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Tuesday, April 30, 2019

The Conversion and Evolution of Houston’s Office Market Properties

By Rand Stephens (Houston)

With more than 36 skyscrapers, Houston’s skyline ranks as the 4th best in the U.S., according to, and throughout that skyline are many historical gems that are increasingly being transformed from office buildings to hotels and/or residential dwellings. In an office market with a vacancy rate that’s been hovering at about 16% for several quarters, some landlords may consider capitalizing on their building’s historical features and shift away from the office sector and onto the hospitality/multifamily sector or take the plunge and undergo major renovations.

Courtesy of
There are some buildings in downtown Houston that have stood for more than a century. Over the last 20 years we’ve seen close to 20 heritage structures go from C-suite to hotel suite with a single renovation overhaul sweep, as noted by For example, the M.E. Foster Building at 711 Main was built in 1908 and nearly 100 years later was transformed into the Capitol Lofts. Just recently, office buildings at 1314 Texas Ave. and 1114 Texas Ave. kicked off hotel transformations that are slated to open later this year. So many other have also made the switch – Aloft Hotel, The Star Hi-Rise, Kirby Lofts and Le Mérdien Hotel are just a few examples.

However, the transformation from office to hotel/residential is not for every building. Most of these conversions have been with buildings erected in the early 1900s or during the 1950’s. The architecture during that time was ornate and grand, complete with lavish marble floors and ornamental ceilings, which would suit a luxury hotel or residential high-rise quite nicely. Now fast-forward to the construction surge of the late 1970’s and early 80’s that coincided with the oil industry boom. The building designs during that time frame are not exactly transformable into anything other than another office building. And why would they be? No one sets out to design a building that will transform from office to hotel decades later.

80's-Era Renovations include: Houston Center, Allen Center, Lyric Tower and Bank of America Center
The most viable option for buildings of the 70-80’s era is to update and renovate. Those already jumping on that bandwagon include The Lyric Tower, Allen Center, Houston Center and Bank of America Center. Leasing is already slightly up for the Houston Center since renovations were announced. 80’s-era class A buildings are doing all they can to compete with what I consider a new class of building – class A+, buildings like Capitol Tower and Texas Tower. Renovations can only go so far. Building systems, bathrooms and lobbies can be upgraded, but it’s impossible to change the floor layouts and insert building floor activation to the street. Despite all of their remodeling efforts, some landlords are pressed to change their strategy to leasing to smaller tenants because larger tenants want the amenities and features offered in A+ buildings.  

The Houston office market has always had a symbiotic relationship with the energy industry. When the oil glut hit in the mid-1980’s, construction came to a screeching halt and did not resume until the early 2000’s. Today, as we see the oil industry make a comeback, we are also seeing renewed activity with office construction, renovations and transformations throughout Downtown and Uptown Houston. The first quarter of 2019 has shown encouraging signs of progress for Houston’s office market with positive absorption and lower vacancy rates. I expect that trend to continue (at a slow pace) just as Houston’s skyline will continue to transform.

Tuesday, April 16, 2019

New dynamics in corporate real estate outsourcing require new thinking from corporate real estate executives

By Brian Bellew (Chicago)

Large global service providers should no longer be perceived as exclusively safe or the easy default choice
• Behavioural-based qualities like commitment, team chemistry and trust are now known to be vitally important to the success of corporate real estate outsourcing with a service provider
• Technology is important, but it is no panacea or replacement for trust
• Smart corporate real estate executives now cast a wider net when seeking corporate real estate outsourcing service provider partners

The decision-making process for corporate real estate outsourcing has become increasingly dynamic. The drivers that frequently tipped the scale in favour of the largest global service providers with their expensive proprietary technology are no longer as compelling given the rise in importance of behaviour-based qualities of service providers, including trust. Smart industry leaders should keep an open mind to both large and medium-sized service providers when evaluating outsourcing candidates.

These are some of the key trends noted in my white paper Shifting Gears: Corporate OccupantsRe-evaluate Real Estate Outsourcing Models”.

Outsourcing drivers are changing among heads of corporate real estate for occupants, especially those with smaller or medium-sized portfolios. Their companies often do not need fully integrated, global services. These leaders now have more choices and are more open to working with smaller- and medium-sized firms that do not necessarily position themselves as full-service global corporate real estate providers.

It all begins with trust. Trust in an outsourcing relationship is more important than what both parties negotiate into the service agreement. Trust is a key element to the long-term success of the relationship. Trust is causal – that is, a direct link exists between trust and longevity in outsourcing relationships.

Some industry watchers are even now wondering whether larger service providers have lost the ability to move quickly, think entrepreneurially or take reasonable risks. The conventional wisdom is that a broker-led model, which supposedly casts aside the breadth of non-brokerage ancillary services, is somehow lacking when compared with a corporate services-led brokerage approach. More recently, some corporate real estate leaders have reversed course from a traditional corporate-services model to a broker-led one. The new broker-led service providers are not burdened by the overhead of typical large full-service brokerage firms.

