Real Estate for a changing world

Contact us
  • Choose your subject...
  • Human resources
  • Research
  • Media inquiries
  • Investors relation
  • Occupier solutions
  • Other

 

*Mandatory information must be entered in the information fields marked with an asterisk in data collection forms. If these fields are not completed, we will be unable to provide the services outlined above.

 

Market Research - Houston
USA

United States: Houston office market - 2020 overview

The Houston metro office market saw its most challenging year on record as the global pandemic and collapse in the energy sector led to negative absorption of 5.1 million SF in 2020

Fourth consecutive quarter of negative absorption

The Houston metro office market saw its most challenging year on record as the global pandemic and collapse in the energy sector led to negative absorption of 5.1 million SF in 2020. Despite an uptick in leasing activity at year’s end, the fourth quarter saw negative absorption of 1.0 million SF. Impacts to the market were felt beyond negative absorption, as sublease supply increased, ending the year at 6.8 million SF available across the metro. With absorption in the red and an increase in sublease supply, both vacancy and availability saw upticks, ending the year at new highs of 19.5% and 25.8%, respectively.
 

 

Vacancy trending up with a wave of sublease space coming

Over the fourth quarter, vacancy increased 290 basis points year-over-year. 17 of the 32 reporting submarkets registered increases in vacancy.
Total availability increased by 80 basis points over the forth quarter, to 25.8%, an increase of 240 basis points year-over-year. Class A saw the metric increase 90 basis points over the period to 26.8%, while Class B saw a 60 basis points increase in availability to 25.3%.
Overall, 21 of the 32 reporting submarkets registered increases in availability, in large part due to increases in sublease offerings. Looking forward, additional sublease offerings are likely to be added to the market post-pandemic as the prospect of moving the space becomes more viable.
 

 

Sales activity slows

 

Property sales remained subdued over the fourth quarter with few notable transactions. Triten RE Partners & Taconic Capital’s acquired 1111 Fannin in the CBD. The building’s anchor lease to JP Morgan Chase is set to expire in September 2021 as the company moves back into their namesake property located nearby. Also of note, Capital Commercial Investments purchased 6500 West Loop South from AT&T Inc. As with 1111 Fannin, The 389,000 SF facility in Bellaire, known for its large floorplate, is set to convert to multi-tenant leasing opportunity. Additionally trading hands, Javier Marcos acquired 10700 North Fwy in the North Houston District from Iron Point Titan Asset Management. The 182,000 SF Class A tower is located in the North Houston District/ North Belt West submarket. While acquisition activity remains slowed, the appetite to acquire quality facilities on a reduced operating basis has kept investor sentiment positive for the Houston market.

 

AAG Houston office market 2020 overview
PDF - 1.2Mo