Construction is officially underway on a mixed-use development on 17 acres in inner Houston that includes a fully leased office building to a major energy trader at a time when office vacancies are at record highs in the area.

Houston-based Tellepsen Builders broke ground on a 146,000-square-foot office building at The RO, a mixed-use project at 3120 Buffalo Speedway that has been in the works for more than seven years. The office building is fully leased to Vitol Inc., a global commodities trading company, and is being financed by Vitol Americas Corp., according to public documents filed with the Harris County Clerk.

Houston-based Transwestern is the developer of The RO. Neither Transwestern nor Vitol responded to requests for comment about the agreement.

The RO is being built on the site of Exxon Mobil's former research campus for its upstream operations at the intersection of Buffalo Speedway and West Alabama Street in Houston’s Greenway Plaza market. Exxon Mobil sold the land to Transwestern and Spear Street Capital in 2017 and the energy company's buildings were later demolished. Transwestern bought out Spear Street's stake in the project in 2022.

The RO stands for River Oaks, one of Houston's most affluent neighborhoods that is nearby.

Other planned portions of The RO include a hotel-condominium tower, a 75,000-square-foot dining and retail center, and a 317-unit apartment complex. The hotel-condo tower, called The Birdsall, is Auberge Resorts Collection's first project in Houston. The Birdsall's 44 residences and 105 hotel rooms are being built by Hoar Construction.

Transwestern sold a 4.7-acre tract of The RO referred to as parcel seven to an entity related to Occidental Petroleum Corp. in 2023, according to Harris County Clerk's records. The agreement between Transwestern and the Occidental entity states that any high-rise office tower built on the land must be constructed primarily with glass rather than stone or other masonry with first-class standards like Houston office towers 609 Main St. and 1500 Post Oak Blvd.

Occidental currently has its headquarters at 5 Greenway Plaza, less than a mile away from The RO. Occidental did not immediately respond to a request for comment.

The RO is being built at a time when Houston's Greenway Plaza market is struggling to attract office tenants despite the neighborhood's location between Downtown and Uptown.

"The average age of office properties is more than five decades old, and only about 10% have been renovated this past decade. This has often made it difficult to attract new tenants and move-outs have been a common sight," said Itziar Aguirre, CoStar's director of market analytics in Houston.

Greenway Plaza had a net loss of 1.1 million square feet in office lease commitments over the past five years and 80% of new leases signed in the Greenway Plaza in any given year is for 5,000 square feet or less, Aguirre said.

"Weak demand has inevitably pushed the overall vacancy rate higher, and at 21.7%, as of the second quarter of 2024, stands at an all-time high and well above the 10-year average of 15.3%. The overall available rate is even higher — 25.6% — and also at a record high," Aguirre said.

Vitol's space at The RO is being built at 3425 West Alabama St. on 2.372 acres known as parcel two. The office development comprises 143,027 square feet of rentable office space, three levels of above-grade parking and 5,920 square feet of shell office space, according to county clerk documents.

An agreement between Vitol and Transwestern for the energy trading firm's new office space at The RO lists 12 competitors of Vitol that cannot set up shop at The RO.

Those competitors are BP Energy Co., BP Global Energy Trading, BP Trading and Shipping, Cargill Inc., Castleton Commodities International, Glencore PLC, Gunvor Group Ltd., Koch Industries, Louis Dreyfus Co. B.V., Mercuria Energy Group Ltd., Shell Trading (U.S.) Co. and Trifigura Group, according to the agreement filed with the county earlier this year.

Vitol currently leases about 62,000 square feet of office space at 2925 Richmond Ave. at the Kirby Grove mixed-use development that was built in 2015, according to CoStar data. Kirby Grove — also in the Greenway Plaza market — is less than a mile away from The RO.

Architecture firm PDR designed Vitol's space at Kirby Grove which it refers to as "trade floor meets art gallery" on its website. PDR has designed Vitol's customized spaces in Houston for nearly 30 years, according to PDR's website.

PDR is not listed on a fact sheet about The RO's development. PDR did not immediately respond to a request for comment. Pickard Chilton is the design architect and Kendall Heaton Associates is the architect of record for The RO's office space, according to the fact sheet.

The RO is expected to total 740,000 square feet and be complete in 2027. Pickard Chilton is also the master plan architect for the entire development and the design architect for the apartment complex.

“The RO represents years of planning and design that will mirror and enhance the community around it with thoughtful architecture, localized amenities, intuitive access and comfortable green spaces to relax with family and friends,” Sean Suffel, a project executive with Transwestern Development, said in a statement.

New York-based Kohn Pedersen Fox is the design architect for the hotel and condos. Houston-based Dillon Kyle Architects is the interior designer for the condos and New York-based Roman & Williams is the interior designer for the hotel. California-based House & Robertson Architects is the architect of record for the hotel and condos. Atlanta-based Preston Partnership is the multifamily architect of record. Houston-based OJB Landscape Architecture is the landscape architect. Michael Hsu Office of Architecture designed the retail portion.