{{titleBar.title}}

{{titleBar.tagline}}

 

 

NAI Partners: 4Q2015 Office Market, Economic Outlook not a 'V' but 'U'NAI Partners: 4Q2015 Office Market, Economic Outlook not a 'V' but 'U'https://www.recenter.tamu.edu/news/newstalk-texas/?Item=120952016-02-12T06:00:00Z

​HOUSTON - With hope for a V-shaped recovery from the oil downturn gone, reality has settled in to a best case scenario of a U-shaped recovery.

While the oversupply of oil is recognized as the key variable driving oil prices down, the most recent drop in WTI is as much a result of the soaring value of the U.S. dollar, as the oil glut persists with little recent change in supply of the commodity. The strengthening dollar is also reducing U.S. exports.

Forecasts are for the oil prices to begin to turn around in mid to late 2016, but oil forecasts are less than stellar in their performance.

4Q posted 1.1 million sf of net absorption, a demand for office space that was on par with historic 4Q performance. Yet, total annual net absorption was only 3.1 million sf, making 2015 the 8th slowest year since 2000.

Leasing activity in 4Q2015 was down to 2.7 million sf, significantly lower than historic 4Q levels of 4.4 million sf.

Leasing activity in 4Q brought total annual leasing activity to 12 million sf, the second lowest year of office leasing in the past 16 years.

Low net absorption, along with 3.9 million sf of new deliveries, increased vacancy in 4Q to 14.4 percent.

Availability is at a 16-year high of 19 percent, which includes 7.9 million sf of sublease space. Still another 8.8 million sf of construction have yet to deliver (with yet unknown vacancies), suggesting increases in supply under weakened demand for 2016.

With Houston’s office market clearly in the falling phase of market cycles, attention turns to a favored tenant market and increasing landlord concessions.

Analytic forecasts of NAI Partners indicate that the falling phase of Houston’s office market cycle will continue through 2016, bottoming out in mid to late 2017 with vacancies reaching peak levels of 17 percent.

NAI Partners
Houston-The Woodlands-Sugar Land
Office
https://assets.recenter.tamu.edu/Documents/MktResearch/Houston_office_NAI.pdf

Also see NAI Partner's 4Q2015 Industrial Report.

Source: {Source}

 Search NewsTalk Texas