Downtown Houston’s historic Humble Oil Building complex has gotten a new owner with a new plan. RLJ Lodging Trust just acquired the three-building hotel and apartment complex for $79.5 million and announced that it will convert the property’s residential tower to a lodging facility.
The off-market transaction, financed through RLJ’s revolving credit facility, wasn’t a bad deal considering that in 2003, the then-owner–a partnership spearheaded by Housing Horizons, a subsidiary of Kimberly-Clark–invested $70 million in the redevelopment of what had been the original headquarters of Humble Oil and Refining Company. The transformation resulted in the opening of the 191-room Courtyard Houston Downtown Convention Center , the 171-room Residence Inn Houston Downtown Convention Center and the 82-residence Humble Tower Luxury Apartments, which occupies a 17-story structure developed in 1936.
The iconic complex, with its two other structures having been originally built in 1921 and 1940, is listed on the National Register of Historic Places, and RLJ will respect the designation as it reinvents the existing apartment tower as a SpringHill Suites. The new hotel will add 166 guestrooms to the hungry market surrounding the 1.2 million-square-foot George R. Brown Convention Center.
“The convention center has been pretty steady over the last two years but they really haven’t been able to attract larger conventions because of the lack of immediate rooms,” Luigi Major, a managing director with global hospitality consulting firm HVS, told Commercial Property Executive.
RLJ isn’t the only developer that has its eye on the gap between supply and demand near the convention center. Quite a few projects are on tap, including the 1,000-room Marriott Marquis, which will be physically connected to the gargantuan meeting center.
But it’s not just the convention center that is spurring demand. Houston’s thriving economy and booming energy sector have translated into a loud cry for hotel rooms downtown. “What we see in downtown Houston is a lot of demand that’s not being accommodated in the market because there’s no capacity right now, so it’s being pushed out [to other submarkets],” Major said. “But when you have that increase in supply, some of the demand will return, on top of the demand that can be generated by the convention center attracting larger groups once it has the capacity to hold those groups.”
Construction of RLJ’s new SpringHill suites is scheduled to reach completion and join the two other hotels at the Humble Oil complex in mid-2015.