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Abandoning plans for a new Katy headquarters, KBR has announced that it will instead extend its current lease and expand its presence in downtown Houston.

The Houston expansion will replace previously announced plans to develop the Katy campus.

At completion, the new total of KBR leased space in downtown Houston will total more than 1.2 million square feet.

In making the announcement, KBR Senior Vice President Klaudia Brace said the decision came after a review of market conditions and KBR’s business plan.

“It became clear that expanding our downtown presence was not only a good business decision, but also brings the added benefit of contributing to our city’s continued downtown revitalization,” Brace said, “KBR’s 100-year history is built on roots that originated in downtown Houston and, with this expansion, we can build on that history while offering continued quality service to our Houston-based customers. While we are expanding our downtown footprint, our work and relationships in the broader Houston community will continue. KBR appreciates and acknowledges the support and efforts extended from the greater Katy area during the company’s West Houston planning.”

Katy Area Economic Development Council CEO Lance LaCour called the decision disappointing, but said the effort was worthwhile.

“We are very disappointed with the KBR decision. However, the amount of effort, work and due diligence generated by the KBR qualification and proposal process which resulted in the

Katy area site being initially selected was not completed in vain,” LaCour said. “This process is indicative of the abilities of our organization and the entire group of community partners and business interests that came together to pursue the KBR opportunity. We continue to believe that our work has confirmed the attractiveness of the site and our community for a corporate headquarters facility.”

He said the knowledge and research gained from the KBR site selection process would be used to market the Katy area to other corporations worldwide.

“Katy has the available land, talent and proximity to the energy corridor that no other community can provide,” LaCour said. “Katy was recently ranked one of the top five most ‘notable places in the U.S. for recession resistant economic growth’ and is gaining the attention and interest of corporations that would benefit from all of the site selection and planning work that has been devoted to this very desirable location.”

Renovation planning for KBR’s downtown Houston expansion is expected to begin next month, with project work scheduled to begin in the second quarter of the year.