Are you ready for another downtown tower?
Betting on the continued strength of downtown's office market, Trammell Crow Co. is planning to build a tower on the eastern end of downtown near the convention center and Discovery Green, a 12-acre park under development.
The building, to be known as Discovery Tower, is designed to be 31 stories tall, including 630,000 square feet and 10 levels of parking. But the developer, which doesn't have a tenant for the building, said it could grow to 1.2 million square feet, depending on demand.
With strong commercial occupancy rates in the Central Business District, "We don't feel it's necessary to sign someone up first," said Aaron Thielhorn, a principal of Dallas-based Trammell Crow, which plans a formal announcement today.
"But wait," I hear you cry. "Isn't that an awful lot of office space being constructed downtown?" Well, yes, but apparently it's needed.
The vacancy rate for the best downtown office buildings is 9 percent, and the availability of large blocks of space has dwindled, according to real estate brokers.
That's led other developers to plan new buildings as well.
Brookfield Properties of New York, which owns a number of downtown buildings, including the Allen Center complex, is working on plans for a new downtown tower, but it's taking a more conservative approach. It would like to have at least 50 percent of the building's space leased before starting construction, Executive Vice President Paul Layne said.
Fort Worth-based Crescent Real Estate Equities Co. also said it will announce a building this year that will be attached to its existing Houston Center complex.
"We are actually very far along on our plans," said John Goff, vice chairman and CEO, adding that Crescent has land holdings that would allow it to develop up to 2 million square feet in two buildings.
Goff said Crescent would start a building on a speculative basis -- or without first signing up a tenant -- but "we're confident when we make a firm announcement we're going to have some occupancy in tow."
And Hines also is preparing for the development of a downtown building, but it won't announce anything until plans are complete.
"It's broadly known in the real estate community that downtown Houston is running out of space, and leasing rates are increasing monthly," said Mark Cover, executive vice president of Houston-based Hines. "With the continued growth in commodity-based businesses, we believe the near-term outlook is very bright for the office market in Houston."