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717 Texas Street Houston, TX- renovation

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The vacancy rate in the Houston office market was close to unchanged month-over-month and year-over year at 21.5% and 21.7%, respectively. The amount of vacant office space on the market is approximately 51.1 million sq. ft.—comprised of 47.6 million sq. ft. of direct space and 3.6 million sq. ft. of sublease space.


Market Highlights

Vacancy rate at 21.6%. The vacancy rate in the Houston office market was close to unchanged month-over-month and year-over year at 21.5% and 21.7%, respectively. The amount of vacant office space on the market is approximately 51.1 million sq. ft.—comprised of 47.6 million sq. ft. of direct space and 3.6 million sq. ft. of sublease space. The Central Business District vacancy rate is at 24.9%, up slightly from this time last year at 24.5%., while the Energy Corridor vacancy rate is at 32.8%, down 60 basis points from this time in 2018 at 33.4%. Net absorption remained negative at 670,000 sq. ft.—though still an increase compared to this point in time in 2018, when the year-to-date total was negative 1.4 million sq. ft. Of the almost 2.5 million sq. ft. currently under construction, about 35% of that space has been spoken for.

Renovated Houston tower. 717 Texas, a 33-story, 697,195-sq.-ft. Class A office tower in the northern downtown’s theater district has undergone major renovations attracting several new tenants to add to its roster. Shackelford, Bowen, McKinley & Norton, a Dallas law firm, leased 15,000 sq. ft. on the 27th floor which they will move into once the buildout is complete. In addition, the building is home to Houston-based power company Calpine Corp., plus multiple law firms such as Blank Rome and Smyser Kaplan & Veselka. The trend of new office renovations in Houston continues as landlords are on the spot to keep tenants during the seeming “flight-to-quality” movement.

Job growth remains healthy. Revisions to first-quarter data removed nearly 15,000 jobs from Houston’s payroll count. Taking this into consideration, Houston employment has grown at an annual rate of 1.9% in 2019—slightly below the historical average annual growth rate of 2.1%. During 2019 through July construction jobs logged the fastest growth rate at 8.9%, followed by mining and logging at 6.1%. Professional and business services registered at 0.8% over the same period. The unemployment rate in Houston rose to 3.8% in July from 3.6% in June. The July U.S. unemployment rate was 3.7%, and Texas overall remained at its record low of 3.4%.


Leta Wauson
Director of Research
leta.wauson@naipartners.com
tel 713 275 9618

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