HOUSTON – Six Houston Center, a proposed downtown skyscraper, is still on the drawing boards, but it’s too soon to start building the new office tower, says the project’s developer, John Goff, chairman of Fort Worth-based Crescent Real Estate Equities.
A few years ago, Crescent proposed to build the 29-story Six Houston Center tower on its block of land on the eastern side of downtown Houston, not far from Discovery Green park. But that was before oil prices crashed and the Houston office market took a tumble.
Office vacancies are rising in downtown Houston as energy firms, such as Shell Oil, have downsized or relocated altogether. The downtown office availability rate has reached 16.5 percent, according to CBRE, which recently said in its year-end report that it could take “three to five years” for downtown vacancy to subside to a normal level. In addition, Hines is completing its 1 million-SF 609 Main tower this month. And Skanska is expected to begin vertical construction this year on its 750,000-SF Capitol Tower, atop the building’s already built foundation, which is about four blocks from the Six Houston Center site.
But Goff, a major investor in the energy industry, says Houstonians shouldn’t get down in the dumps about all of the office space on the sublease market and rising vacancy rates. Good things will happen soon enough, Goff says, when the Permian Basin kicks into high gear.
The Permian Basin in West Texas is a vast resource – an underestimated oil reserve that will energize the Texas economy, especially in Houston, known as the Energy Capital of the World, Goff says.
“The value of the Permian Basin is greater than the entire value of the developed island of Manhattan. I don’t think we fully grasp the impact that’s going to have on the state overall, particularly Houston. With the advent of horizontal drilling and all the fracking processes that have been developed, that basin is now the most valuable in the world. “
Goff has made a number of significant energy investments over the last couple of years while oil prices were down. In one notable play, he loaded up on shares of Resolute Energy, acquiring about 10 percent of the company when its stock was trading about $1 per share. Today, Resolute shares are trading at $46 per share.
“So while Houston has taken a breather, and suffered in the downturn from a real estate perspective, I have been very bullish on oil,” Goff says.
Goff is no stranger to Houston real estate. Crescent developed downtown’s Five Houston Center tower about 15 years ago and at one time, Crescent owned Greenway Plaza and a big stake in The Woodlands.
Crescent’s downtown skyscraper site is a block bounded by Walker, Rusk, Caroline and San Jacinto streets. The 603,000-SF Six Houston Center office tower will be developed there by Crescent someday. But not too soon, Goff says.
“We have no immediate plans (to build the Six Houston tower). We’d need to see a full recovery before we would consider it, “ Goff told Realty News Report in an exclusive interview.
Since Goff’s firm completed Five Houston Center in 2002, the eastern part of downtown has gained a lot of momentum with the development of Discovery Green, the new 1,000-room Marriott Marquis and new multifamily projects, such as Marvy Finger’s One Park Place and 500 Crawford apartments.
“We really like the way downtown has moved (eastward toward the George R. Brown Convention Center) in that direction. That part of downtown has only gotten better. We feel very good about holding that land for the near-term and long-term,” Goff says. “I’m bullish about Houston. Houston is going to be back. It’s just a matter of time.”
Feb. 1, 2017 Realty News Report Copyright 2017