Investor making big changes to The HC | Hughes Center

It’s been a busy year for The HC | Hughes Center.

Since Blackstone subsidiary Equity Office bought the Class A office park at Paradise and Flamingo roads for $347 million a year ago this week, the investor has quietly made big changes.

Those changes — from a new fitness center to a fresh way of leasing office space — were on display Thursday at a brokers’ event inside the park’s flagship Wells Fargo Tower.

“We have reintroduced The HC as more of a lifestyle work environment. It’s more hip, lively and exciting,” said John Woo, portfolio manager for Equity Office Properties. “We truly are redefining the Las Vegas office experience.”

That’s not to say the center lacked cachet. Since opening in the late 1980s, it’s been the city’s premier Class A office park, with high-profile tenants including Wells Fargo Bank, Ameristar, Boyd Gaming and law firms Gordon Silver, Lewis Roca Rothgerber and Snell &Wilmer.

But Equity Office is the center’s fourth owner since 2006. Through those transitions and the recession, the property hasn’t seen many new improvements. Plus, construction along the 215 Beltway brought tougher competition for tenants once the economy picked up.

Woo admitted that the park “lost some of its luster.”

“But I think we’ve brought it back,” he said.

Renewing that shine meant surveying tenants for ideas. The results include a 24/7 gym free to tenants, as well as five fast-casual restaurants soon to go with seven existing sit-down eateries. Equity Office is building a 12,000-square-foot home for Chipotle, Panera Bread, Jamba Juice, Pieology and Habit Burger. Also coming: outdoor sitting areas with Wi-Fi.

The investments, as well as a marketing push that pays brokers 100 percent of their 5 percent commission within 48 hours of signing a lease, have paid off so far. The 1.5 million-square-foot center has signed deals on 180,000 square feet of office and retail space in the last year, and has another 91,000 square feet under proposal. Its occupancy rate has jumped from the low 70 percent range to around 80 percent. New tenants include auto-loan company Consumer Portfolio Services, mall-booth operator American Kiosk Management and defense contractor Lockheed Martin.

But managers said they’re especially excited about the center’s 50,000 square feet in speculative, or spec, offices.

It’s not the first time a local property manager has built spec offices, but no one has done it on such a large scale. Spec office is a different way of leasing — completely building out an office interior and hoping for tenants to materialize, rather than leasing an empty shell and letting tenants take on the design and cost of finishes. Spec is also expensive — Equity Office has spent $2 million — and it’s risky, because there’s no guarantee tenants will sign.

But Equity Office wanted to meet growing demand for “open, collaborative, creative” spaces for users of up to 5,000 square feet, Woo said. The suites have open floor plans, including work benches, sitting areas and unwalled kitchens that flow out into workspaces.

Five of seven suites in the first phase have been grabbed up, while three in the eight-unit second phase are spoken for, said Ryan Martin, a broker with Colliers International and the center’s leasing agent. Tenants include a provider of nurses to prisons, a San Diego-based law firm and a boxing promoter.

Equity Office wouldn’t disclose how much it’s spending on all of its improvements at The HC.

But upgrades are essential, said John Restrepo, principal of consulting firm RCG Economics.

New projects along the 215 Beltway, including the 200,000-square-foot, Class A One Summerlin under construction in Downtown Summerlin, are pinching older properties in the center of town, Restrepo said. Improvements are also key if Equity Office wants to keep asking lease rates that Woo said range from $2.65 to $3.15 per square foot. That’s compared with a second-quarter market average of $1.80, according to RCG.

“The city has evolved over time. Commuting patterns have changed, and location preferences have changed. The center is still a player, but is it the player it used to be? No. It’s still a great project, and an important project. It just has more competition,” Restrepo said. “Is it going to be able to compete with Downtown Summerlin? We’ll see.”

Contact reporter Jennifer Robison at jrobison@reviewjournal.com. Follow @J_Robison1 on Twitter.