Hines announces first major tenant for its 609 Main building
December 26, 2015 | greystar
An international law firm will be the first major tenant of a 48-story building under construction in downtown Houston, the developer announced Monday.
Kirkland & Ellis signed a lease for the top two floors of the more than 1-million-square-foot office tower going up at 609 Main St. at Texas Avenue. This is the first tenant announced since Houston-based developer Hines broke ground in 2013. Since then, an oil price plunge dried up capital for new office tower projects, particularly ones built on speculation, or without tenants.
Once the tower is completed in 2017, Chicago-based Kirkland will move its 75 employees from an existing space at 600 Travis. The law firm also leases space at Hines projects in Chicago and California.
In a statement, Hines senior managing director John Mooz noted that Hines has had a 10-year plus relation with Kirkland & Ellis.
The lease is "simply another example of how much more economically diversified Houston is than in previous cycles. Thinking back to the last economic downturn, Houston and the economy at large are in a far better position than in 2009," Mooz said in an email responding to follow-up questions.
Asked whether Hines is worried about low oil prices, he said: "Of course things are moving a bit more slowly with our energy companies now that oil is no longer at $100. However, it should not be lost that Houston has a large number of non-energy-based companies, and we are seeing significant interest at 609 Main from several of these prospects. We look forward to reporting more leasing activity shortly."
Low oil prices, though, are driving up the amount of empty office space up for sublease in Houston.
In fact, real estate firm CBRE reported recently the sublease space glut has hit an all-time high and predicted the number will plateau at 10 million square feet by year's end. Local brokers say office tenants have been able to negotiate more concessions and allowances for spaces. But it varies in Houston from market to market and property to property.
Hines also has a residential tower under construction near Market Square Park. It also purchased the Houston Chronicle building at 801 Texas. It has not announced plans for the property.
The Hines building rising at Main and Texas, designed by architectural firm Pickard Chilton, will be marked by a diagonal crown from its north and south facade. The property will have a LEED designation.
Kirkland & Ellis is a 1,600-attorney law firm that is based in Chicago and has offices in Beijing, Hong Kong, London, Los Angeles, Munich, New York, Palo Alto, San Francisco, Shanghai and Washington, D.C. It opened its Houston office in April 2014.
"We are excited to provide our lawyers and staff a truly world-class new home that reflects our ambitions for the Houston office," said Andrew Calder, a partner at Kirkland, in a statement. "In less than two years, our Houston office has grown to include 45 lawyers. Our new space will provide an environment responsive to the needs of our clients and our team as we continue to build out key areas of the practice."
Kirkland declined to elaborate beyond its statement.