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Houston Office market experiences some gains, though picture remains cloudy. office lease
Year-over-year, as of August 2021, 4.4 million sq. ft. of office space was under construction in the Houston metro. The majority of the projects delivering this year were started pre-Covid-19, in a much different office environment where remote work wasn’t uncommon, but not to the level of saturation it is today because of the pandemic.
The vacancy rate at 25.1% is expected to rise as supply continues to deliver in an atmosphere where leasing activity hasn’t come back to pre-pandemic levels. Overall office net absorption has remained negative, expanding further into the red at 3.4 million sq. ft. so far this year.
Even with tenant commitments in place from preleasing efforts, a lot of space will hit the market in the next 12 to 24 months. Recent market activity and deal announcements have been encouraging; however, the spread of the Covid-19 Delta variant has led many companies to reconsider their office re-openings, and the continued future uncertainty could severely hamper any recent gains. We are literally living in a “wait-and-see” environment, making it extremely difficult to predict near-term or long-term trends.
SIGNIFICANT LEASE TRANSACTIONS
The Harris County District Attorney Office renewed its lease for 140,136 sq. ft. in Jefferson Towers at Cullen Center in the CBD in May, Linde PLC signed a renewal for 120,454 sq. ft. at 1585 Sawdust Road in The Woodlands submarket in March, and Aspen Technology signed a renewal for 79,867 sq. ft. at 2500 CityWest Blvd. in the Westchase submarket during August.
Director of Research
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