HOUSTON – (Realty News Report) – Most sectors of Houston’s commercial real estate are fairly healthy, although the office market may take a while to recover, according to Colliers International.
The pandemic and downward pressure on the energy industry drained 140,000 jobs from the Houston economy and office vacancy increased.
“The Class A vacancy rate is 22.1 percent. That’s the highest in the United States,” said Patrick Duffy, president of Colliers International, speaking online recently at the firm’s annual Trends event.
Filling Houston’s vacant office space won’t be an instant accomplishment.
“In order to have a 5 percent decline in vacancy, we need about 50,000 to 60,000 new jobs that are office jobs,” Duffy says. “We’re a number of years away from the office market returning to equilibrium.”
Almost 4 million SF of office space is under construction in Houston, including the 47-story Texas Tower being built by Hines. The new buildings are generally being successful in attracting new tenants, while many owners of older office product spend heavily to improve their buildings.
Houston Thumbnails on Other Property Types:
Industrial – Houston delivered 30.4 million SF in 2020, more than any other U.S. Market, Colliers reports. ”This was the year of the big box,” Duffy said. With that much construction, vacancy increased to 8.8 percent. That’s up from 6.6 percent a year ago. The construction pace is tapering off in 2021.
Retail – Online retail sales were up sharply in 2020 because of the pandemic. But that should subside this year during the return to normalcy. Construction of retail should be brisk along the Grand Parkway where suburban dwellers are buying houses at a rapid pace.
Multifamily – In 2021, construction of new properties will lighten up, after 20,000 units were delivered last year. On the investment side, the average price in Houston was $136,344 per unit. “Multifamily is healthy and we expect it to continue to be.”
Healthcare– Medical space is expected to see rising rents and expansion in 2021. Buildings with some 568,000 SF of medical space (not including hospitals) were completed recently. Life sciences continues to be a growing sector.
Feb. 1, 2021 Realty News Report Copyright 2021
File: Houston Office Recovering Slowly: Colliers Trends Outlook
Caption: Downtown Houston. Photo by Ralph Bivins. Copyright 2021 by Realty News Report.
File: (2) Colliers International. Hines. Houston Office Recovering Slowly: Colliers Trends Outlook 2021. Grand Parkway.