Big Oil and big buildings have been permanently entwined with downtown Houston’s identity since the mid 20th century. Shell Oil Company recently underscored its connection to downtown by renewing its lease on its eponymous downtown properties through 2025.
Shell’s presence in downtown Houston officially began in 1970, after Hines completed One Shell Plaza. Today, Shell maintains approximately 6,500 employees and contractors in downtown Houston, including their trading group, downstream operations and corporate functions.
Such a project and real estate deal sound typical, even expected in current day Houston, but when Gerald D. Hines secured Shell in 1967, it was his first major office building. Beyond the magnitude of the deal for Hines and the significance of Shell relocating its U.S. headquarters from New York to Houston, One Shell Plaza was a marvel of engineering at the time. Innovations in erecting tall buildings on Houston’s dense clay made the 50-story office tower possible (previous practices only supported up to 44 stories). Its companion, Two Shell Plaza, was completed in 1972. Shell and Hines announced Shell’s renewal of their lease at One Shell Plaza and Two Shell Plaza in December.
Shell and Hines signed a deal for a total of 1,222,425 square feet — huge news for downtown Houston and commercial real estate worldwide. The contract marked the largest office space lease in the world last year, according to both CoStar and Cushman & Wakefield. The lease extends Shell’s stay through 2025, at which time Shell will have been a tenant for more than 55 years.
Shell’s commitment to downtown goes even further. In August 2010, the oil company signed a new lease with PM Realty Group for approximately 300,000 square feet at 1000 Main Street next to the scenic and transit-friendly Main Street Square. This spring, Shell plans to move all three of its local trading groups from the 250,000 square feet at Two Houston Center to 1000 Main, which was built as Reliant Energy’s trading center in 2003.
Today, Shell’s downtown offices occupy space at One Shell, Two Shell, Pennzoil Place and Two Houston Center, but by 2014 the company will be in One Shell, Two Shell and 1000 Main. Shell is working towards modernizing its workplace, to allow for greater collaboration and less isolation of employees. The company expects the size of the staff to stay the same, but the workflow and interaction will become more efficient.
Happy in Houston’s hub
The geography of Houston is often described as a wheel. Downtown serves as the hub of the city, in terms of business and transit. “Following a very detailed analysis of options available within downtown and in suburban areas, a renewal at One and Two Shell most closely matched our business needs and employee experience we wanted to create,” says Jeri A. Ballard, vice president of global real estate strategy & portfolio for Royal Dutch Shell. “This included access to amenities, public transportation options, minimized commute time, economics and total carbon footprint of the location.” Ballard adds that no other part of town offers the depth of amenities found downtown.
“We did evaluate constructing a new building in the Houston central business district, but the One and Two Shell options most closely meet our needs,” says Ballard. “Hines will be going through a major base building modernization of One and Two Shell, which will ensure that they will remain class A buildings for years to come.”
Some may wonder why Shell didn’t choose to relocate to the Woodlands or the Energy Corridor. “Shell is committed to making downtown Houston a vibrant place to work and downtown is still the commercial hub of the city,” says Ballard.
“In addition, after an exhaustive technical study and survey of Shell employee commuter patterns, it was determined that Houston’s central business district combined with easy access to public transportation, provided both the lowest average commute time and most efficient transportation options available.”
Reducing environmental impact
How does one of the world’s largest oil companies commit to sustainability and environmental safeguards? Shell is aware of the negative environmental impact of the oil and gas industry, and has made strides since the early 1990s to reduce and eliminate pollution in its operations. Today, Shell is hardly pollution-free, but the company is serious about cleaning up its practices. Shell has published a sustainability report every year since 1997.
“We’ve made a commitment to transition all of our offices to LEED-certified buildings,” says Ballard. “We’ve been working on this since 2004, and we already have carbon footprint reduction measures in place in our Houston offices. We are striving for 100 percent of our buildings to be LEED-certified or meet similar standards.”
“Each Shell group’s scorecard is 25 percent sustainability, so that means every employee’s compensation is impacted by sustainability,” says Ballard. That, combined with the progressive sensibility of the Shell employee culture, has resulted in widespread support within Shell’s Houston offices for sustainability goals. “It takes cooperation of the company and the building owners,” continues Ballard. “Hines has been a pioneer in Houston. They knew we had a desire to be in a greener, more sustainable office environment and were keen to make those changes.”
Both One Shell Plaza and Two Shell Plaza were LEED Gold certified in 2009, and both buildings meet Energy Star standards. The LEED updates to the buildings include low-flow fixtures, which contribute to 60 percent water savings in potable-water use. The improvements yielded a 42-percent reduction in lighting power and a 56-percent waste diversion thanks to a recycling program.
Sustainability of planet and talent
“Green buildings, sustainability and carbon footprint are very much on the minds of today’s recruits,” says Ballard. “Being located downtown allows us to recruit from the entire Houston metropolitan area, which is rich in skills, experience and diversity.”
Access to public transportation was a key factor in Shell’s decision. Ballard reports that approximately 25 percent of the Shell staff in the CBD use park and ride, bus or other public transportation.
“The average distance traveled for staff assigned to downtown is a 22-mile commute. If everyone worked a typical schedule and no one took public transport, we would log over 70 million miles driven in a year,” says Ballard. “Public transportation options allow us to reduce this to around 50 million miles driven, which equals a reduction of 17 million pounds of CO2 per year.”