HOUSTON – Houston’s office market continues on a winning streak with a 2014 performance that’s equivalent to winning both the World Series and the Super Bowl in the same year.
Rental rates for Houston office space rose 5.1 percent over the last year, according to a third quarter report by Colliers International.
The citywide average rental rate stood at $26.94 per square foot, Colliers reported.
Although some Houston downtown Class A towers were quoting rates around $50 per square foot – lofty rents that were once thought to be impossibly high.
Citywide vacancy stood at 11.9 percent at the end of the third quarter, down from 12.6 percent a year earlier, Colliers reported. The average CBD Class A vacancy is 9.8 percent.
With over 100,000 new jobs created over the last year, office space has been filling rapidly. Houston’s office market has year-to-date absorption of 4.4 million sf.
“Of the 1,644 existing office buildings in our survey, only 45 have 100,000 SF of contiguous space available for lease or sublease. Further, only 15 have 200,000 SF of contiguous space available. Citywide, available sublease space totals 4.0 million SF or 1.9% of Houston’s total office inventory, but only 1.8 million SF of this sublease space is currently vacant,” Colliers report said. “Some of the larger tenants that moved into new space during Q3 include Repsol Services Company (200,000 SF) which moved into 2455 Technology Forest Blvd. in The Woodlands submarket, Devon Energy (63,269 SF) which moved into Wildwood Corporate Centre located in The Woodlands submarket, NetIQ Corporation (55,380 SF) which moved into 515 Post Oak Blvd. in the West Loop/Galleria submarket, and William Jacob Management (28,638 SF) which moved into 15810 Park Ten Place located in the Katy Freeway submarket.”
Houston has more than 17 million square feet of office space under construction and about 5.3 million square feet of that is set to come online in the fourth quarter.