Market Trends
Vacancy decreases as the local economy heals
The recovery of the Houston office space market was slow throughout much of 2017. According to the Bureau of Labor Statistics, the unemployment rate in the Houston Metropolitan Area dropped over the past year by 1.2% from 5.3% in October 2016 to 4.1% in October 2017. Both the United States and Texas unemployment rates have reduced to now current averages of 4.1% for the USA as a whole and 3.9% for the State of Texas. Nearly 37,000 new jobs were created in the Greater Houston area over the past 12 months.
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 Year End 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 positive net absorption of of nearly 770,000 square feet of office space at the end of 2017. This is a great change of pace from earlier in the year when negative absorption was the norm. With nearly 2.5 million square feet of new office space currently in development and over 630,000 SF of office space delivered recently, things are looking up for the Houston area. Rental rates have risen slightly and to the benefit of many small business owners, lease concessions have become much more common. The current asking rates are now $0.26/SF higher on average than they were at this time last year.
If you are seeking Houston office space for lease, it may be in your best interest to sign the longest lease term that you are comfortable with. Market demand won’t remain this low forever and now is a good time to negotiate additional concessions that come with a longer term lease commitment. The market is showing signs of a rebound and rental rates are expected to continue to rise. 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 started their rebound at the end of 2017. The market-wide office space vacancy rate decreased to 16.3% over the past quarter. Class A office space in the Houston area had the highest vacancy of approximately 19.7%. Office space rental rates have increased slightly over the past 12 months to a now current average of $27.76/SF gross for office space throughout the Houston marketplace. The now current rates have gone down up by $0.18/SF on average in the past few months alone.
Additional Information: Houston Office Market Report – Year End 2017
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 Year End 2017 Houston Office Market Report has been obtained from sources deemed reliable. While considered accurate, we make no guarantee, warranty, or representation about it.