Real Estate Forum - April 2013

NEWS FRONT
The Woodlands: A 40-Year, Overnight Success Story

THE WOODLANDS, TX—In 1974, businessman and oilman George P. Mitchell presided over the grand opening of the Woodlands, a 2,800-acre master-planned community approximately 30 miles north of Houston. Mitchell’s brainchild has always been a good representation of a quiet bedroom community. Yet seemingly overnight, the Woodlands has attracted the interest of commercial real estate investors, developers and office tenants.

A good example of such an entity is Anadarko Petroleum Co., which built the first tall tower in the Woodlands and based its headquarters there. This year, the oil company plans an expansion of approximately 550,000 square feet to be added to the existing headquarters facility.

US Oncology (bought by McKesson), Chevron Phillips and Waste Management also took space in the Woodlands throughout the late 1990s and 2000s. Then, when Exxon Mobil Corp. announced in 2011

that it would develop a 385-acre corporate campus just south of the Woodlands near Interstate 45 and the Hardy Toll Road, “that truly put the world’s focus on what was going on out there,” says Robert S. Parsley, co-chairman and principal with Colliers International’s Houston office.

Experts say that although the Exxon Mobil campus is the catalyst, interest has been strong in the Woodlands for years.

“What happened, for years, is that the Woodlands was always that place that was way up north from Houston,” Parsley explains. However, as the Houston metro region continued its relentless march north along I- 45, things filled in. As a result, “that same drive doesn’t seem quite as far as it used to be,” observes Parsley, who handles leasing on behalf of the Woodlands Development Corp.

But office space is not exactly plentiful in
the Woodlands. It’s not surprising for an
office building to come on line and to be
immediately leased up. And, unlike in other
Houston submarkets, office development is
constrained in the Woodlands, to prevent
overbuilding. Even since Howard Hughes
Corp. acquired ownership of the Woodlands
in 2011, development has been slow, mea-
sured and steady. This is on purpose,
according to Alex Sutton, co-president of
the Woodlands Development Corp., which
has oversight of the master-planned com-
munity. “The architectural requirements
and restrictions have been a major piece in
creating the value here,” he adds.

Business Is Booming in Houston

The nation’s fourth largest city proved a survivor of the economic downtown that crippled many parts of the country. These days, Houston is experiencing an economic boom resulting in new developments and renovations by welcomed investors, major corporations investing in new headquarters and increased job growth.

Already known as an international gateway market, Houston recently claimed its spot for the first time as a top five global city in an annual survey by the Association of Foreign Investors in Real Estate. International companies are flocking to our nation’s energy hub and the region boasts the US’ highest concentration of energy-related companies. Houston is the core of a central support system for energy, oil and gas industry tycoons. According to a recent research report from Stream Realty Partners, $120 billion in oil and gas infrastructure is budgeted for the Gulf Coast by 2016, specifically in refineries, pipelines, and export terminals, with $48 billion planned for Gulf Coast refineries to accommodate an influx of liquefied natural gas.

All of this activity is creating an influx of demand for class A office space in Houston from international and domestic companies. In the heart of the city sits Uptown Houston, a prestigious area flanked by Memorial Park and the Galleria. Soaring office buildings and elegant high-rise residences merge together with high-end retail and restaurants to create a unique urban environment that attracts international business professionals.

Uptown boasts more than 19 million square feet of investment-
grade office space, making it one of the largest business districts
in the country. The newest addition to the Uptown/Galleria
office district is an iconic, modern office tower at 2200 Post Oak
Blvd., also known as BBVA Compass Plaza. The project, which
opens this spring, is the first new office tower in Houston’s
Galleria area since the mid-1980s. Being developed by a joint
venture of Stream Realty Partners and the Redstone Cos., the
22-story, 318,189-square-foot property is being built to LEED
Gold standards and is on target to open this month.

The column was written collectively by the staff at Stream Realty Partners, based in Dallas with offices throughout the Southwest. The firm may be contacted at info@streamrealty.com. The views expressed here are the authors’ own.