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Unwanted Top Ranking: Houston has Largest Sublease Supply in Nation, Reports CBRE Research

HOUSTON – Houston has the largest supply of sublease office space in the nation, according to a new report by CBRE Research.

Houston had an 11.1 million SF of sublease space on the market at year-end. Boston ranked second with 4.8 million SF of sublease supply, followed by Manhattan at 3.8 million SF.

The oversupply of sublease space, which is particularly acute in the Energy Corridor area, grew significantly since 2014 energy firms shed excess office space while oil prices were low.

Shell Oil has vacated huge chunks of office space in downtown, leaving more than 800,000 SF of sublease space in One Shell Plaza, which was an early-day landmark in the career of Mr. Gerald Hines.

Landlord representatives have been emphasizing that his is a good time to “go long”  with long-term leases while sublease space offers bargain opportunities. Some progress has been in leasing up the sublease space and lately some tenants have been declined to dump additional sublease space on the market because it almost seems like a lost cause. Meanwhile, this all puts downward pressure on rents.

Plus, there are still some new buildings coming online in Houston soon. And Skanska is expected to start construction this year on the new 750,000-SF Capitol Tower in downtown.  In the Greenway Plaza area, Thor Equities is constructing additional office space in its mixed-use project on Kirby Drive.

However, many respected Houston commercial real estate experts say Houston has bottomed out and the worst is over.

March 10, 2017 Realty News Report Copyright 2017

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