Office Market Continues to Impress in Houston
- Jan 29, 2015
According to recent data from CBRE, 2014 was an excellent year for Houston’s office market.
Q4 2014 marked a net absorption of 1.7 million square feet of office space and ended the year with a total of 5.5 million square feet, the third highest absorption rate since 1977. The most prominent submarkets were the CBD with a positive absorption of 329,000 square feet; North and Westchase with 933,000 square feet; and The Woodlands, Southwest Freeway and West Loop with 300,000 square feet.
Population and job growth are among the most important factors that have contributed to this growth, according to CBRE’s market report. The Houston MSA added an impressive 122,900 jobs over the 12 months ending in October, 2014, with an average of 46,000 jobs on average per year since 2000.
In the last quarter of 2014, vacancy dropped to 11.6 percent, in spite of Houston being the national leader in office construction. According to CBRE, there are 17.6 million square feet of office space under construction in Houston, of which 64 percent are pre-leased or owner occupied. Q4 2014 delivered six new buildings totaling 1.2 million square feet – CGGVeritas, the ExxonMobil campus, Greenhouse at Park Row, Beltway Lakes II, The Reserve at Sierra Pines II and LaCenterra III.
In spite of the recent oil price drop, developers and investors remain optimistic: the consensus remains that the crisis in the energy industry will affect Houston only if the price remains well below the breakeven point for multiple quarters.
Other notable office deals in 2014 were Skanska USA’s groundbreaking for West Memorial Place II; MetLife’s acquisition of 3040 Post Oak Blvd. ; and the development of the 60-acre, mixed-use CityPlace project.
Chart courtesy of CBRE