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Vacancy rate at 21.1%. After peaking at 22.0% in Q2 2018, total vacancy has been slowly dropping, reaching its current rate of 21.1%. So far, year-to-date 2019 net absorption is in positive territory at 762,230 sq. ft., following 2018 with a year-end total of positive 207,314 sq. ft. This marked the first time the Houston office market ended a calendar year with positive absorption since Q4 2014. However, that doesn’t mean the office market is out of the woods quite yet. Though space is being absorbed at an improved clip, in many cases these leases represent companies moving to new locations. For the Houston office market to thrive again it will need to start seeing an increased number of expansions, new entities taking space up, and existing companies not yet in Houston expand their operations to the Bayou City.
Energy Corridor gradually on the mend. Houston’s west side is continuing to see positive forward movement, underscored by the sale of Eldridge Place, a three-building, 824,632-sq.-ft. office complex purchased by Granite Properties for $78.4 million from TIER REIT. It has been reported that Granite plans to spend $20 million on renovations to the complex. Additional signs of optimism in the Energy Corridor include the 525,000-sq.-ft. lease by McDermott International in December and Transocean‘s 300,000-sq.-ft. lease in October.
Houston employment update. The greater Houston area created 108,300 jobs, a 3.5% increase, in the 12 months ending December 2018, according to the Texas Workforce Commission’s preliminary job data. The five sectors adding the most jobs in 2018 were construction (19,400); administrative and support services (16,800); durable goods manufacturing (15,500); professional, scientific and technical services (11,200); and health care (11,100).
Director of Research
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