HOUSTON – (Realty News Report) – Houston, also known as Space City, has the highest office vacancy in the nation.
Houston’s overall office vacancy rate stood at 23.5 percent in February, far worse than the average national vacancy of 15 percent, according to a report by Yardi Systems Commercial Edge.
Houston, a city that earned its “Space City” name because of NASA operations, currently has an additional 4 million square feet of Class AA space under construction.
The coronavirus pandemic has been rough on the nation’s office market as corporate office tenants retreated during economic uncertainty. The work-from-home practices caused tenants to rethink their future office footprints.
Houston suffered additional woes as the energy business went into decline. Layoffs were widespread. Energy companies put their office space out for sublease.
And everyone in Houston tried to forget the nightmare of April 2020 when the unthinkable occurred – oil below $0 a barrel in energy trading markets.
Even before the pandemic, mergers and acquisitions, such as the Occidental Petroleum buying Anadarko Petroleum, resulted in huge blocks of space going vacant.
So today, Houston’s office vacancy is at its highest point in decades.
“Houston’s office market was struggling amid a glut of available space even before the outbreak of the deadly COVID-19 coronavirus,” said Wade Bowlin, president of property services, central division of Madison Marquette said earlier this year. “Even though many companies have been able to quickly adapt by taking their workforce remotely and encounter little disruption to their everyday operations, this doesn’t mean this physical workplace shift won’t eventually be felt in the office market in the long-term as companies either reduce or expand their footprints.”
The Yardi report showed Dallas had the nation’s second-highest vacancy rate – 19 percent in February. It was followed by Atlanta, Phoenix, New Jersey and Nashville.
As the pandemic declines, the outlook improves for office space.
Mentoring younger employees and immersing new employees in corporate culture cannot be fully accomplished in work-from-home environments, said Jonathan Brinsden, chair of ULI of the Americas for Urban Land Institute and CEO of the Houston-based Midway real estate firm, speaking at a recent conference presented by the National Association of Real Estate Editors.
“A consensus is beginning to form among tenants and institutional partners. More and more companies feel that working from home, with no one in the office, is a detriment,” said Brinsden.
April 5, 2021 Realty News Report Copyright 2021
Caption: Photo credit: Ralph Bivins for Realty News Report Copyright 2021
File: Houston Vacancy Leads Nation – Covid and Oil Impact Space City’s Office Market
For more about Houston development, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available on Amazon http://tiny.cc/4a2g6y
File: (2) Houston Vacancy Leads Nation with 23.5 percent rate. Source: Yardi Systems Commercial Edge. Midway. Madison Marquette.