|CBRE: Houston office marketview 4Q 2015||CBRE: Houston office marketview 4Q 2015||https://www.recenter.tamu.edu/news/newstalk-texas/?Item=11820||2016-01-22T06:00:00Z|
HOUSTON - As oil prices greased their downward spiral throughout 2015, slipping past $35/bbl in December, Houston’s office market comes into view at year-end as the most vulnerable of the region’s commercial real estate sectors.
Houston’s office market reported an additional 1.2 million sf of direct positive absorption but this seven-figure measure was driven exclusively by new deliveries in 4Q 2015 where single-tenant occupiers claimed the lion’s share of this demand at nearly a million sf.
In fact, Houston’s construction pipeline is the story of the entire year where space deliveries in the Class A sector totaled 11.6 million sf (38.1 percent preleased) and help explain why the total annual absorption clocked up to nearly 4.8 million sf across all categories of owned, single- and multi-tenant space.
Examining beyond the total calculations, though, when the 4.2 million sf of owner occupied space deliveries are excluded, Houston’s competitive leasing market actually absorbed less than 600,000 sf during 2015.
Meanwhile, these new Class A deliveries came online with asking rents above market averages causing overall rents to trend upwards. Still, several submarkets finally saw Class A rents reflect the pullback in tenant demand and these include the CBD, West Loop/Galleria, Westchase and North Belt.
Eyeing the year ahead, Houston will watch its office supply increase by another 6.7 million sf of new construction with approximately 3.3 million sf directly available. This space, combined with 29.9 million sf of existing direct vacant space, means projected direct vacancy will eclipse 15.2 percent, a five year-high dating back to when Houston was first emerging from the Great Recession.
However the Houston office market tango includes some upside with the largest energy office occupiers publicly stating their long-term strategies to weather the steep slump in crude and natural gas commodity prices.
|CBRE||Houston-The Woodlands-Sugar Land||Office|| https://assets.recenter.tamu.edu/documents/mktresearch/Houston_CBRE_Office_MarketView.pdf|
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