Boston Consulting Takes 53 KSF at Skanska Tower in Houston

June 17, 2024

Office Brokerage Houston NewsMoreSouthwest

Completed four months ago, the office building is now nearly half leased.

Aerial view of 1550 on the Green — 1550 on the Green is the first component of Skanska’s three-block mixed-use project dubbed Discovery West. *Image courtesy of Skanska*

Boston Consulting Group has inked a 12-year lease for about 53,000 square feet plus parking at the 1550 on the Green office building in Houston.

Now the property is nearly half—48 percent—leased, with BCG expected to take occupancy toward the end of next year. Previously, international law firm Norton Rose Fulbright committed to a 15-year lease for 32 percent of the office space and began relocating this month.

Skanska broke ground on the 387,500-square-foot development in June 2021 and opened the tower this February. Common-area amenities include a fitness center, rooftop conference facilities, parking and 7,000 square feet of retail, including a restaurant and coffee shop.

Located at 1550 Lamar St. near Discovery Green, the building has direct access to the Lamar Bike Trail, which runs through downtown Houston, and has attained a variety of sustainability standards, including LEED Platinum, WELL Platinum, WiredScore Platinum and Fitwel certifications.

The 1550 on the Green building isn’t Skanska’s only recent project in Houston. The company and its joint venture partner, B. Bell Builders, will soon start work on a new development adjacent to McNair Hall at Rice University. The 112,000-square-foot structure for the Jones Graduate School of Business will consist of new classrooms, Ph.D. student office space, and various breakout and meeting spaces.

Houston leasing sags

In its first quarter 2024 earnings report, Skanska noted that the U.S. leasing market is lagging overall, but some segments and locations are nevertheless seeing improved activity. Tenants are focusing on high-quality, sustainable office space in locations good enough to help attract and retain employees, the company posited.

Meanwhile, Houston’s office market posted negative net absorption of about 616,400 square feet during the first quarter of 2024, a reversal from positive absorption of 563 million square feet in the last quarter of 2023 and 287,500 square during the first quarter of 2023, according to Colliers. The marketwide vacancy rate increased to 26.7 percent in Q1 2024, and will likely continue to rise in the immediate future as tenants occupy their new, downsized offices and leave larger spaces vacant, Colliers forecasts.

Developers are responding to the sluggish market by dialing back construction. As of the first quarter, some 214,400 square feet of office was underway in Houston, a steep decline from the 969,200 square feet a year earlier, the same brokerage shows.