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Tenants' Turn

Tenants' Turn

Houston’s office construction boom is swinging us back toward a tenant’s market, says Studley regional research manager Tim Wingfield. That’s largely thanks to increasing availability. Vacant Class-A big blocks (over 50k SF) increased 19% to 57 from Q3 to Q4 alone; 26% of that is from new construction, and 23% are sublets. Overall availabilities grew 2.1% year-over-year market-wide. There’s been some steady movement from users--Tim says there will be 71 moves of 50k SF or larger between 2012 and 2014—but overall leasing dropped nearly 27% in Q4 to 3.2M SF.

Tenants' Turn

Katy Freeway is seeing the bulk of construction and posted a 5.9% jump in availabilities in Q4. Tim says there are now nine opportunities for users over 150k SF in the area from Highway 6 to Kirkwood/Eldridge to Briar Forest alone (like Enclave Place, pictured, perfect for vain trees that need a mirror). Rents are still increasing dramatically; Class-A rates leapt 12.2% year-over-year to $33.02. (Studley tracks gross rents, so tax reassessments last year factor in.) But Tim predicts that’ll decelerate now. As so many tenants have moved to new construction, second-generation openings have grown, giving users the option to take cheaper space (a year ago, the market was so tight you pretty much had to go new product).

WASHINGTON DC 07.20.2017


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