Office rents on Louisiana St. at a premium
Winning the title for the Houston area’s highest office rents is downtown’s Louisiana
A new report says Louisiana Street is the 15th-most expensive in the nation, with businesses paying a 50 percent premium to be located there.
Louisiana Street, Houston’s priciest place for office space, ranks No. 15 among the nation’s most expensive streets, a new report shows.
Companies are willing to pay nearly a 50 percent premium to be on the downtown thoroughfare lined with some of Houston’s most iconic buildings, including Pennzoil Place, Bank of America Center and Wells Fargo Plaza.
Rents on Louisiana average $43.67 per square foot per year, or 49 percent more than the Houston market average of $29.28, according to commercial real estate firm JLL’s “Most Expensive Streets” report.
Put another way, it would cost almost $875,000 a year to lease a 20,000-square-foot office on Louisiana at the current rate. The rents are full-service, meaning the price covers expenses such as rent and utilities.
Louisiana Street is home to the headquarters of such Fortune 500 companies as Enterprise Products Partners, Kinder Morgan, CenterPoint Energy and Targa Resources; global law firms such as Bracewell & Giuliani and Baker Botts; and architecture firms such as Ziegler Cooper, Page and Gensler.
Houston is a bargain compared to the East and West coasts. Rent on Louisiana Street is less than half the going rate of San Francisco’s Mission
Street, which ranked No. 5.
New York’s Fifth Avenue commanded the highest downtown rent at $119.27 per square foot, according to the report. It came in No. 3 overall.
The highest rents were claimed by suburban markets. Sand Hill Road, known as the “Wall Street of the West” due to its concentration of venture capital firms in Menlo Park, Calif., fetched rents of $141.60 per square foot. Hamilton Avenue, populated by Silicon Valley tech companies in Palo Alto, Calif., saw rents of $124.44.
Hughes Landing Boulevard in The Woodlands captured the No. 8 spot among the most expensive U.S. suburban streets. With rents of $41.37 per square foot, prices are 41 percent higher than the overall market, according to JLL.
That puts Hughes Landing Boulevard in the same league as Brickell Avenue in Miami, Union Street in Seattle and Market Street in Philadelphia.
Tenants at Hughes Landing can walk to stores and restaurants that are part of the mixed-use development along Lake Woodlands. It has attracted global companies such as Exxon Mobil Corp., which leases nearly half a million square feet there in addition to its 3 million-square-foot campus nearby.
Texas’ most expensive streets are in Austin and Dallas, JLL said. Tenants are paying $48.11 per square foot to be on Congress Avenue in Austin and $43.81 per square foot to be on McKinney Avenue in Dallas. Fort Worth’s 3rd Street had rents of $30.18 per square foot.
On average, JLL found rents along the nation’s 42 most expensive streets were up 9.3 percent since 2013. Last year, Louisiana Street ranked No. 16 with average rents of $38.82.
Some Houston landlords are capitalizing on the prestige of a Louisiana Street address.
The former Two Shell Plaza, which underwent a major renovation that coincided with the downsizing of Shell Oil Co. as a tenant, now goes by 811 Louisiana. The building’s previous address was 777 Walker.
Down the street, work is just starting on the building formerly known as Wedge International Tower. The building, now called 1415 Louisiana, is getting a makeover inside and out.
Houston-based Hines, which developed many of the skyscrapers along Louisiana, handled both of those redevelopment projects.