By Marissa Luck
Source: Houston Chronicle Newspaper
https://www.houstonchronicle.com/business/real-estate/article/Exxon-may-shed-some-office-space-at-Houston-17558856.php#
Exxon Mobil is considering shedding some of its office space at its soon-to-be Houston headquarters, possibly becoming the latest energy firm to shrink its office usage in spite of elevated oil prices.
The oil giant has not made any decisions yet about what it will do with its excess space, but it is considering either selling or leasing some space at its 385-acre campus in Spring north of downtown Houston. The potential real estate moves were first reported by the Wall Street Journal.
The space reduction comes even as Exxon earned an record profits of nearly $20 billion in the third quarter thanks to high oil prices and elevated refining margins. Despite worries about a recession, oil prices above settled above $92 a barrel on Friday.
Exxon spokesperson Meghan Macdonald said the company is reconfiguring the Spring campus to better use its existing space, and it has engaged a real estate broker to assess third-party interest in its excess space. There is no timeline yet on when the additional space might be available for sale or lease, and it was not immediately clear just how much space Exxon would omit.
The oil major announced early this year its plan to relocate its corporate headquarters to the Houston area, consolidating employees from its long-time headquarters in Irving as well as employees in The Woodlands into the Spring site. These transitions are expected to wrap up in 2023, Macdonald said.
Additionally Exxon already has engaged real estate firm JLL to help market its Irving campus for sale, Macdonald added.
Along with those moves, Exxon has been studying how employees use its Spring campus. The company found that it uses less than half of the space at any given time, according to a memo sent from Staale Gjervik, president at Exxon Mobil, to Houston area employees. Many of its team members are scattered across the campus, making it harder to collaborate even though the company requires all employees to be in the office full-time with no remote or hybrid workplace policy.
“We’ve also heard widespread feedback that you see opportunities for better collaboration by bringing teams closer together,” Gjervik wrote. “It is with these inputs in mind that we’re looking at ways we can more effectively leverage our office space, and one of the options we are considering is the use of a neighborhood concept.”
So-called neighborhoods would cluster employees together in a space with a mix of open and enclosed areas, private and quiet areas and more dedicated meeting and collaborative spaces, he said. Employees would be assigned to work in a “neighborhood” rather than being tied to a specific desk, he added.
“This could allow us to expand the number of meeting rooms and collaboration areas -- two things that have been repeatedly requested by employees in recent years,” Gjervik added.
These neighborhoods are already in place in about 20 other Exxon locations globally, he added. Employees in Houston are touring so-called demo areas now and leadership is still collecting feedback prior to shuffling any spaces just yet, Macdonald said.
The sprawling Spring campus was built in 2014-2015 to accommodate 10,000 employees, but the energy firm has reduced its headcount over the past several years as oil companies have learned to do more with less under pressure from Wall Street to keep a lid on costs. As of January 2022, Exxon had 8,500 employees working out of Spring.
Exxon isn’t the only oil firm reevaluating its real estate footprint. Chevron has offered to move many of its California-based employees to the Houston area. The company recently announced it sold and downsized its headquarters in San Ramon from 1.3 million square feet to 400,000 square feet.
Meanwhile, pipeline company Enbridge halved its office footprint when it moved its employees to the Energy Corridor in West Houston earlier this year. Energy services firm Halliburton has said it has cut its real estate footprint in Houston by about 30 percent since the start of the pandemic. Schlumberger, EP Energy, Petroleum Geo Services, Engie and BP also put sizeable blocks of office space on the market for sublease over the past couple years, too, according to Cushman & Wakefield.
The office space reductions are another sign that energy companies space needs are no longer directly tied to their success in the oil patch.
Written By
Marissa Luck
Marissa Luck is a senior real estate reporter at Houston Chronicle and the co-host of Looped In, a podcast focusing on Houston real estate.
Previously, Luck covered commercial real estate in Texas for CoStar News; real estate for Austin Business Journal; energy for Houston Chronicle; and business news for The Daily News in Longview, Wash. She’s won awards from Society of Professional Journalists and National Association of Real Estate Editors and her byline has appeared in numerous publications including Associated Press, MSN.com, Dallas Business Journal, Houston Business Journal, San Antonio-Express News, Crosscut, Seattle Times and Seattle Post Intelligencer and more.
Luck studied international political economy at The Evergreen State College in Olympia, Wash. Originally from Hawaii, Luck grew up in the Pacific Northwest and now lives in Midtown Houston.