Jacobs Engineering downsizing its footprint in downtown Fort Worth

Posted Wednesday, Jan. 16, 2013  comments  Print Reprints

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FORT WORTH -- Jacobs Engineering plans to keep its downtown Fort Worth office in the landmark 777 Main building, but with a significantly smaller profile.

The announcement comes several months before the California company's lease in the building is scheduled to expire. It also quells talk that the company might seek to consolidate its Fort Worth and Dallas offices elsewhere in the Metroplex.

By Dec. 31, when its lease expires, Jacobs said it will move all of its operations in the building to the 24th, 25th, and 26th floors of the 40-story office tower at Seventh and Main streets. Renovations on those floors will begin next month, Jacobs said.

The space, plus some space in the basement it will keep, totals about 75,627 square feet, less than a quarter of the space it currently occupies. Jacobs signed a 10-year lease, but it has options to renew.

In announcing its intention to stay in Fort Worth, Jacobs -- which acquired the Carter & Burgess engineering firm in 2007-- also said it is consolidating two Dallas offices onto three floors in Dallas' 36-story Harwood Center tower.

Tom McDuffie, a Jacobs group vice president, said in a statement, "Our relocation and facility enhancement decisions are driven not only by sound business practices, but also by our desire for safe, healthy, and enlivening office environments that support the way we want to do business, provide the technology we need, and more importantly, enhance our employees' productivity."

Talk that Jacobs might leave downtown Fort Worth had sent ripples through the commercial real estate market for the past couple of years. If the company pulled out of the market, it would have left a big gap of vacant office space to fill at a time when leasing activity has been slow.

Fort Worth's central business district had an average 10 percent vacancy rate as of the third quarter, according to research from some of the area's large commercial brokerage firms.

"It's good for Fort Worth," said Whit Kelly, senior vice president of Jones Lang LaSalle's Fort Worth office, who represented the building's owner, Crescent Real Estate Holdings, in lease negotiations. The lease represents about 8 percent of the building, he said. The building is currently 94 percent leased.

Jacobs looked at other downtown Fort Worth office space before deciding to stay at 777 Main.

"It was not an easily won victory," Kelly said.

Melissa Graham, 777 Main's property manager, said Crescent had many in-depth meetings with Jacobs, which conducted a full due diligence review. It was important that the building has LEED silver status because Jacobs plans to go for gold LEED status on the three floors, she said.

"It speaks volumes about the relationship we've had with them for 15 years," Graham said of the lease.

Carter & Burgess first moved into the building, then named UPR Plaza, in 2000, subleasing about 400,000 square feet of space on 20 floors that were vacated when Union Pacific Resources was bought by Anadarko Petroleum and moved to Houston. The lease had 13 years remaining and will expire in November 2013.

The building was renamed Carter Burgess Plaza in January 2001 and renamed 777 Main in April 2012.

In 2009, Jacobs reduced its space to about 363,250 square feet on 15 floors and at that time was reportedly not using it all. In April, Jacobs space was down to about 334,000 square feet, but it was subleasing about 140,000 square feet to others.

Kelly said he is negotiating new leases with those subtenants, but when Jacobs consolidates to the three floors, it could leave about four floors of space available in the tower.

FTS International Services has already committed to two floors, or about 45,000 square feet, and Wilbros Group will expand and take the 23rd floor, space that had been used by Jacobs.

Jacobs already occupies the three floors it will keep under the new lease. It will also have about 8,000 square feet in the building's basement.

Built in 1982 by Woodbine Development Corp., the building opened as Continental Plaza, and in 1998 became UPR Plaza. Crescent Real Estate Holdings has owned the building for 18 years.

Since being renamed, the building is undergoing extensive remodeling and complete new signage, all of which should be completed by March.

Eric Olofsen with Cushman & Wakefield in Los Angeles and Matt Heidelbaugh with Cushman & Wakefield in Dallas, represented Jacobs.

Crescent Real Estate Holdings is owned by Goff Capital and Barclays Capital.

Jacob's is based in Pasadena, Calif. It recently said it earned $379 million on revenues of $10.8 billion in fiscal 2012, which ended on Sept. 28. In fiscal 2011, it made $331 million on $10.3 billion in revenues.

Sandra Baker, (817) 390-7727

Twitter: @SandraBakerFWST

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