the former Anadarko Hackett Tower. Parsley says the building is a Class AAA property that offers an opportunity to lock-down a large block waterfront office space in The Woodlands.

The growth boosters at The Woodlands keep a stiff upper lip about any sign of  shrinkage at OXY, and layoffs have been expected. But on the positive side for Howard Hughes, 255 new homes were sold in The Woodlands for the nine-month period ending Sept. 30, 2019 – almost exactly the same sales total as the comparable period in 2018. The Woodlands, which is located about 27 miles north of downtown Houston, is nearing the end of its lifecycle in single-family construction after decades of new home construction consumed thousands of acres. The Anadarko buildings are the tallest towers between Houston and Dallas.

Realty News Report Editor Ralph Bivins recently received the Gold Award for Best Real Estate Column from the National Association of Real Estate Editors.  

Feb. 25, 2020 Realty News Report Copyright 2020

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