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Success story

TransCanada (ANR Pipeline)

Challenges
ANR Pipeline Company, a wholly owned subsidiary of TransCanada Corp. occupied approximately 100,000 square feet in 717 Texas Avenue under a sublease agreement with no expansion or renewal rights.
 
Additionally, the landlord had the unilateral right to terminate the sublease before its expiration date if another tenant in the building wanted their space.
 
717 Texas Ave had very little vacancy and a tenant base that was expanding. Other tenants in the building had legal rights on and to future vacant space in the building, as well as the long term rights to ANR’s space.
 
At the heart of ANR’s business operation is a Pipeline Control Center that requires critical infrastructure to support a 24/7 day operating environment to meet Federal Energy Regulatory Commission (FERC) standards. The infrastructure includes specialized equipment that requires long lead times to deliver, install and test.
 
ANR’s business was growing rapidly and they were running out of space. They had to be proactive to eliminate the risk associated with their sublease, the growth of their business, the Pipeline Control Center, and the landlord favorable office market conditions in downtown Houston.
 
Solutions
After gaining a detailed understanding of ANR’s business plans and real estate objectives, Jones Lang LaSalle developed a proactive strategy to help TransCanada gain control of their future by securing high quality office space that met their long term growth needs.
 
ANR conducted an extremely detailed quantitative and qualitative
evaluation of the office market and every downtown Class A building. They ultimately selected Bank of America Center.
 
Results
Bank of America Center was selected because it: 
  • Provides a location that is convenient to ANR employee commuting patterns;
  • Its iconic architecture and functional design support the goals of retaining and recruiting employees in a highly productive work environment;
  • Provides at least one floor of expansion space immediately and a “Forward Commitment” to lease the balance of the space at pre-negotiated rental rates until ANR’s current sublease expires in 2015;
  • Has large and efficient 30,000 SF rectangular shaped floors that could accommodate ANR’s entire business units;
  • Has substantial MEP infrastructure that supports specific ANR business functions requiring 24/7 day operations;
  • Provides abundant long term expansion opportunities and potential control of the entire low rise elevator bank of the building;
  • Provides ample employee parking opportunities in adjacent parking garages;
  • Provides immediate proximity to area amenities – dining, fitness, hotel, cultural and entertainment venues;
  • Offers economics that are compelling versus other alternatives and, over the next 18 years, provides an excellent market hedge.

The evaluation, negotiation and documentation process took almost 2 years to complete and resulted in a transaction that is a “win-win” for both TransCanada and the Landlord;
TransCanada’s future growth and space flexibility will be accommodated through multiple lease rights giving TransCanada control over all floors (3-16) in the low rise elevator bank;

  • TransCanada’s rents are fixed for the next 18 years;
  • TransCanada’s Pipeline Control Center can be expanded, built , tested and fully operational well before full occupancy;
  • The Landlord replaces an existing building tenant that is contracting (Bank of America) with TransCanada, a growing tenant with investment grade credit.

Services

  • Tenant Representation
  • Project Development Services

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