Houston is diversified, but energy still has a huge impact. (Plus isn't there diversity within oil? Black gold, Texas Tea, etc...) Studley research guru Tim Wingfield has learned that commodity prices are the most reliable and earliest indicator of where Houston's office rents will be in three months. It correlates even better than employment (and faster—the Jobs Report only comes out quarterly, but you can track oil prices daily). Based on Q1's average West Texas Intermediate (the benchmark of oil pricing), Tim projects a $0.20/SF rent increase in the next quarter.

Employment still works into the relationship—asking office rents are a function of future changes in demand, which is based on employment, which is related to recent changes in oil prices (Tim says that oil price changes alone explain 20% of the variability in Houston's employment growth). While oil prices are the best predictor for short-term rents, changes in other variables (construction pipeline, absorption, and active rotary rigs, for example) affect rent growth six to seven quarters ahead.