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Houston Office Vacancy Hits Highest Point Since 1995, CBRE Reports

HOUSTON – (Realty News Report) – Houston’s office vacancy rate has reached 17.8 percent – its highest point since 1995, according to the CBRE real estate firm.

A year ago, Houston’s overall vacancy was 16.8 percent, CBRE reported.

Energy companies continue to shrink their offices, even though oil is now back above $60 a barrel. Houston’s office market recorded 418,000 SF of negative absorption in the first quarter, CBRE reported.

The vacancy bubble developed as energy firms and oilfield service companies shed massive quantities of Houston office space since 2015. In some cases, new buildings were constructed and the energy firms that had pre-leased them never moved in. With oil prices declining and drilling activity vanishing, the energy firms had more space than they needed. A couple of years ago, the sublease space had grown to more than 12 million SF. The sublease inventory is now about 9.3 million SF.

According to CBRE, some 1.7 million SF of office space is under construction in Houston right now. The 754,000-SF Capitol Tower, being built by Skanska at 800 Capitol in downtown, just topped out and is scheduled for delivery in about a year. Also, several buildings are under construction near the Exxon Mobil campus north of Houston.

About three years ago, Houston led the nation with 17 million SF of office space under construction.

Thor Equities recently completed its Kirby Collection office building near the corner of Kirby Drive and Richmond. Tilman Fertitta is wrapping up his project on Loop 610 near Post Oak.

A year ago, CBRE warned there would be a long wait for a market recovery, at least until 2020. At this point, market equilibrium appears to be elusive and its uncertain when Houston’s office market will recover and what will trigger the turnaround.

April 9, 2018 Realty News Report Copyright 2018

 

 

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