shine on

Global real estate manager to tap into solar energy to power Houston portfolio

Brookfield Properties announced plans to power its Houston properties with solar energy by 2026. Photo via brookfieldproperties.com

Commercial real estate manager Brookfield Properties, a major office landlord in Houston, is plugging into solar energy to power its local portfolio.

The New York City-based company plans to rely on a new-build solar power plant to supply all of the electricity for its 10.3 million-square-foot, 10-building office portfolio in the Houston area. Brookfield’s key properties here include:

  • The 3.1 million-square-foot Allen Center complex
  • The more than 1.1 million-square-foot Heritage Plaza
  • The 1.1 million-square-foot 1600 Smith Street tower
  • The nearly 850,000-square foot TotalEnergies Tower

Laura Montross, vice president of communications for Brookfield Properties, tells Realty News Report that the solar power plant will be operating by 2026.

Each year, the company’s Houston portfolio uses about 90,000 megawatt-hours of electricity, “which is unlikely to take up the total capacity of a new solar power plant,” she says, “so the excess capacity will be available to other buyers or the utility grid operator for purchase.”

Montross says Brookfield is in talks with several developers of solar power plants about the Houston project, but neither a site nor a contractor has been chosen yet.

Brookfield announced June 28 that its entire U.S. office portfolio will run on zero-emissions electricity by 2026. The switch is expected to reduce carbon emissions within the more than 70-million-square-foot portfolio by about 80 percent.

“Instead of taking incremental steps or waiting for others to act, we are completely transforming how we power office buildings throughout the United States,” Ben Brown, managing partner of Brookfield Real Estate, says in a news release.

Brookfield Properties says electricity for the nationwide office portfolio will come from four sources: hydropower (49 percent), solar and wind power (33 percent), and nuclear power (18 percent). Outside Houston, the company maintains a large office presence in the New York City, Los Angeles, Denver, and Washington, D.C. markets.

“Not only will [this strategy] significantly advance our goal of transitioning our entire portfolio to net zero carbon,” Brown says, “but also we are confident that both the increased demand for zero-emissions electricity it will create and the industry precedence it will set will be a game-changer for how state-of-the-art office buildings are powered throughout the country.”

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A View From HETI

Texas has also officially claimed the No. 1 spot in the U.S. for existing and under-construction data center capacity, according to the report. Photo courtesy JLL

Houston stands to benefit from constraints dogging data center markets elsewhere in Texas, a new report indicates. This comes against the backdrop of Texas surpassing Virginia as the country’s top state for data centers — and amid deepening opposition to these facilities.

The report, published by commercial real estate services provider JLL, foresees Houston continuing to gain traction in data center development as occupants seek “scalable alternatives” to Texas markets experiencing supply-and-demand imbalances.

The Houston area currently hosts data centers with 287 megawatts of capacity, well below capacity levels in the Dallas-Fort Worth, Austin-San Antonio and West Texas markets.

However, the region is witnessing a spike in capacity, with 390 megawatts of capacity under construction, according to the report. Counting newly built data centers, Houston would be home to 677 megawatts of data center capacity, an 80 percent increase from the current inventory, the report says.

Developers target West Houston for large-scale data centers

Developers increasingly are evaluating West Houston and surrounding areas for large-scale campuses capable of supporting behind-the-meter power, according to the report. Data center development in the region is likely to remain concentrated in those areas, where power is readily accessible and flood risks are lower, the report adds.

The report notes that Houston is evolving from a traditionally enterprise-focused co-location market for data centers into a “credible large-scale growth market,” buoyed by rising interest in hyperscale facilities and increased development activity.

Corporate, energy and healthcare users are still active in Houston’s data center market, the report says, with cloud computing and technology tenants making inroads. The Houston market absorbed 25 megawatts of data center capacity in the first half of this year.

Texas crowned No. 1 state market for data center capacity

The growth of Houston’s data center sector is occurring in tandem with Texas’ ascent as a data center market. The report shows Texas now boasts 26 gigawatts of existing and under-construction capacity, followed by Virginia at 13 gigawatts.

JLL declares that “Texas has cemented its position as the state for data centers.”

The “frontier” markets of West Texas, the Carolinas, Louisiana, and Ohio account for 77 percent of all capacity being developed nationwide, according to the report.

As evidence of Texas’ heightened stature in the data center sector, commercial real estate services provider Cushman & Wakefield recently ranked Dallas as the world’s No. 1 primary data center market, while Austin-San Antonio led the list of second-tier markets and West Texas topped the third-tier ranking.

These rankings underscore “Texas’ growing importance as a large-scale AI infrastructure hub,” Cushman & Wakefield says.

Opposition to new data centers in Texas grows

While businesses see the value of adding data centers in Texas, the state’s data center boom is rattling residents and politicians alike.

A recent University of Houston survey finds that although 85 percent of Houston-area residents use AI—a key driver of data center growth—nearly 63 percent oppose construction of a data center within a mile of their home. Experts estimate 6.5 gigawatts of capacity, or roughly one-fifth of the total U.S. pipeline, will join the Texas power grid by 2030, with Houston serving as a main hub.

A poll taken recently by the University of Texas/Texas Politics Project yielded similar results: 56 percent of Texans oppose development of data centers in their community.

“Texas’ grid is already facing pressure from population growth, extreme weather and rising industrial demand,” UH researcher Soran Mohtadi says. “When residents say they are concerned about data centers, they’re mostly referring to grid reliability and affordability.”

Data center backlash prompts action by politicians

Responding to Texans’ concerns over power and water consumption, Gov. Greg Abbott recently imposed a moratorium on new data centers in the state to allow time for regulatory agencies to assess the projects’ impact. Meanwhile, some state lawmakers are calling for a crackdown on data center development.

Last month, a state legislative committee chaired by Sen. Joan Huffman, a Houston Republican, held a hearing on the effects of state sales tax exemptions given to data centers. The cost of these exemptions has climbed from an estimated $14.6 million in 2014-15 to a projected $3.3 billion in 2028-29, according to law firm Holland & Knight.

Two backers of massive data centers in Texas, social media giant Meta Platforms and AI powerhouse OpenAI, agreed this week to comply with Abbott’s recently issued standards regarding data center projects—and more have followed suit.

Dan Diorio, executive vice president of state policy and government affairs for the industry-backed Data Center Coalition, fears backlash against data centers may curb economic growth in Texas.

“I worry that communities that put moratoriums ultimately create too much uncertainty and unpredictability, and what that ultimately means is that those communities may shut themselves off to data center development but also may shut themselves off to broader economic development,” Diorio told Fox 7 News in Austin.

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