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The Sublease Index—measured by the amount of sublease space as a percentage of total available space—registered at 8.9% as of the end of May 2020, down 40 basis points from Q1 2020 at 9.3%. This is notable considering that the apparent excess of available sublease space has been one of the most prominent talking points in the Houston Office market the last four years. The total amount of available space (all space available regardless of whether it is vacant) in the Houston Office market is 63.2 million sq. ft.
Class A buildings had the amount of available sublease space decrease by 4.1% during the last two months, while available direct space increased by 1.8% during the same time. Available space recently listed included 64,839 sq. ft. in Total Plaza, at 1201 Louisiana Street in downtown Houston. According to Bloomberg, U.S. natural gas terminal developer Tellurian Inc. has cut roughly 40% of its workforce in a massive restructuring effort aimed at slashing costs and rescuing a struggling, $29 billion export project.
The COVID-19 pandemic alongside the recent oil price war and its impact on the Houston real estate market will be difficult to forecast. The pandemic presents challenges when forecasting future outcomes because predictions depend on past information, and our historical data points are not comparable to current circumstances. We believe the vacancy and availability rates will continue to rise for the remainder of 2020.
Director of Research
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