Office Rents Drop in Houston
We all know the office market's been hit pretty hard by oil prices, and Savills Studley's Q3 data confirms it—rents are down, availability is up, and leasing is meager.
Overall asking rent dropped 1.1% this quarter, down to $29.46/SF, according to a report released by Savills Studley. Class-A asking rent is down 1.5% to $35.59/SF. Savills Studley research manager Tim Wingfield tells us low oil prices, additional sublease opportunities and sustained construction deliveries are to blame, and the office supply-demand imbalance will continue for at least 12 more months.
More tough news for the market is that availability continues to soar and quarterly leasing remains flat. We've leased 10.2M SF in the last 12 months, down 26.7% from Q3 2014. Katy Freeway’s in pretty bad shape: Availability surpassed 30% while both Westchase and The Woodlands’ Class-A availability rates topped 25%.
Savills Studley countered the gloom with a pretty sizable lease announcement: senior managing director Kevin Hodges (here with his wife, Joan) repped petroleum engineering company WD Von Gonten in a 73k SF lease at Block 10 West Office Park. It's good news for that rough Katy Freeway submarket, as Hicks Venture's 207k SF office building was built in '13 in the Katy Freeway East area. Pat Hicks repped the landlord in-house.