Now that the dust has settled from XTO’s announcement to relocate a large swath of its Fort Worth operation, local business and civic leaders foresee a full rebound for the economy and downtown Fort Worth.
XTO leaves behind six of seven buildings to sell and will transfer 1,600 workers from Fort Worth to Houston by 2020.
Mayor Betsy Price described Exxon Mobil’s plan to move XTO Energy division to Houston over the next three years as a “blow to our community.”
Local leaders agree that the loss of the jobs is the worst of the impact. The company plans to keep about 350 employees in Fort Worth to support its Barnett Shale operations, Exxon Mobil officials said.
“Nobody wants to lose 1,600 jobs, that’s really unfortunate,” said Andy Taft, president of Downtown Fort Worth Inc. “Those are our friends and neighbors and we hate to see them go.”
But, the real estate market might be another matter.
One of XTO’s buildings in the Fort Worth Stockyards is already under contract for sale and another downtown building is under contract to be sold to the Fort Worth Transportation Authority, according to real estate industry insiders.
The four office buildings in the core of downtown Fort Worth have quickly drawn interest.
“The phones have been ringing off the hook since the announcement last Friday,” Taft said. “Those buildings are in high demand.”
The buildings are located at 810 Houston St., 711 W. Houston St., 210 W. Sixth St., and 714 Main St.
“They are all Class B office space with less than 10,000-square-foot footprints,” said Todd Burnette, managing director of JLL, the firm hired by XTO to sell the properties.
There is a glut of office space in downtown Fort Worth, according to local industry insiders, with more about to become available as a result of D.R. Horton’s departure for Arlington and the opening of the new Frost Tower bringing another 280,000 square feet of premium Class A office space.
“This will have about zero impact to the Class A office market,” Burnette said.
With a combined vacancy rate of more than 10 percent in all classes of office space, additional multi-tenant commercial space will only boost that higher, according to Jack Huff, principal with the commercial real estate firm of Transwestern in Fort Worth.
“The Fort Worth market will recover and will again be full,” he said. “In the ’80s, there were wholesale failures in oil and gas, architecture, engineering, you name it. There were millions and millions of square feet of empty office space. It took a while but it all came back.”
The situation now is not nearly as dire and XTO’s buildings can be repurposed for other uses such as apartments, condos or hotels.
Those familiar with the buildings say they are vintage properties that have been meticulously restored and one, the W.T, Waggoner Building at 810 Houston St. is listed on the National Register of Historic Places. Designed by the renowned architects Sanguinet & Staats, the 20-story building serves as XTO’s headquarters.
XTO Energy was founded as Cross Timbers Oil Co. and its founders Bob Simpson, Steve Palko and Jon Brumley earned praise for buying and rehabilitating old, dilapidated downtown office buildings. Simpson, an especially dedicated preservationist, was meticulous in his desire to restore the buildings to their former glory.
The company became one of the premier operators in the Barnett Shale in the early 2000s. That expertise began to attract the attention of the oil and gas majors and, in a deal announced in 2009, Exxon Mobil purchased XTO for $36 billion.
But fears of a move from Fort Worth have been expressed by area business leaders ever since the acquisition, even though XTO has won praise from Exxon Mobil officials and the industry for its expertise in shale.
“XTO Energy, a home-grown legacy company, has been an outstanding industry leader, a generous community supporter and excellent steward of historic buildings in downtown Fort Worth for decades. It’s hard to hear the announcement of their move,” said Bill Thornton, president and CEO of the Fort Worth Chamber of Commerce in a statement.
JLL’s Burnette said the updated office space is on the cusp of Class A level office space and would easily suit a small corporate firm looking to locate in downtown Fort Worth without spending time or money on renovations.
“Fort Worth is a well-guarded secret and has been in a growth mode,” he said. “The Class B market is usually tight so this is actually very good news.”
The availability of these properties also represents an opportunity for the sale of the buildings as opposed to tenant leasing, some say.
Brandom Gengelbach, executive vice president of economic development for the Fort Worth Chamber of Commerce, said he believes the vacated space can turn over before XTO workers leave for Houston. The company plans to move 1,200 employees in 2018 and another 400 in 2020.
The chamber is working with the city on a new strategic plan to determine the best land use for downtown as well as the rest of Fort Worth.
“There is a chance that we’ll be able to see these buildings sold,” he said. “That’s very exciting for downtown. I’d said we’re looking at this as a way of making lemonade out of lemons.”