Behringer Harvard Scores Big Lease Deals in Chicago, Houston, San Fran
- Aug 19, 2011
August 19, 2011
By Barbra Murray, Contributing Editor
Big office lease agreements are no longer a thing of the past — in certain areas. Behringer Harvard has secured renewed commitments and new leases totaling nearly 560,000 square feet at three of its office properties in the leading markets of Chicago, Houston and suburban San Francisco.
At 222 S. Riverside Plaza, the 1.2 million-square-foot Chicago property Behringer Harvard has owned since 2006, the real estate investment company signed Fifth Third Bank to a lease extension and expansion resulting in the bank’s commitment to stick around until March 2024 in larger digs totaling 218,100 square feet.
In Houston, Behringer Harvard reeled in a multinational leader in the oil-and-gas industry to occupy 244,000 square feet and possibly more at Three Eldridge Place, a 303,200 square-foot tower developed by Behringer Harvard in late 2009 in the city’s bustling Energy Corridor.
In San Francisco, box.net, a cloud-computing firm, signed on to occupy Behringer Harvard’s 96,700 square-foot property at 4440 El Camino Real in Los Altos, just 35 miles south of San Francisco. The building, which has been part of the real estate company’s portfolio since 2006, had been home to technology-licensing firm Rambus Inc.
The Chicago, Houston and San Francisco office markets are all on the upswing, according to reports by commercial real estate services firm Grubb & Ellis. In the Windy City, the majority of the submarkets experienced positive absorption in the second quarter, an occurrence last seen in 2009. Houston continues to be buoyed by the energy sector, as evidenced by such news as the new lease deal for 80 percent of Behringer Harvard’s Three Eldridge Place in the Energy Corridor, and ExxonMobil’s confirmation two months ago of plans to develop a 385-acre campus in The Woodlands submarket. As noted in the Grubb & Ellis report, “The rise in oil prices over the past 12 months, the new opportunities in the oil shale plays, and the reopening of the Gulf of Mexico has fueled employment growth in the energy sector.”
Behringer Harvard’s deal with box.net to lease 100 percent of the building at 4440 El Camino in Los Altos dovetails with the current state of the Silicon Valley office market. Leasing activity continues to increase due to intense demand from social-media, mobile-computing and technology companies, according to Grubb & Ellis. The box.net lease was responsible for pushing the Los Altos submarket vacancy rate down by 48 percent.
So far, 2011 leasing activity has been good for Behringer Harvard. During the first half of the year, the company closed renewals, expansions and new leases totaling approximately 1.8 million square feet, with a weighted average leasing cost of $23.88 per square-foot, compared to $20.54 per square-foot in the first half of 2010.
*This story was updated at 3:56 p.m. on August 19, 2011.