For years, the default corporate option was to favour the largest global service providers, most of which rely heavily on expensive proprietary technology as a way to smooth over any gaps in integrated service delivery. Increasingly, corporate real estate executives are realizing that the behaviour-based qualities of service providers like commitment, team chemistry and trust are just as important – or even more important – than sheer scale or technology to the overall success of the joint relationship.

As a result, pragmatic corporate real estate leaders include both traditional large and medium-sized service-provider firms when contemplating outsourcing candidates. The results achieved for satisfied clients by many of these nimble mid-sized firms are simply too compelling to ignore.

(Brian Bellew is a Principal of Avison Young and Managing Director of the firm’s enterprise solutions practice group)

Wednesday, April 3, 2019

Rebranding a landmark

By Lydia Ellis (Birmingham)

It all started with a website.

A website that really needed upgrading.

The problem was, there was always a bigger issue. Getting the estate ready for sale. Being on sale. Being sold …

When Birmingham’s Brindleyplace was sold in 2017 and Hines (the former owner) was retained as asset manager, the time was finally right to address the website, much to the delight of Avison Young’s destination-marketing team, who are retained by Hines for leisure marketing on the estate. This situation, however, opened up a much wider conversation: What about the brand? What do the occupiers think? What else is going on in Birmingham, and where does Brindleyplace need to be?

For a marketing team, this was an opportunity like no other – to be part of rebranding a major landmark. Something of a celebrity in the world of mixed-use, Brindleyplace is the textbook example of city-centre regeneration that is used as a case study for thousands of students the world over. The assignment wasn’t just about a single building or the office market. This estate is a key part of Birmingham’s ongoing regeneration story, but now it faced new challenges. With an ever increasing amount of new developments on its doorstep. It needed to retain its stature and appeal.

As asset manager, Hines took the brave decision to really get under the skin of the issues, and through Avison Young engaged Real Service to undertake research with existing occupiers, prospective clients and neighbours. The results told an interesting story. A story of an estate held in affection by many, appreciated for its high standards and safe atmosphere. On the other hand, criticisms were levied, such as the estate being …wait for it … too clean! Whilst these criticisms were explored much deeper than we can cover here, in summary it was recognised that Brindleyplace needed to become more accessible, but with an edge, an edge that would continue to cement its position as Birmingham’s premier mixed-use estate.

The results of Real Service opened up a set of work streams which Hines has pursued with a real commitment and passion in partnership with Avison Young to ensure the research findings are addressed. One of the work streams was branding. There was recognition that the brand needed improvement – both visually and in terms of acting as a guide for the whole ethos of the estate moving forward.

Several workshops were held, facilitated by creative agency Core to discuss the research findings and where key stakeholders felt Brindleyplace needed to be. Much debate was had around the name. Brindleyplace is often referred to locally as Brindley, and it was a strong contender for a name change. In the end, the decision was to continue as Brindleyplace officially, but at a campaign level to be able to use Brindley with a new strapline: “The Place.” Thus, the new creative features a play on the words “The place.” For example: “Brindley The place for business/events/meeting friends/eating out/etc.,” certainly provides a flexible, yet strong approach for all communication. The accompanying creative is bold, fresh and a significant move forward.

Alongside this, a set of values was identified. We know Brindleyplace is unique. There is nowhere else like it in Birmingham (or, indeed, many other places!) in terms of the daily demographic, the managed estate environment and the range of special events for occupiers. We now need to focus on keeping it just so … Where else can you get a National Sea Life Centre next to a big-four accountants office? Where else do you get a range of pop-up events throughout the year that are refreshed continually by a dedicated on-site team? Where else offers one of the safest places in Birmingham alongside some of the city’s best nightlife? Finally, the value that will continue to be worked on the most is community.

From an estate that was an original pioneer of work-life balance back in the ’90s, much has been done to provide facilities and events for occupiers – but not necessarily to bring together a joined-up community. This last aspect is being addressed through a range of communication improvements, including a partnership with Workwell to introduce a new tenant portal, Hines’ first one globally. This portal will include the opportunity for occupiers to create their own groups and to network online as well as in person. The community aspect will continue as a work stream for the long term and a range of wider initiatives and partnerships across the city, including work streams to address graduate retention and wellness on the estate, are being worked on by Avison Young’s destination-marketing team.

The new creative is unveiled today with the new website finally going live amongst a number of other initiatives. Creative will also be unveiled across the estate, and more than 300 pieces of signage have been replaced, but this project is about so much more than a logo. Every touchpoint has been looked at. All staff have been briefed; from the senior directors to the electricians and everyone in between. The events programme has been completely reviewed and refreshed in order to keep the element of surprise.

Whilst a huge amount of work has gone on in the last 18 months to get to this point, this isn’t the end – it’s just the beginning of Brindleyplace’s new chapter. This work combined with the £7 million in investments being made into refurbishing three buildings, a new partnership with a leading university to be announced shortly and a major new event in September mean Brindley is the place that never stands still.

To discuss Brindleyplace further, contact Lydia Ellis by e-mail or by phone 07770934185.

(Lydia Ellis is an Associate based in Avison Young’s Birmingham office and interim Head of the company’s U.K. destination-marketing team. She is based in the company’s Birmingham office.)

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