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Colliers: Office Vacancy Soars in Houston Suburbs

Lisa Bridges, Colliers.

Lisa Bridges, Colliers

HOUSTON – Houston’s office vacancy rate jumped sharply in the second quarter, jumping to 16.2 percent, up from 14 percent in the second quarter of last year, according to the Colliers International real estate firm.

The downturn in the energy industry forced thousands of layoffs and companies emptied great blocks of office space. Tenants are renewing existing leases, but more companies are contracting than expanding.

Leasing activity has dropped by 34.3 percent since the second quarter of 2015, Colliers reported.

The Energy Corridor and west Houston, where a number of new have been constructed in recent years, has amassed an oversupply of office space.

Class A space in suburban Houston was 18.3 percent vacant in the second quarter, up from 14.1 vacant in the second quarter of last year, Colliers said.

The amount of sublease space has soared over the last year. There’s about 10.8 million square feet of sublease space in Houston, Colliers says.

“The majority of this space was leased by growing energy companies addressing their future expansion needs and now that the hiring has stopped and job cuts have occurred, the expansion space is no longer needed,” wrote Lisa Bridges, Colliers director of market research in Houston. “Some of the larger energy firms with multiple blocks of space on the market for sublease ultimately intend to consolidate operations into space not taken under a sublease.”

Colliers reports Houston had negative absorption of 400,000 SF in the second quarter. It’s the first time Houston has negative absorption in years.

July 21, 2016

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