Brookfield’s Lease in Allen Center

HOUSTON – (Realty News Report) — Moss Adams, LLP, an accounting, consulting, and wealth management firm, has committed to a new lease at One Allen Center, a Brookfield Properties office tower in downtown Houston.

The lease is part of an emerging trend bringing office building tenants to expand and extend the term of leases while the nation’s office market has high vacancy, with the vacancy rate  over 25 percent in Houston.

Under the terms of the new agreement, Moss Adams will relocate within One Allen Center and expand to lease 21,118 SF of contiguous space through 2035. Moss Adams was represented by CBRE’s Kevin Kushner and William Padon. Brookfield Properties was represented by Bubba Harkins, Russell Hodges, and Jessica Ochoa of CBRE.

“Brookfield Properties has a tenured, strong relationship with Moss Adams, and we are pleased that they have decided to recommit and expand their presence at Allen Center,” said Travis Overall, Executive Vice President and Head of the Texas Region for Brookfield Properties.

One Allen Center, 500 Dallas, is part of the Allen Center campus, which contains a total of 3.2 million SF of office space and 50,000 SF of retail. Brookfield Properties also owns the Houston Center complex in downtown.

A few years ago, Brookfield spent $48.5 million for the first phase redevelopment of Allen Center and subsequently spent well over $100 million more in upgrades to other phases of Allen Center, Houston Center and other downtown buildings. The company, a major player in downtown Houston, has never disclosed the full  price tag for its downtown redevelopment program, but its downtown redevelopment budget has been significant.

In March 2021, Brookfield Properties delivered Phase II of the redevelopment program called  Reimagining of Allen Center, which focused on upgrades to Two and Three Allen Center. Renovations to Two Allen Center included a new two-story lobby, a second-floor outdoor terrace overlooking The Acre, and updated retail bays. Renovated elevator cabs, new air handling units, and light fixtures are now featured in both buildings. Thermally efficient glass was installed on the first and second floors at Two and Three Allen Center, as well as the skybridge connection between the two buildings. Brookfield also acquired the adjacent DoubleTree hotel, redeveloped it and rebranded as “C. Baldwin” with affiliation in the Hilton Curio Collection.

The most significant improvement at Allen Center involved the removal of two barriers along Smith Street – a skybridge and exterior berms and old-school landscaping that was off-putting to pedestrians and passersby. It was all part of the urban fortress planning from decades ago when tunnels and skybridges ruled downtowns.

With landscape architecture by OJB – The Office of James Burnett, the outdoor space at Allen Center, which had been an afterthought, became a highlight with the new greenspace. The lawn is bordered by trees. Some trees were retained and 171 new trees were planted. There are tables, chairs and open space for group activities or performances. Brookfield calls it “The Acre.”

Brookfield Properties recently announced that Work & Mother, the fully equipped mother’s suite located in Three Allen Center, is now an included building amenity for Allen Center tenants. The Work & Mother Suite at Allen Center has ten private rooms, each equipped with a hospital-grade pump, milk storage bags, and more. As an additional amenity for employers, the Work & Mother Suite allows tenants to satisfy the Fair Labor Standards Act obligations for employees.

To innovate its offerings, Brookfield Properties also launched a bimonthly Farmers Market series at their downtown campuses (Allen and Houston Centers) in March 2023, with the Smith Street Farmers Market taking over The Acre at Allen Center on the first and third Wednesdays of every month. The markets bring a variety of artisans to the campus with offerings from locally-sourced produce, and grass-fed meat to cold-pressed juice, baked goods, jams, and niche products for downtown workers, tenants, residents, and visitors.

Although vacancy has been going up, leasing activity has been strong in Houston’s office market with approximately 6 million SF leased so far in 2023.

In recent years, when corporate tenants relocate, they often have been downsizing when they sign a new lease. Consider the three largest leases signed in Houston in the second quarter: LyondellBasell’s lease of 318,504 SF in Williams Tower, Fluor Corp.’s lease of 308,186 SF in the Energy Corridor, and Technip’s lease of 171,600 SF in the Energy Corridor. Those three tenants reduced their square footage by 11 percent, 71 percent and 54 percent, respectively, according to Savills.

As companies deal with the remote work trend in the post-Covid era, many office tenants are expected to shed space and reduce their office footprints.

Tenants continue to relocate to higher quality office properties and the pain flows downhill into Class B and C office buildings which grow obsolete.


July 17, 2023 Realty New Report Copyright 2023

Photo: Allen Center in downtown Houston. Photo by Peter Molick, courtesy of Brookfield Properties.

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File: Brookfield’s Lease in Allen Center

 

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