HOUSTON – The significant amount of office building construction in the Energy Corridor and other parts of West Houston has prompted CBRE Research to create more submarkets for tracking the West Houston office market, which has been booming due to the energy industry. Class A occupancy in the Energy Corridor is over 99 percent.
West Houston has been one of the most dynamic office markets in the nation over the last two years with robust new construction and exceptional occupancy rates,” said Analee Micheletti, Research Analyst for CBRE Houston. “As more development emerges in the West Houston submarkets, CBRE Research is recalibrating to capture that trending data.”
CBRE Research created of two new submarkets, termed “West Belt” and “Far West.” These new submarkets will enhance the market’s current tracking of the westward office movement in Houston as growth takes place outside of the Inner Loop business centers.
As Houston’s energy sector real estate needs have transitioned toward a campus model, Houston has seen commercial migration westward, evidenced by lack of availability and high demand in the West Belt and Far West markets. CBRE Research suggests that this westward movement is likely to continue in the near future and anticipates distinct trends to become apparent for each new submarket.
CBRE created the West Belt submarket as a result of the development along the Sam Houston Tollway (Beltway 8) becoming more established in recent years. Buildings in this submarket were reclassified from the FM 1960, North Loop and Katy Freeway submarkets.
According to CBRE Research, this area has begun to differentiate itself from the neighboring FM 1960 and North Loop submarkets with higher rents and rising development activity. Reassigning these buildings to the new West Belt submarket allows CBRE to track this unique area, as the Beltway’s accessibility in the midst of Houston’s westward expansion continues to drive office demand.
Sam Houston Crossing II, which comprises 313,000 sf, along with 8 West Centre, comprising 228,000 sf, each delivered this year as new additions to the West Belt submarket. Both are 100% leased.
Four new buildings totaling 482,000 sf are currently under construction, including Beltway Lakes III, a speculative project. Another speculative construction project, Beltway Lakes IV, will break ground in the fourth quarter.
West Belt comprises 51 buildings totaling 4.5 million sf and is 96.4% occupied. The boundaries are roughly along Beltway 8 from Clay Road to Highway 249.
Buildings in the Far West submarket were previously tracked in the Energy Corridor submarket. With Class A occupancy at 99.6%, the Energy Corridor has been one of the tightest submarkets in Houston for over a year. As the energy sector transitions toward a campus model, large blocks of space have experienced high demand. The subsequent westward migration resulted in CBRE’s creation of the Far West submarket.
The majority of the buildings in Far West delivered either before the recession or in 2012-2013. This submarket on the whole is extremely new, standing testament to the westward movement of development and activity in Houston.
Three new buildings delivered this quarter, adding over 273,000 square feet to the Far West inventory. Additionally, one of the most popular master planned communities in Houston, Cinco Ranch, is located in the heart of Far West and has created new office product where there previously had been none.
The current product in this area is limited. However, with five proposed buildings and nearly 7,600 acres of available land for future developments, CBRE Research predicts that this submarket will continue to grow in light of its close ties with the neighboring Energy Corridor.
Far West contains nine buildings totaling 567,000 sf and is 67.8% occupied. The boundaries are along the north by Interstate 10, the south by Westpark Tollway and the east stretching from Greenhouse Road to Highway 99.