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Exxon's XTO Energy's Shift to Houston Impacting Fort Worth's Skyline

XTO Energy Plans to Relocate its HQ to the Exxon Mobil Campus in Houston This Summer
May 23, 2018
Fort Worth's skyline was built, in part, because of long-held ties to the Texas energy industry, but XTO Energy's decision to relocate its headquarters to Houston this year signals a shift for the industry that was once its foundation.

By the end of this summer, XTO Energy Inc., a subsidiary of Exxon Mobil Corp. (NYSE: XOM), plans to move about 1,200 jobs to the new 385-acre Exxon campus near Houston. The relocation, announced last year, is part of XTO Energy's effort to sell off its corporate-owned real estate in Fort Worth.

With the help of real estate services firm JLL, XTO Energy has already sold five of its seven properties in Fort Worth, including the Petroleum Building, a 14-story, Art Deco-style office building located on a full city block along West 6th Street adjacent to Sundance Square. The Petroleum Building was built in 1927 for businessman Richard Dulaney, whose long career was built on oil and gas.

XTO Energy also put an additional building, the iconic WT Waggoner Building in Fort Worth, on the market earlier this year.

The XTO Energy-owned real estate has been marketed and sold in phases to "mitigate market impacts," said Jeremy Eikenberry, a spokesman for XTO Energy.

"The majority of employees will relocate to Houston next month, and the remaining 400 in mid-2020 for operational reasons," Eikenberry told CoStar News, in an email. "Our phased moves are intended to support business continuity while also helping minimize economic impact to the Fort Worth area."

After those moves, the company expects to employ about 350 employees in Fort Worth to support the regional operations. Some employees with XTO Energy's midstream operations supporting the Barnett Shale operations will also stay in Fort Worth.

Earlier this month, XTO Energy notified the Texas Workforce Commission of the planned relocation, which will result in the layoff of about 65 employees.

From a real estate perspective, Fort Worth Economic Development Director Robert Sturns said he's not too concerned.

"Anytime you lose a major employer with a lot of employees it's a challenge, but no one was caught off guard and the buildings have been sold or repurposed quickly," Sturns told CoStar News. "Those buildings can be used for office space or converted into some other use that will bring other uses into downtown Fort Worth."

Sundance Square has yet to determine what it will do with the Petroleum Building. But Sturns said options could include the conversion of the office building into a residential or hotel-condo development. Everything is being discussed, he said.

"They are trying to determine the future opportunities for the building," Sturns said, adding that Sundance Square, like many other Dallas-Fort Worth property owners, were at the annual International Council of Shopping Centers' convention in hopes of landing some ideas.

The changing of the skyline has been decades in the making, with Fort Worth officials focusing on broadening its employer base beyond energy, bringing in medical companies, engineering firms and aerospace operations, with the goal of making the city even more resilient. Sturns estimates about 10 to 15 percent of Fort Worth's business community currently relies on the energy industry.

"In our strategic plan, we began looking at how we could mitigate the risks of the oil and gas industry on our community," Sturns said. "The oil and gas industry is so cyclical and those downturns can be hard on a community. We wanted to diversify as much as we could."

Candace Carlisle, Dallas-Fort Worth Reporter  CoStar Group   

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