The Offices at Greenhouse’s value decreased by 14.9% in one year, according to a letter to stockholders by its owner, KBS Growth & Income REIT.

The REIT cited the energy downturn, the compounding effect of the coronavirus pandemic and an increase in available sublease space in the building as the reasons for the lower appraised value.

The office building was appraised at $48.5M in December, down from an appraised value of $57M in December 2019. The Offices at Greenhouse is a Class-A, five-story, 203.3K SF office building at 19219 Katy Freeway in Houston’s Energy Corridor submarket.

KBS told shareholders that the value decrease was partially because the property’s largest tenant decided to market 84K SF for sublease. That resulted in a significant reduction in value because of projected costs and downtime attributable to backfilling the space in 2025 and beyond.

An energy downturn was already underway prior to the pandemic, but the global health crisis has led to a significant decrease in demand for oil and gas, further decimating the bottom lines for many energy firms.

Oil and gas companies have traditionally played a large role in generating demand for office space in Houston, particularly in the Energy Corridor. Without that demand, office vacancy rates are expected to remain high for the next few years. KBS said that will translate into reduced leasing expectations for the metro, leading to more concessions and reduced rental rates.

KBS also said in the letter that the company’s estimated value per share had fallen to $4.90 as of Dec. 7, down from the previous estimate of $8.43 as of Dec. 4, 2019. The decrease was attributed to lower appraised values of the real estate properties owned by the REIT, which were impacted by civil unrest in certain markets as well as the pandemic.