Houston’s Net Absorption Still Negative, But Pipeline Is Emptying
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So far in 2017, the Houston office market has leased less than 1.1M SF of direct space and 289k SF of sublease space, not enough to keep up with new supply.
The biggest leases in the central business district include Crestwood’s 54k SF sublease at BG Group Place, Legacy Holding’s 22k SF at 600 Jefferson St. and Willis Towers Watson’s 19k SF at Two Shell Plaza.
Total net absorption is negative in this quarter to date, largely because of sublease openings. New data from NAI Partners shows that 151k SF of absorption helped counteract 322k SF of negative sublease absorption. Total vacancy with sublease space sits just less than 20%, slightly up from Q4.
The good news: The pipeline has 1.6M SF under construction, half the amount in Q4. Construction activity winding down could give absorptions and vacancies time to equalize.