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Houston Office Market Feels 2nd Quarter Pain Due to Energy Fallout

HOUSTON – Troubles in the energy industry ripped the Houston office market in the second quarter as the pace of leasing slowed and vacancy rates shot upward, according to the Colliers International real estate firm.

Houston’s citywide vacancy rate rose to 14.1 percent in the second quarter up from 11.6 percent the second quarter of 2014, Colliers said.

A significant amount of office space was emptied by energy firms and placed on the market as sublease space. A number of energy companies have announced layoffs and job cutbacks and oil prices fell.

“For the first time in 5 years, Houston’s office market posted negative net absorption, primarily due to tenants relocating to new buildings and companies placing excess space on the sublease market,” wrote Lisa Bridges, director of market research in Houston for Colliers.

The Houston market suffered 525,000 square feet of negative absorption in the second quarter, Colliers reported.

A number of large energy firms moved into new buildings, leaving vacancies in the wake, including Exxon Mobil, Sasol and Air Liquide.

Colliers said 12.3 million square feet of office space is under construction in the Houston area, one of the largest construction totals in the nation.

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