Construction to Lift Demand in 2022
Houston’s overall office sector recently measured a little more than 180,000 SF of negative demand with the West Loop taking the lion’s share. Our forecast for 2022 mark for moderate office space gains, Houston added 20,400 jobs in December, according to the Texas Workforce Commission, ranking the final month of the year as the best for job growth on Houston’s record. Q4 was particularly strong for Houston employment gains, with October, November and December totaling 80,800 jobs, also the fastest pace of job growth for any quarter on record as noted in a recent update by the Greater Houston Partnership.
Vacancy Moves Sideways, Inch 20 bps to 20.5%
Houston’s office sector saw direct vacancy inch up negligibly during Q4 brought on by minor rises in two submarkets: the Northwest (year-ending at 18.1%) and the West Loop (year-ending at 23.2%). More than half of the metro submarkets saw office vacancy decline or stay the same in the final quarter.
Overall full-service asking rents rose during the final quarter to $31.17 PSF. Full service asking rents in the Class A category weighed in at $35.62 PSF up from $35.45 PSF a year ago while, Class B measured $23.69 PSF, up from $22.90 PSF over the past 12 months.
Investor Activity Exceeds $1.4B in 2021
International investors pivoted towards the acquisition front during Q4 2021 and shifted to net buyers of Houston office assets, finishing the year in the black with $51.9 million in net acquisitions.
Institutions remained net sellers recently, their position highlighted by year end net dispositions totaling $394 million. REITs were likewise net sellers in the Houston metro office sector with sales topping close to $102 million.
Closing out the recap, private buyers finished 2021 in the black with $319.4 million for net new acquisitions.