BREAKING NEWS

East River Adding Art to the Mix

Major Warehouse Lease Signed

Unilev Taps Stream Realty

58 Cities Drop Off Million-Dollar Home List

RNR Real Estate Briefs – HOU, AUS, DAL & more

Offices For Energy Transition

REALTY NEWS REPORT - Logo

Banner
  • Home
  • Categories
    • Breaking News
    • Houston
    • Residential
    • New Development
    • People
    • Office
    • Multi-Family
    • Capital Markets
    • Texas
    • Retail
    • Hospitality
    • Industrial
    • Land
    • Lease Brief
    • Medical
    • National
    • Realty News Report
    • Trades
    • Uncategorized
  • Archive
  • Subscribe
  • The Ralph Bivins Project
  • About
  • Contact
FacebookLinkedinYoutubeEmail
REALTY NEWS REPORT - Logo

Sublease Supply will be Over 10 Million SF Soon: Oil Companies Shedding Office Space in Houston

by Realty News ReportFebruary 23, 2016
Share0
Brandon Clarke
Brandon Clarke

HOUSTON – The Houston office market is headed into a rough year. Houston’s energy companies are shrinking and at the same time 22 office buildings are under construction.

“It’s pretty bad out there. I’m not going to sugar-coat it,” said office tenant representative leasing broker Brandon Clarke, senior vice president of CBRE in Houston. “Houston is a down market right now.”

Office vacancy rates jumped to 17.6 percent (including sublease space) at year-end. Clarke predicted at the CBRE Press Luncheon last week that Houston’s vacancy rate, with the sublease bubble, will be over 21 percent shortly.

Energy firms are dumping loads of excess office space. Some 8.6 million square feet of sublease space is on the market now and at least 1.5 MSF more is coming soon, Clarke says. The supply of sublease space is bigger than it’s been in decades, he says.

Shell Oil Co. has placed 350,000 SF of office space in the 50-story One Shell Plaza tower onto the sublease market in downtown Houston.

Shell is one of many energy companies that excess office space following a sharp downturn of oil prices. West Texas Intermediate crude was at $107 per barrel in 2014. It’s less than $30 a barrel today.

Two additional dark clouds threaten the office market: (1) Mergers and Acquisitions will create more empty space and (2) bankruptcies are looming.

Fifty energy companies declared bankruptcy in 2015 and another 50 to 100 possible bankruptcies could be in the pipeline, Clarke says. To prepare for the onslaught, Vinson & Elkins and other law firms are hiring additional bankruptcy attorneys. Bankruptcies apply heat on building owners. It could metastasize.

In 2016, Clarke says, office rents will be lower. Vacancies will be higher.

“We are looking for a large amount of vacant space to come online,” says Robert Kramp, CBRE’s director of research and analysis.

Most other parts of Houston’s real estate market are doing fine. And some office buildings are in great shape. Overall, however, the office sector is facing difficult times.

Share0
previous post
Chunk of Former Texas Instrument Campus Sold for Industrial Project
next post
Houston Chronicle Leaves Downtown; Newspaper Property Now Controlled by Hines

Related posts

Trees For Houston Groundbreaking

Realty News ReportApril 21, 2022April 22, 2022

Realty Associates Debuts Next-Gen Tech with Delta Media

Realty News ReportMarch 16, 2022April 7, 2022

Call for Entries: NAREE’s 72nd Annual Real Estate Journalism Competition

Realty News ReportFebruary 14, 2022February 14, 2022

Leave a Comment Cancel Reply

Save my name, email, and website in this browser for the next time I comment.

Search News

Partners Ad
CBRE Ad
Arch Con Corporation Ad
Hines Ad
Avera Ad
Ziegler Cooper Ad
Lee & Associates Ad
2021 Realty News Report Ad
Property Logos
RNR - Lincoln Property Company
Hal Gordon - Property Tax Lawyer
Hunington Ad
Evergreen Commercial Realty
STREAM Ad
Hunington Ad

Let's Connect

logo
About US
Author Ralph Bivins is editor of Realty News Report, which covers regional and national news. Bivins recently received the Gold Award for Best Column in the National Association of Real Estate Editors Journalism Competition. Contact us
Follow us
FacebookLinkedinYoutubeEmail
@2022 All Right Reserved. Powered by CGS Digital Marketing
REALTY NEWS REPORT - Logo
FacebookLinkedinYoutubeEmail
  • Home
  • Categories
    • Breaking News
    • Houston
    • Residential
    • New Development
    • People
    • Office
    • Multi-Family
    • Capital Markets
    • Texas
    • Retail
    • Hospitality
    • Industrial
    • Land
    • Lease Brief
    • Medical
    • National
    • Realty News Report
    • Trades
    • Uncategorized
  • Archive
  • Subscribe
  • The Ralph Bivins Project
  • About
  • Contact