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It’s One Shell of a building, but will giant oil company stay put?

culturemap HOUSTON

January 18th, 2010 at 12:00 AM

A big change may be in store for the first downtown skyscraper developed by the legendary Gerald D. Hines — the 50-story One Shell Plaza in the center of Houston. There’s credible market intelligence indicating that Shell Oil — the namesake tenant of the landmark building — could be moving out, or at least shrinking its presence significantly.

“Shell is clearly talking about downsizing its downtown offices,” says Sanford Criner, executive vice president of the CB Richard Ellis real estate firm.

Houston is the U.S. headquarters of the European energy firm – Royal Dutch Shell, which is based in The Hague. Its Houston workforce totaled 13,000 people last year. A few months ago, Shell announced that it was laying off thousands globally and a significant number of Shell jobs reportedly have been moving from Houston to low-cost labor markets in India and the Philippines.

It’s More Than a Building

One Shell Plaza is a historic place. When it opened in 1971, it was the tallest building in the city and gave notice to the world that Houston was destined to be an important international city with a legitimate claim as Energy Capital of the World.

The Shell skyscraper also launched Gerald Hines toward a career as the premier developer of high-rise office buildings.  Hines Interests, founded in 1957, had been busy in suburban Houston in the 1960s, developing small office buildings on Richmond Avenue and warehouses around town. With One Shell Plaza, Hines stepped into the big leagues. Hines shaped the Houston skyline with its tallest building — the 75-story JP Morgan Chase Tower — and amazing buildings like Pennzoil Place, Bank of America Center and more. Of course, Hines also developed the Galleria, the First Colony master-planned community, and hundreds of other projects around the world. But downtown Houston is the most visible canvas for Hines’ masterworks.

In downtown Houston, Hines also proved that quality architecture could be an excellent investment. Companies like Pennzoil paid top-dollar rents to be in a noteworthy tower with great design. And it all started with One Shell Plaza, a travertine-wrapped tower designed by Skidmore, Owing & Merrill. (Architecture buffs note that Wilson, Morris, Crain & Anderson served as associate architects on the project and Bricker + Cannady handled a massive renovation of the building in the 1990s.)

One Shell Plaza, located at 910 Louisiana, also made the street one of the preferred addresses in downtown. Other developers and corporate tenants wanted to be there. The Shell building is a classic that is still getting accolades. One Shell Plaza, along with its sister property, the 26-story Two Shell Plaza, recently received LEED Gold Certification, recognizing their achievement in sustainability and energy efficiency.

Moving On

Shell, the largest tenant in the 1.6 million square-foot building, couldn’t move out immediately even if it wanted to. Its space is subject to long-term leases and the company might have to find others to sublease its space to avoid a large financial hit.

The Reliant Energy Plaza, 1000 Main St., has been mentioned as a possible location for a downsized Shell. Reliant Energy Plaza has an advanced “trading center” wired with extensive electricity and broadband capacity for dense banks of computers that might be appealing to Shell.

It may be awhile before we hear a definitive word about Shell’s downtown presence. A contraction by Shell would weaken the downtown office market, which is facing higher vacancies and lower rents in the future.

Even if Shell left and One Shell Plaza had to be renamed, it would take a long time for the new name to stick in the local vocabulary. A lot of people still call Hines’ 64-story Williams Tower by the Galleria by its original name – Transco Tower. Letting go of the Shell Plaza name won’t be easy, either.

Even the Cops Grooved With It

A few decades ago, the Houston Police Department employed some officers who had a sore spot against guys with long hair and other suspected hippies. Anytime, you could get pulled over because having long hair and a mustache was “probable cause” for HPD to make a traffic stop. I was in the passenger seat late one night when my slightly shaggy brother-in-law got pulled over in the Montrose area. Even though we were doing nothing wrong, the policeman gave him general hassle, scrutiny and in-depth questioning.

“You expect me to believe you work at One Shell Plaza?” the cop asked my brother-in-law. To prove it, my brother-in-law dug out his Shell Plaza ID badge and the policeman immediately waved us on and we drove away free.

No other office building in Houston had the cachet that even the ordinary patrolmen on-the-beat respected. The common man knew the One Shell Plaza and was proud of it. It was Houston’s tallest and best office tower.
If you lived in Houston in 1971, then you know One Shell Plaza was a big deal. And it still is — with, or without Shell.

Ralph Bivins, former president of the National Association of Real Estate Editors, is editor-in-chief of RealtyNewsReport.com.

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