Noble Energy just signed a 497,000 square foot lease in the former Hewlett Packard building in northwest Houston. That is almost 11.5 acres and they will occupy all 10 floors with plans to expand in the future.
As everyone who lives and breathes commercial real estate in Houston knows, this is a massive deal (and the second recent big win for North Houston after the Exxon deal). However, for small business owners who are learning about the basics for their search and/or lease, we thought we would break it down into some digestible numbers.
Based on an average annual rental rate of $25 a square foot for office space in Houston and assuming a 10 year lease – that’s over $124 million for the life of the lease / $12.4 million a year or over a $1 million a month! (This is just broad strokes; we imagine this was a rather complicated transaction with lots of lease concessions---which would bring down the effective monthly payment--given the updates being made to the building mentioned in the article).
Grubb and Ellis represented Noble in the transaction and we would bet they earned their commission. Just think about the dozens of lease clauses, lease concessions, and the build out package that needed to be negotiated. In addition, Kirksey Architecture is re-designing the space for a new modern look. Think about all the vendors now involved – furniture, IT, contractors, etc. – usually a broker helps their tenant manage all these decisions and timing (it's important that certain vendors are included before the lease is executed).
Although this is a massive transaction, these are issues that smaller tenants face as well and that highlight the importance of using a tenant broker, based upon what type of office space you may be looking for. If it is fairly commoditized (short lease, no build out, pre-existing set up, etc.), it is possible to do much of it yourself. But, once you get outside of those narrow parameters a broker can be of the utmost importance.