The asset’s architecture allows
for tenants to reap the benefits
of natural lighting. Shown are a
through-floor access (left) and
a tenant’s boardroom.
ity upgrades that aim to retain and attract tenants. Pennzoil Place
has invested more than $9 million to upgrade the 36-year-old
building, from lighting retrofits and building automation systems
to installation of a fiber backbone that gives it a technological
advantage against even the newest buildings in the market.
“We made these upgrades because they needed to be done,”
says Ben Quinton, a senior property manager at Tranwestern
who works at Pennzoil Place. “The old systems were ineffective
and inefficient. But we also made this investment to make this
building more marketable and keep vacancy to a minimum
when Shell exits.”
Developed by Hines, Pennzoil Place has historically per-
formed well in the local office market. The asset stands out in
the Downtown Houston skyline with its two 36-story trapezoidal
towers, which sport dark bronze-tinted glass and a 115-foot-
high glass-enclosed courtyard between them. New York Times
architecture critic Ada Louise Huxtable dubbed Pennzoil Place
the Building of the Decade in 1975 because of its dramatic
The facility has 44 tenants, including Pennzoil: Bracewell &
Patterson; Akin, Gump; Baker McKenzie; Protiviti; Bearing
Point; and Cheniere. Less than 20,000 square feet of office
space remains available to rent, a figure that pencils out to an
impressive 99.2% occupancy. Although demand for Houston
office space should remain healthy, more anticipated consolidation—and new building construction—will increase competition
in the years ahead.
The Oil Patch’s office-market recovery has so far defied
most of the nation, fueled by above-average job creation and
limited new supply. According to Marcus & Millichap’s third-quarter report, Houston is among the tightest markets in the
nation, with a 13.9% vacancy predicted by the end of 2012.
Class A office in the urban core is in excess of 90% occupied,
but M&M predicts corporate relocations from leased space to
build-to-suit properties will hamper the pace of recovery over
the next few quarters.
In addition to multiple build-to-suits, the firm reports that the
pipeline of planned projects has grown to include 13 million
square feet of competitive office space. The Energy Corridor
and Westchase area account for about 40% of that total. With
its investments in a fiber-optic backbone to optimize building
system controls, security monitoring, automated climate regula-
tion, maintenance operations and lighting management,
Pennzoil Place is ready to compete.