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Houston Chronicle: Energetic growth ahead: Real estate

Nancy Sarnoff, 
Published: May 23, 2007

Office towers under construction along the western part of Interstate 10 reflect the strength of the city’s energy-centric economy.

While this part of town, known as the Energy Corridor, might not experience the same kind of growth spurt it’s seen over the past couple of years, a new study predicts a healthy expansion through 2025.

More than $1.6 billion worth of office, retail, apartments and hotels have been under construction or planned since 2005, according to the Energy Corridor District.

“No place has as much development going on than the Energy Corridor when you look at office, residential, retail,” said David Hightower of Houston land developer Wolff Cos. and president of the board of the management district, which released the results of a study on Tuesday projecting the future uses of the area’s undeveloped land, as well as residential and employment growth through 2025.

The CDS Market Research report says that office development will grow by more than a third and retail space will increase by more than half over the next 18 years.

“I think that’s conservative,” said Clark Martinson, general manager of the district, which covers both sides of Interstate 10 from around Kirkwood to just beyond Barker-Cypress and south along Eldridge Parkway north of Westheimer.

A portion of the office development will be fueled by energy companies.

Top oil and natural gas firms that helped pioneer this western corridor are expanding their corporate campuses after years of standing still.

Shell has a new office building under way north of I-10, and BP is building one on the south side of the freeway where its sprawling campus has earned the nickname “BP World.”

“You’ve got three 1,000-pound gorillas out there,” said Ford Hubbard, marketing director of the HOK architecture firm, referring to Shell, BP and ConocoPhillips.

Those companies helped shape this area, which dates back more than 30 years when the Park Ten business park was developed and Shell and Conoco started building offices there.

Companies moved to the area because of its cheap and abundant land, as well as its proximity to growing residential communities.

With recruitment and retention being key factors in today’s energy industry, these campus environments are being expanded with fitness centers, large cafeterias and other employee perks.

Until recently, there was little new development here as energy companies were conservative about taking more space.

But in the first quarter, office occupancy for top-quality buildings hit 95.8 percent in the Energy Corridor and 92.8 percent for all properties, according to CB Richard Ellis.

Developers recently started buildings even before they had tenants to occupy them.

Trammell Crow Co., developer of the 330,000-square-foot Energy Center, still has not signed a lease in the building. But it’s planning a second phase.

“There’s been a tremendous amount of interest in both buildings,” Aaron Thielhorn of Trammell Crow said.

Most of the single-family housing in this area spans beyond the Energy Corridor’s tight boundaries.

According to the study, much of the residential growth will come from apartment development.

Several new complexes are in the works, as developers bet on energy-driven employment growth. Office jobs will grow by about 42 percent through 2025, according to the report.

“We want to be close to the employment,” said Rick Craig, a partner in development firm Simmons Vedder, which just started building 300 apartments at the southeast corner of Briar Forest and Eldridge.

The company is planning a second phase just as big.

Growth in the area has affected development even further west.

Developer Doug Simpkins, who recently invested in more than 200 acres near the Katy Mills Mall, said he wouldn’t have bought the land had it not been for the booming Energy Corridor and new residential communities.

“It’s directly in the path of that growth taking place out there,” Simpkins said.

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johnadonovan wrote:

If Shell and BP merge, as seems possible given recent market speculation, one of the new office buildings will end up vacant.

Posted by John Donovan of www.royaldutchshellplc.com

http://www.chron.com/disp/story.mpl/headline/biz/4828041.html

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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