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Vacancy rate down to 21.1%. Midway through the fourth quarter, the vacancy rate dropped by 50 basis points to 21.1%, from 21.6% this time last month. Year-to-date there has been 866,000 sq. ft. delivered to the Houston market, with 16.1% of that space available for lease. Meanwhile, 2.7 million sq. ft. is currently under construction—a total that includes soon-to-open Capitol Tower in Houston’s CBD. The 35-story; 781,000-sq.-ft. skyscraper at 800 Capitol Ave. newest tenant is Waste Management, relocating its headquarters in 2020. Waste Management has inked a deal for the largest lease in the tower, 284,000 sq. ft. across nine floors.
Office net absorption year-to-date has turned positive. Houston’s office market may finally be on the road to recovery, although warning signs continue. The office market has seen over 378,000 sq. ft. of positive net absorption year-to-date as of November 2018, following three year-end totals of negative net absorption in 2015, 2016 and 2017. With a slowing supply pipeline and an improving labor market, the outlook for the office market continues to improve.
Leasing velocity has picked up. A significant amount of leasing activity is happening, including Hewlett Packard Enterprise signing the largest Houston-area office deal of the year, preleasing 568,000 sq. ft. at CityPlace in Springwoods Village. Other significant leases this year include Houston-based energy company Apache Corp.’s 530,000-sq.-ft. renewal at Post Oak Central and Transocean’s lease of 300,000 sq. ft. lease at Enclave Place.
Director of Research
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