Houston's Office Construction Still No. 2 in US
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Houston's office construction pipeline has dropped 33% from the peak one year ago, but we're still the second-most-active market in the US (behind NYC). With 11.5M SF in the dirt (and a couple of new projects breaking ground lately), we're still at record-breaking levels of development.
PMRG director of research Ariel Guerrero tells us Houston will deliver 8.1M SF of for-lease office product in 2015, the highest volume in over 30 years. (Nearly 53% of it will occur in Katy Freeway/Energy Corridor submarket.) We've got another 5M SF of for-lease buildings delivering in 2016 and beyond, with about half of it pre-leased. That'll drive direct occupancy rates down next year, Ariel says.
But new groundbreakings have not stopped. Ariel's tracked 1.1M SF (seven projects) of new starts YTD through Q3. That excludes some spec groundbreakings lately, such as the Kirby Collection and The Post Oak just in the last two weeks. But those are mostly smaller projects—those two projects combined are only 350k SF of office—that will keep the pipeline near the same level. (The largest 2015 groundbreaking isn't spec: Amegy Bank's 380k SF future HQ at 1717 West Loop S.) Other recent groundbreakings are Grandway West Phase 2 (124k SF) and MetroNational's 240k SF tower at I-10 and Gessner (rendered here).