HOUSTON – A whopping 6.8 million square feet of office space was filled in Houston last year, despite big gains in rental rates, according to the year-end report by Colliers International.
The big driver of the leasing activity was incredible job growth, as Houston added about 125,000 jobs last year – the strongest year for jobs since 1981. Forecasters are expecting a sharp reduction in job growth – some say less than 70,000 new jobs will be added in 2015 – because of falling oil prices.
Nevertheless, Houston’s office market racked up impressive net absorption of 2.2 million square feet in the fourth quarter of 2014, Colliers reported.
In 2014, Exxon Mobil occupied 1 million square feet of its new north Harris County campus and Southwestern Energy moved into its new corporate headquarters, a stone’s throw from Exxon Mobil, Colliers said.
Houston’s office construction pipeline still contains over 17 million square feet, which is the nation’s leader in office construction.
A total of 7.5 million square feet of the new construction is spec, according to the Colliers report by the firm’s director of market research, Lisa Bridges.
Colliers said the citywide average office rental rate was $26.79 per square foot, up 3.2 percent over higher than it was a year ago. Rates in Houston have risen considerably in recent years and some Class A properties have been asking $50 per square foot.