Houston office market class A availability rises
The Houston office market will have a continued imbalance of supply and demand through the rest of 2017, according to Savills.
During the first quarter 2017, the class A sector surpassed 30 percent availability for the first time. Net absorption projects to nearly –2 million square feet for 2017, which would also press overall availability past 30 percent by year-end.
Available sublease space dropped slightly to 11 million square feet. The reduction of available sublease space was due to tenants taking space off the market, lease expirations, bankruptcies and exercise space reduction options. Of the currently available sublease space, more than 4.5 million square feet will expire within the next 24 months; during this time period there will be a dramatic shift in available space from large tenants back to landlords. And new construction totals 2 million square feet.
Office property sales fell from $1.08 billion during the fourth quarter 2016, to $745.7 million during the first quarter 2017.
The number of office workers declined 12,300 jobs, or 1.9 percent, from a peak of 657,600 jobs in January 2015 to 645,300 jobs in January 2017.
Office demand is ultimately driven by employment, and office-using employment is dominated by the energy industry, concludes Savills. Prices dipped below $20/barrel in early 2016, but spent the rest of the year between $45 and $50/barrel. The first quarter 2017 price ranged between $48 and $53/barrel.