Another Large Block of Office Space Hits Sublease Market in Houston’s Energy Corridor
HOUSTON – (Realty News Report) – A major block of Energy Corridor office space has been placed on the sublease market by TechnipFMC, a firm that performs engineering and construction for the energy industry, according to NAI Partners.
The TechnipFMC sublease space, which totals 375,937 SF, is located in the Energy Tower II building at 11720 Katy Freeway, near Kirkwood. CBRE is marketing the sublease space.
The Energy Tower II building was developed by Mac Haik, a former receiver for the Houston Oilers before he became an auto dealer and real estate developer.
Even though the sizable TechnipFMC sublease is a set-back, overall, the Houston office market has been improving, says Jon Silberman, managing partner of the NAI Partners real estate firm, at the firm’s quarterly press breakfast Wednesday.
The sublease supply surged to more than 12 million SF in 2016, following a precipitous drop in oil prices. West Texas Intermediate crude dipped below $30 a barrel in early 2016, as oil companies to laid off thousands of employees in Houston. The energy firms put excess office space up for sublease. One national real estate firm reported the Energy Corridor was the weakest office submarket in the United States.
After hitting the peak of 12 million SF, the sublease supply has declined to 8.8 million SF today, NAI Partners reports. Some 1 million SF of sublease deals were completed in the fourth quarter of 2017.
“We are churning through that sublease space,” Silberman commented.
One of the largest recent new subleases was FairfieldNodal subleasing 47,000 SF at Air Liquide Center, a new building near Memorial City, reported NAI Partners. Costello Engineering also moved into 35,000 SF at CityWestPlace Bldg 2 in Westchase.
NAI Partners’ Dan Boyles, a partner and team leader in the office sector, said the Houston office market is showing gradual improvement. In the fourth quarter of 2017, the Houston office market had positive absorption, following a long string of losses as the city’s vacancy rate climbed.