Houston Office vacancy up again, though data show continued economic recovery.
RISE IN VACANCY TO 24.7%
Year-over-year, as of May 2021, overall vacancy in the Houston office market is at 24.7% and availability is at 29.4%, both up from this time last year. Year-to-date, the Houston office market has recorded 4.5 million sq. ft. of leasing activity—which is comprised of both new leases and renewals—while net absorption (move-ins minus move-outs) is at negative 2.7 million sq. ft. There have been three projects delivered so far in 2021 totaling 153,400 sq. ft., and 19 developments under construction at 4.2 million sq. ft. The Houston average asking full-service rent is at $29.18 per sq. ft., down slightly from this time last year.
SIGNIFICANT LEASE TRANSACTIONS IN 2021
Linde Engineering has leased 120,454 sq. ft. in Sierra Pines II at 1575 Sawdust Road in The Woodlands. The company will occupy the second and third floors in the six-story, Class A office building. Also, Buckeye Partners has signed a 66,064-sq. ft. lease at 4200 Westheimer Road in the Galleria/West Loop submarket. With this transaction, the 205,629-sq.-ft. building is now 61% leased.
HOUSTON ECONOMIC INDICATORS
The Federal Reserve Bank of Dallas reported that Houston metropolitan area payrolls continued to increase in April to 3,012,000—94.5% of February 2020 levels—after shifting up in March when the state removed most pandemic restrictions on businesses, and the economy bounced back from Winter Storm Uri. The rest of Texas has continued to outpace the U.S. overall in employment since summer 2020, with payrolls rising to 96.8% of February 2020 levels by April.
Director of Research
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