After Selling Exxon Building, Shorenstein has Another Sale Working

HOUSTON – (Realty News Report) – Shorenstein Properties recently sold the long-vacant, 45-story Exxon/Humble Oil tower in downtown Houston for a conversion to multifamily.

Shorenstein bought the Exxon tower for $50 million in 2013, then sold it for about $25 million at the end of 2022.

Now, San Francisco-based Shorenstein has another major disposition in the works. It’s in downtown Los Angeles and it could be a bit painful, too.

In 2014, Shorenstein bought the 62-story AON Center office tower on Wilshire Boulevard in Los Angeles from Beacon Capital Partners for $271 million or $244 per SF.

Now Shorenstein is trying to sell the AON Center building. It’s expected to draw bids around $220 million or about $50 million less than what Shorenstein paid for it, according to Real Estate Alert.

In Houston, the sale of the skyscraper that is the former headquarters of Humble Oil, a predecessor to Exxon, is expected to be converted from office to residential – a redevelopment that could supercharge downtown revitalization.

The 1.2 million-SF Exxon tower, 800 Bell, was completed about 60 years ago. Photo: CAL-pix copyright 2023

The 1.2 million-SF building, located at 800 Bell, has been empty since the oil company relocated to its new campus about eight years ago.

The buyer of the Exxon tower, a New York investment group affiliated with CMI Developers, has experience in historic redevelopment and apartment conversions.  The tower was completed in 1962. The age and prominence of the Exxon building might enable the developers to obtain tax credits designated for redeveloping historic buildings.

When the Exxon tower opened it was considered the tallest building west of the Mississippi River. At one time the top two floors of the building were the home of the Petroleum Club, a place where thousands of oil and gas plays were discussed and deals were struck.

The large scale of the Exxon tower raises the opportunity for placing a significant amount of retail or restaurants in the lower levels of the building, located between Milam and Travis. The old Exxon parking garage, located nearby, comes with the deal. A number of surface parking lots, owned by others, are located in the area, carrying the potential for new development in the neighborhood.

In 2013, Shorenstein Properties of San Francisco paid about $50 million to acquire the Exxon building, for a redevelopment. As part of the deal, Exxon Mobil agreed to lease-back the entire building until 2015, when the energy firm relocated its employees to its new 385-acre corporate campus in northern Harris County.

When Shorenstein bought the Exxon building, Houston’s office market was soaring because fracking created a renewed surge in the oil business. But oil prices took a nosedive in 2015 and Houston office vacancy escalated at a frightening pace as energy firms shed excess office space.

Houston’s office vacancy persisted for years. Covid hit. Downtown office vacancy is now approaching 26 percent, according to Jones Lang LaSalle. The hopes of revitalizing the Exxon building as office space faded. Today’s office market is particularly tough because new office buildings are chosen by corporate tenants who desire modern accoutrements and amenities for their employees.

So last year, Shorenstein retained JLL Capital Markets’ Jeff Hollinden and Rick Goings to sell the property. In 2021, Hollinden and Goings had handled the sale of Shorenstein’s 28-story Five Post Oak Park office tower in Houston’s Inner Loop. The Exxon building’s sales price could not be determined, but there has been speculation in the real estate community that the eventual price of 800 Bell would come in around $25 million, or about half of what Shorenstein paid for it years ago. The sale closed at the-end of 2022.

Importantly, the Exxon building is located about five blocks north of the Pierce Elevated freeway. The Pierce Elevated freeway is expected to be re-routed and removed someday, according to the controversial Texas Department of Transportation plan for Interstate 45 and the downtown freeway network. Both projects – the removal of the Pierce Elevated and the 800 Bell redo – would provide significant momentum in the southern end of downtown.

The Exxon building, designed by Welton Becket & Associates, is known for its “fins” which protrude from the building’s exterior to provide shade from the sun.

Jan. 24, 2023. Realty News Report Copyright 2023

Photos credit: CALpix Copyright 2023


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