Third Palm Planning Co-Working Space in Energy Corridor as Need for Republic Square Office Space Dims

HOUSTON – Third Palm Capital is preparing to move ahead independently with its repositioning of the former Exxon Chemical campus, a prime, 35-acre site on the Katy Freeway in the Energy Corridor.

The new plan calls for transforming existing office space on the site into a co-working location where self-employed people and small entrepreneurs share office space. The existing conference center will be reopened for public use.

Third Palm, which is controlled by Dart Enterprises, a Cayman Islands firm, announced plans in early 2015 for a major mixed-use project called Republic Square. But that was before oil prices took a rapid nosedive and derailed a number of projects in the Energy Corridor.

Third Palm Capital spokesman Tony Wilbert said an update to the Republic Square repositioning will be unveiled later this summer.

“We aren’t ready to make any statements about Republic Square at this time,” Wilbert said.

The Exxon Chemical campus was one of several Exxon Mobil properties that came on the market in Houston when the energy firm relocated to a new 385-acre campus in north Houston.

Exxon Mobil retained HFF to market the Exxon Chemical facility it vacated and the site was sold for more than $70 million. It covers some 35.2 acres with frontage on Interstate 10 and Memorial Drive, bordering Terry Hershey Park.

The long-range plan – when completed in a decade or so – calls for the Republic Square to include 2.6 million square feet of office space, 100,000 square-feet of retail and restaurant space, two hotels and 800 multifamily residential units.

Designed with New Urbanism principles, a top drawer design team was assembled: Elkus Manfredi Architects, Pickard Chilton, Kirksey and Sasaki Associates.

Houston-based PM Realty Group was tapped manage the development. Cameron Graham, executive vice president of Third Palm, said in an interview last year that PRMG has no ownership stake in the project, contrary to other news reports.

But it may be a long time before the Energy Corridor office market is ready for more office space. Vacancy has risen sharply over the last year or two in the Energy Corridor.

Transwestern reports some 4 million square feet of office space is available in the Energy Corridor and another 1.2 million is under construction.

ConocoPhillips, for example, has not occupied the 22-story Energy Corridor building it recently completed near the Republic Square site. It just put the entire building up for sublease.

The supply of sublease office space in Houston has expanded to 10 million square feet and it will get even bigger before the end of the year.

So the Energy Corridor, where Class A office space was almost 99 percent occupied three years ago, has taken a fast fall. Almost as fast as oil fell from $100 a barrel two years ago to less than $30 in early 2016.

June 16, 2016