Boston Consulting Group Secures 12-Year Lease for 53K SF Office at Skanska Tower in Houston

Boston Consulting Group (BCG) has secured a 12-year lease for approximately 53,000 square feet, along with parking, at the 1550 on the Green office building in Houston. BCG plans to move in toward the end of next year, bringing the building's leased space to nearly 48 percent. Norton Rose Fulbright, an international law firm, previously signed a 15-year lease for 32 percent of the building and began relocating this month.

About the 1550 on the Green Development

Skanska initiated construction on the 387,500-square-foot 1550 on the Green in June 2021, with the building opening in February. The property features common-area amenities such as a fitness center, rooftop conference facilities, parking, and 7,000 square feet of retail space that includes a restaurant and coffee shop. Located at 1550 Lamar St., near Discovery Green, the building has direct access to the Lamar Bike Trail. It also meets various sustainability standards, including LEED Platinum, WELL Platinum, WiredScore Platinum, and Fitwel certifications.

Skanska’s Continued Developments in Houston

Skanska is also planning a new project in partnership with B. Bell Builders, adjacent to McNair Hall at Rice University. This 112,000-square-foot development for the Jones Graduate School of Business will feature new classrooms, Ph.D. student offices, and multiple breakout and meeting spaces.

Houston Leasing Market Trends

In its Q1 2024 earnings report, Skanska highlighted the overall sluggishness of the U.S. leasing market. However, certain segments and locations are showing increased activity, particularly high-quality, sustainable office spaces that attract and retain employees. Despite these pockets of growth, Houston's office market experienced a negative net absorption of approximately 616,400 square feet in Q1 2024, reversing gains from late 2023 and early 2023. The vacancy rate rose to 26.7 percent in Q1 2024, with expectations for further increases as tenants downsize and leave larger spaces.

Developer Response to Market Conditions

Developers are scaling back on new construction in response to the slow market. As of Q1 2024, only 214,400 square feet of office space was under development in Houston, a significant drop from 969,200 square feet the previous year, according to Colliers.