XTO Energy’s decision to move 1,600 workers to an Exxon Mobil campus near Houston threatens to leave a hole in the downtown office market.
But real estate and economic development professionals said Monday that there are some encouraging signs for the future.
XTO has already lined up buyers for two of their seven buildings in Fort Worth, albeit the smallest two.
The former Swift & Co. headquarters in the Fort Worth Stockyards, at 600 Exchange Ave., is under contract with a sale expected to close this fall. The buyer has not been disclosed. It was listed for sale earlier this year for $5.4 million.
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Also, a 50,000-square-foot building at 801 Grove St., on the east end of downtown, is under contract to be sold to the Fort Worth Transportation Authority. The T plans to move its headquarters to the building, which is near the Intermodal Transportation Center.
It could be some time before the fate of the other five buildings is known, but for now downtown officials see opportunity on the horizon.
XTO will be moving in phases — it plans to relocate 1,200 jobs next year and the other 400 by 2020 — giving professionals “a gracious timeline” to find new occupants, said Brandom Gengelbach, executive vice president of economic development for the Fort Worth Chamber of Commerce.
“They’re such a great community partner. It was hard to hear they will be moving jobs. The goal is to fill the space before they leave,” Gengelbach said.
Gengelbach said the chamber is hoping to meet this week with XTO officials to get the green light to market their properties when they have prospects. Showing office space when it’s occupied is easier than when it’s vacant, he said. Currently, the chamber is working with two companies that are looking to relocate to a downtown location, including one that wants to be close to a vendor, Gengelbach said.
XTO plans to keep 350 employees in Fort Worth and retain one of its seven buildings.
XTO hopes to retain as many of its employees as possible by offering them relocation packages to its Houston-area campus, particularly those in professional and technical positions, said spokeswoman Suann Guthrie. The moving dates in mid-2018 and mid-2020 were picked to allow those with families to relocate during the summer months.
“We want them to have a long, productive career at Exxon and the company values their knowledge,” Guthrie said. “We are making our best effort to relocate them”
The company also is scheduled to meet with City Manager David Cooke to discuss the impact the company’s move will have on Fort Worth.
“We’ve indicated with the mayor and the chamber that we want to work with them on an effective transition for the highest and best usage for the downtown buildings,” Guthrie said.“We have done great things together and we will continue that relationship going forward.”
Guthrie said the decision to sell the Grove Street building had been made previously and was unrelated to the move to Houston. XTO has used that building for document storage, she said, but had built a records center at Alliance some years ago.
Laura Hanna, a T spokeswoman, said the public transit agency, which currently has administrative offices in Burnett Plaza downtown, plans to move into the building in a couple of years. The sale is expected to close by the end of the month, she said.
Jones Lang LaSalle, or JLL, has been retained by XTO to sell four other buildings. XTO hasn’t indicated which of its buildings it will keep. Ryan Matthews, an executive vice president with JLL in Fort Worth, said the timeline for taking those buildings to market hasn’t been decided.
The XTO office buildings will come on the market at a time when the vacancy rate downtown has grown a bit to about 10 percent. Some of the more recent space to hit the market is in three high-rise office towers: 777 Main, Bank of America tower, and the former D.R. Horton Tower in Sundance Square.
The future use of XTO’s four core buildings — the W.T. Waggoner, 810 Houston St.; Bob R. Simpson Building, 711 W. Houston St.; Petroleum Building, 210 W. Sixth St., and 714 Main St., the former Transport Life insurance building — will depend on who buys them, said Jack Huff, principal of Transwestern commercial real estate brokerage in Fort Worth.
Those buildings have smaller floor plates, which make them unattractive for a corporate relocation, Huff said. However, what does make them desirable is the quality renovations that have been completed, he said.
“That’s just because Bob Simpson liked old buildings and loved renovating them,” Huff said, referring to one of XTO’s founders and the company’s CEO before its sale to Exxon in 2010. “Those are Class B buildings that are as close to a Class A building as you can get. There’s a high probability those buildings will end up in the hands of investors who will convert them to multi-tenant buildings.”
Todd Burnette, managing director of JLL’s Fort Worth office, said that despite a fairly hefty vacancy rate downtown, Fort Worth has been able to recover from past market swings. The XTO space, he said, will only open up new opportunities for the city, which has seen broad job growth since about 2010.
The job gains have come despite the downturn in local energy-related jobs since oil prices collapsed. Energy jobs in Fort Worth shrank by about 10,000 between 2010 and 2014, according to research done by JLL.
“Fort Worth is diversifying and is continuing to diversify,” Burnette said. “It’s not dependent on energy like it used to be. It doesn’t control the office market like it used to. Things change. Right now, there are no purchase opportunities. This is a multiple purchase opportunity. That’s a real estate dynamic we’ve never seen downtown at one time.”
One of the last large chunks of office space to come on the market was in 2000 when Fort Worth-based UPR was acquired by Anadarko in Houston, opening up about 530,000 square feet in 777 Main. The space was eventually sublet by the Carter Burgess engineering firm. That company was later acquired by Jacobs Engineering, which still has some space in the building.
Andy Taft, president of Downtown Fort Worth Inc., a downtown advocacy organization, said the buildings will open up a great deal of opportunity. He sees them being reused for office space, but also for hotels, apartments and condos.
“I’ve already started getting calls,” said Taft, who often speaks with investors and developers.
“Downtown Fort Worth has more opportunity now to reuse those buildings than we ever have,” Taft said. “There’s high demand for multi-tenant users. The buildings are well located. That’s very significant for the re-use of those buildings.”
Staff writer Max B. Baker has contributed to this report.