Market Trends
Vacancy remains high as oversupply continues
The recovery of the Houston office space market remains slow into 2018. However, it does appear that the local economy is healing. According to the Bureau of Labor Statistics, the unemployment rate in the Houston Metropolitan Area dropped over the past year by 0.9% from 5.6% in February 2017 to 4.7% in February 2018. Both the United States and Texas unemployment rates have reduced to now current averages of 3.9%. The Houston area’s labor force is now 73,336 jobs greater than it was 12 months ago.
Due to the fluctuating market conditions, it has been be a tedious task for most tenants to properly negotiate an office lease in the best manner possible while ensuring long-term savings. This 1st Quarter 2018 Houston Office Market Report newsletter is distributed as a means of informing our clients and commercial tenants about ways to save time and money during the office leasing process.
The Houston office space market had negative absorption of approximately -1.3 million square feet of office space so far this year. With the extensive oversupply of commercial space, there are surplus of sublease options on the marketplace and concessions are very prevalent. Free rent has become a very popular offering as it remains a Tenant’s market throughout the Houston metro. The city is still a long way out from a truly healthy office space market, but amid all of the vacancy and concession the asking rates have remained steady over the past several years.
If you are seeking Houston office space for lease, now is a great time to sign the longest lease term that you are comfortable with. Market rental rates won’t remain constant forever and free rent concessions will eventually dry up. As the city and economy continue to improve, the office space market will be sure to go up as well. It is important to plan for future business expansion needs though and not limit your long-term options.
Vacancy and Rental Rates
Rental rates have remained fairly steady at a now current market-wide average of $30.80/SF. The total vacancy average for the Houston office space market is now 23.8%. Of all of the sub-markets in the Houston area, the Galleria showed a promising increase in demand, rental rates, and lower vacancy in recent months.
Additional Information: Houston Office Market Report – Q1 2018
If you are interested in rental rates for a certain location or are seeking Houston office space for lease, please contact us with your requirement.
Information in this First Quarter 2018 Houston Office Market Report has been obtained from sources deemed reliable. While considered accurate, we make no guarantee, warranty, or representation about it.