A GREENWAY FOR THE FUTURE

In some ways, Greenway Plaza feels like downtown Houston did 10 or 20 years ago: it bustles with activity during the day, only to slow way down on nights and weekends.

Greenway’s sleepy fate was, in part, sealed when the Rockets moved out of the adjacent Compaq Center and Lakewood Church moved in. The absence of pro sports and big-name concerts at Compaq and the closing of an art house cinema inside Greenway also meant fewer visitors to the 1960s-era real estate development.

Yet it remains, despite its fading architecture and a seemingly disjointed layout, a vibrant part of Houston’s core — a small city in the center of a big one. Over the years it has lured leading-edge companies that had their choice of locales. To this day, the project is heralded for setting a standard for urban-style development that combined work, life and play.

“When it comes to the history, it was almost mixed-use before mixed-use was cool,” said Mike Fransen, senior vice president and managing director of majority owner Parkway Inc.

But for Greenway to remain competitive with the gleaming glass skyscrapers and stylish mixed-use developments going up nearby, it must change.

In its bygone heyday, Greenway Plaza set an example for cutting-edge development. The 10 office buildings, centered around the intersection of Richmond and Edloe, just north of the Southwest Freeway, are connected by a series of air-conditioned sky bridges and tunnels. They’re separated by plazas and green spaces.

New owners recognize the need to restore some of Green-way’s lost luster and have a plan in place they hope will transform the vast urban complex into a place where families might visit a farmers market on weekends or meet at a restaurant for Sunday brunch.

They envision a community where during the week, office workers can wait out rush-hour traffic by sticking around to hear live music or meeting a friend for a drink.

“We’re trying to change the way people perceive this whole location,” Fran-sen said, explaining the strategy over an expansive architectural model of the greater Greenway area.

To be sure, the changes, which will happen slowly and over time, will help Greenway compete for tenants in an environment where corporations increasingly look to their office space to help attract and keep the best and brightest employees.

“I think Exxon has changed the game,” Fran-sen said of the oil company’s new campus near The Woodlands. “All of these groups are in really nice real estate now, and the pressure on other companies recruiting out of those environments is the highest its ever been. Your real estate has to be much better than it’s ever been before.”

Even though Greenway Plaza has remained well leased during the recent energy slump, competition among landlords is becoming ever more fierce, especially with a glut of sublease space on the market and new buildings offering the latest design and technological trends.

Life Time to upgrade

In the Upper Kirby District, Houston developer Midway recently created what it calls an “urban activity center” — an 11-acre office, residential and retail complex alongside a newly renovated public park.

In Uptown, BLVD Place offers an environment where office workers can take an elevator down to a high-end restaurant for lunch or dinner or stop into a Whole Foods Market before leaving for the day.

On a recent Friday afternoon at “The Hub,” Green-way Plaza’s underground food court and amenity area, the halls were mostly empty.

“It’s been like this all day,” said an employee of the Hub’s fitness center looking around at empty treadmills and weight machines.

The gym is often quiet at the end of the week, she explained, because many of its members work for companies that give their employees Fridays off.

Parkway recently inked a deal to bring Life Time Fitness to the complex, replacing the Houston City Club, a tennis facility that catered to longtime Houstonians and residents of the Greenway Plaza high-rise condominiums, a pair of early 1980s towers.

Life Time is planning a major reconstruction of the City Club space to convert it into one of its large format facilities with 89,000 square feet.

Tennis will be replaced by other fitness options, including an outdoor pool.

More amenities planned

Other changes are in store for the overall complex.

Parkway has hired a full-time “programmer” to create and promote events and activities for the tenants. At most buildings, that job falls to the property managers who are already overloaded with responsibilities. The result is usually nothing more than a Christmas party and perhaps a summer ice cream social.

Parkway’s motivation in part stems from a movement by the commercial real estate industry to operate their buildings using more of a hospitality model.

Lobbies in some of Houston’s new towers look more like hotels with comfortable seating areas, meeting places and coffee concessions.

“We’ve hired managers that have come from apartments, from hotels like St. Regis, and our thought is there are people with very high emotional IQs, great social skills and a real appetite to learn,” Fransen said.

Parkway is putting in a new management and leasing office in Greenway as well as a restaurant space designed by Austin-based architect Michael Hsu, known locally for the spaces that house Uchi, Local Foods and Oporto.

In addition to the new Life Time Fitness, Parkway hopes the new restaurant on the ground floor of 9 Greenway will add some needed energy to the complex by tapping into the many apartment dwellers who live along Richmond Avenue.

Jeff Hollinden of mortgage banking and property brokerage firm HFF said at more than 54 acres, Green-way’s sheer size gives it the potential to transform into a more modern mixed-use community.

“You’ve got enough land to do a lot of creative improvements if and when those opportunities arise,” said Hollinden, who helped the sale of just under half of Parkway’s interest in the Greenway Plaza portfolio, which was valued at $1.045 billion. It included the adjacent Phoenix Tower office building.

Variety of tenants

The property hit the market about a year ago, and HFF marketed it to both U.S. and foreign real estate investors and owners. Interest came from the Middle East, Canada, Europe and Asia.

Ultimately, TH Real Estate and Silverpeak Real Estate Partners, along with Canada Pension Plan Investment Board, closed on the $512.1 million acquisition.

“It’s a market that has demonstrated resilience throughout past cycles and historically been astrong total return performer relative to other gateway markets over longer time periods,” Mike Fisk, TH’s managing director and head of strategic transactions, said in a statement at the time of closing.

HFF’s Susan Hill arranged financing from Goldman Sachs for the joint venture.

Part of the concern, she said, was “selling Houston.”

Still, Greenway’s tenants, she noted, don’t all fall into an energy industry bucket. Those that do concentrate on different sectors.

Some of the complex’s largest occupants are Occidental, Transocean, Camden Property Trust, Invesco and Direct Energy.

“It’s not all E&P firms,” Hill said, “not all downstream or upstream.” nancy.sarnoff@chron.com twitter.com/nsarnoff