Blame stunted oil prices or the tsunami of deliveries: Houston office rent growth fell out of the top 10 in North America, according to new data by Colliers. But there's good news: our leasing activity is still among the best on the continent.
Houston was fifth on the continent for CBD office rent growth in Q4, with more than 10% year-over-year increases. That’s dropped considerably; Colliers recorded only 1% growth in Q1 ’15. San Francisco held onto the No. 1 slot, growing rates 14% from Q1 ’14 to Q1 ’15. On the other hand, Houston’s absorption is still nearly the best in North America. Last quarter, we soaked up 1.3M SF of office space, only slightly second to Dallas. That’s not much of a drop from 2014, when we absorbed 6.8M SF, or about 1.7M SF on average each quarter.
One huge difference from last year is how that absorption is broken down—last quarter, Houston had the fourth-highest CBD absorption in North America. This quarter, all 1.3M SF of positive net absorption came from the suburbs, and most of it's from Exxon. The Bayou City held onto the top slots in new supply and space under construction again—no surprise, since we’re still working through our record pipeline. In Q1, we delivered 3.5M SF of office space, well above the second-closest city (NYC Midtown, 2.3M SF). Amid that, our overall vacancy rose to 12.6%. We still have 14.5M SF underway, still nearly double the runner up (Seattle, 8.3M SF).
Check out the Q4 North American comparison here.
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