Redo Unveiled for 600,000 SF Chunk of Vacancy

HOUSTON – (Realty News Report) – Since 1983, Marathon Oil has been the namesake tenant of a 41-story skyscraper near Houston’s Galleria area.

But Marathon Oil will be moving out soon, heading westward to its new headquarters building, which is under construction near City Centre.

So that means the Marathon Oil Tower is getting a new name. And the oil company, which occupied about 62 percent of the 1.2 million-SF building, is leaving behind one of the biggest chunks of vacant office space in Texas.

Beginning in 2022, 21 contiguous floors totaling 600,000 SF of office space will be available for lease.

Rebranded as 5555 San Felipe, the office building bravely addresses the future – and indeed, fortitude is required to operate in Houston’s office market, which reportedly has the highest vacancy rate in the nation. The availability rate is around 25 percent.

The owner of the suburban skyscraper – M-M Properties – have spent heavily to complete a $15 million interior renovation.

“We were able to collaborate with M-M Properties throughout the redesign process and the result is a truly stunning office tower that exceeds all expectations,” said John Spafford, an Executive Vice President with CBRE, which is leasing the tower. “Tenants don’t need to leave the building to take advantage of all of the upscale amenities, but if they do, they’re right in the middle of Uptown with convenient proximity to some of the best restaurants, retail and hotels in our region.”

In 2018, M-M Properties acquired the tower for $175 million, or approximately $146 per SF. It was no secret that Marathon Oil’s lease would expire in 2021.

In fact, M-M Properties founder and CEO Ken Moczulski, knew that the 38-year-old building would require a redo to maintain Class A status at the top of office market food chain. Moczulski, a Harvard MBA grad, worked for Hines Interests for eight years and was chief investment officer at Crescent Real Estate Equities, before launching M-M Properties.

M-M Properties acquired the office tower in 2018 with a vision of rebuilding the tenant experience from the ground up. “The renovation addresses evolving tenant expectations for amenities suited to the social nature of today’s workforce,” Moczulski said when the renovation was started in 2019. “Creative employers require environments that strike a balance between workspace and hospitality. To respond to that demand we employ design thinking on every project we own to align the amenities, programming, aesthetic and services we provide.”

M-M retained the Page architecture firm to tackle the redesign and renovations.

Numerous key upgrades were made to the tower to transform it into an essentially new building, creating a modern and sustainable destination workplace designed to meet the demands of an evolving workforce today and tomorrow. Upgrades include three full floors of curated amenities including:

  • The redesigned lobby lounge includes a coffee bar, new collaborative seating areas, a large media wall, Wi-Fi, and curated art pieces from national artist Margo Wolowiec and international artist Michael Pendry.
  • Café 5555 is a chef-driven, food-hall style café on the first floor of the building that offers remote ordering capabilities as well as full-service catering and event planning.
  • Fit 5555 is a full-service fitness center on the third floor complete with a resort-style locker rooms, state-of-the-art fitness equipment, and personal trainers and group fitness classes.

Still to come is a new freestanding restaurant space to be located on the east lawn of the building, which is located between Yorktown and St. James streets. .CBRE’s Bruce Wallace and Radkey Jolink are leasing the restaurant venue, expected to be about 5,000 SF.

CBRE’s John SpaffordElliott Hirshfeld and Madeline Gregory are the exclusive office leasing representatives for 5555 San Felipe. The building is located between Chimney Rock and Sage roads.

The First Fruits

The building upgrades have already prompted new office leases. Serendipity Labs, a flexible workplace provider, signed a lease for 28,000-SF and will occupy the entire 20th floor of the building. lease.

M-M Properites oversees a portfolio of 29 million square feet of office projects and 17,000 multifamily units.

The Houston-based firm is also busy redeveloping its 56-story TC Energy Center in downtown Houston. Designed by Philip Johnson and John Burgee, the landmark tower, 700 Louisiana, had been known as Bank of America Center.

Marathon’s Future Home

Marathon Oil’s new headquarters building, a 440,000-SF project, is under construction on the south side of the Katy Freeway at Beltway 8. Hines is developing as a build-to-suit with Marathon taking the entire building.

The new project has been referred to as the “One MRO” building, a name derived from its “MRO” ticker symbol on the New York Stock Exchange. Its stock hit $14.03 a share on Wednesday, a 52-week high.

In early 2020, before the Covid hit, Marathon was telling employs that the move-in date would be in the second half of 2021.

 June 3, 2021 Realty News Report Copyright 2021

Photo:s Courtesy  CBRE

For more about Texas development, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up  by Ralph Bivins. Available on Amazon  

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