Brookfield Sells $340M Houston Building to Chevron, Secures Company’s Lease Renewal Next Door
- Jul 05, 2011
July 5, 2011
By Barbra Murray, Contributing Editor
Chevron Corp. has certainly done its part to keep the Houston office real estate market active and Brookfield Office Properties has played a big role in the effort. The energy giant just acquired its 1.3 million-square-foot home base at 1400 Smith St. from Brookfield for $340 million, and renewed its 311,000 square-foot lease with the real estate company at the neighboring building.
Brookfield didn’t exactly lose on the sale. The company had acquired 1400 Smith for just $120 million in 2006, and locked in Chevron as the sole occupant soon after the purchase. Located in downtown Houston just off I-45, the 50-story tower, also known as Four Allen Center, was designed by the architectural firm of Lloyd Jones Brewer & Associates and erected in 1983. In addition to Class A office space, the property also features 38,000 square feet of plaza-level retail space.
Brookfield relied on Commercial real estate and capital markets services provider Holliday Fenoglio Fowler to serve as an advisor for the disposition of the asset. HFF views the transaction as an indicator of an increasingly common transaction type in the real estate market. “The sale of 1400 Smith is yet another example of a user sale, a trend that has been occurring on a fairly regular basis as of late,” H. Dan Miller, senior managing director with HFF, said. “Six buildings have sold to users so far this year and a total of eight have sold to users over the past 18 months totaling more than 2.5 million square feet and representing more than $460 million in value.”
As for Chevron’s occupancy in the 1.5 million square-foot high-rise next door at 1600 Smith St., the new lease agreement marks a renewal of the company’s commitment to the space for seven more years. By maintaining the same square footage at the building, Chevron does not contribute to absorption in the Houston office market, but it certainly helps the central business district maintain its relatively low Class A-market vacancy rate, which, according to a second-quarter report by commercial real estate services firm Colliers International, is a quite respectable 9.6 percent.