Houston CBD office rents rise high to the sky

HOUSTON – Rent for trophy assets in the Central Business District has skyrocketed as top employers compete to provide top-notch work environments for their employees.

Houston rents for top-tier Class A offices that are larger than 500,000 sf, known as trophy assets, have increased 4.5 percent over last year to $44.50 per sf, which includes expenses. Vacancy rates are at 6.1 percent, according to JLL’s 2014 Skyline report released March 12, 2014.

“Until new product such as six Houston Center arrives on scene in 2016 and 2017, rents in the Houston skyline will continue to rise and landlords will continue to restrict concessions,” said Chrissy Wilson, senior vice president at JLL’s Houston office.

Almost half of the Central Business District’s skyline is owned by either New York-headquartered Brookfield Office Properties or JPMC/Crescent.

“This isn’t your father’s oil company office space anymore. The office building and office environment have evolved. In turn, projects that can offer tenants this type of quality have been able to dramatically push rental rates and set the tone for Houston’s Class A market,” said Chris Dekker, vice president of the agency leasing team for JLL’s Houston office.

By the numbers:

• $44.50 average rent per sf, including expenses, a 4.5 percent year-over-year increase
• 2.2 million sf of new office construction slated to start in 2014 in the Central Business District
• 15 Fortune 500 companies with headquarters in downtown
• 36 percent: amount of new construction this year in the Woodlands, the highest percentage in the Houston area
• 6.1 percent: space available in top-tier downtown buildings
• $250 million: estimated cost to construct 6 Houston Center, which should break ground summer 2014
• 7 new office buildings either underway or planned for downtown, including 6 Houston Center. Only two have broken ground, according to Central Houston Inc.

Read more at the Houston Business Journal.

Click through the slideshow to see the rest of the Central Business District skyline and a take a closer look at downtown’s trophy towers.