Last week, controversial defense contractor KBR signed the largest office deal in the United States in nearly two years, leasing a total of 1.2 million square feet in Houston.

Brookfield Properties extended the construction company's 700,000-square-foot headquarters lease at KBR Tower, as well as a 300,000-square-foot lease at 500 Jefferson St. KBR is also taking an additional 234,000 square feet in both office buildings.

The renewal annuls KBR's previously announced plans to relocate its headquarters to nearby Katy, TX, where the company had been planning a 910,000-square-foot campus. Those plans came to a standstill after the market took a tumble at the end of 2008, but the company maintained its intent on relocating to West Houston at a later time. Now, KBR has opted to stay downtown, its home for about 20 years.

"Expanding our downtown Houston presence is not only a good business decision, but also brings the added benefit of contributing to our City’s continued downtown revitalization," said Klaudia Brace, senior vice president of administration at KBR.

Both office towers are part of the four-building Cullen Center office complex in Houston's Central Business District. The 40-story KBR Tower at 601 Jefferson St. measures 1.05 million square feet and delivered in 1973. The 20-story, 390,500-square-foot high-rise at 500 Jefferson was built in 1962.

Dan Bellow and Mike Boehler with Jones Lang LaSalle represented KBR in the transaction. Paul Layne and Paul Frazier represented Brookfield, in-house.

"Successfully completing an office transaction of this size - involving a significant expansion - speaks to the increase in tenant activity we are beginning to see around our major markets," said Dennis Friedrich, president & CEO of Brookfield Properties' U.S. Commercial Operations.