Q1 2017 Houston Office Research & Forecast Report

Houston office construction down 50% from one year ago

Lisa Bridges Director of Market Research | Houston

Houston’s office market has struggled over the past few
years with rising vacancy and slower than average job
growth due to a weakened energy market. However, as the
office construction pipeline has grown smaller and most
spec developments have been put on hold, the office market
appears to be stabilizing.

Although the average vacancy rate in Houston increased
100 basis points over the quarter, 1.8M SF of new inventory
delivered and 40% of that space was vacant. Available
sublease space has decreased over the last two quarters and
energy sector layoffs have declined. The market will most
likely remain relatively flat, plodding through 2017.

Houston’s office market posted 0.7M SF of negative net
absorption during the first quarter, which is only 0.3% of
Houston’s total office inventory. Developers have been
disciplined over the last few years as evidenced by the fact
the construction pipeline has shrunk by 50% in just one
year and by 65% in two years. The 1.8M SF of office space
under construction is 43% pre-leased and the majority is
scheduled to deliver within the next year.

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