The beltway has emerged as a boundary along I-10, with the office market west of Beltway 8 severely impacted by the downturn and the office market east of the beltway not nearly as affected. Research from JLL shows the difference.

Katy Freeway East (East of Beltway 8, along I-10)

Total Vacancy: 11.8%

Q3 Net Absorption: 1,532 SF

YTD Net Absorption: 243k SF

Katy Freeway West (West of Beltway 8, along I-10)

Total Vacancy: 26.9%

Q3 Net Absorption: -51k SF

YTD Net Absorption: -253k SF

No submarket in Houston has experienced greater volatility as a result of the oil downturn than the Katy Freeway West submarket. Q3 2016 underscored the significant change in fundamentals within the submarket. The pipeline, which formerly stood at a hearty 4M SF throughout 15 buildings during Q4 2014, is now down to a single building totaling 86k SF. Vacancy increased 170 bps in Q3 alone.

Unlike its neighbor, the Katy Freeway East submarket has had minimal changes in market conditions this year as its exposure to the energy sector is not as great. Total vacancy within the submarket held steady at 11.8% during Q3, and remains among the lowest in the Houston market.