Houston’s office market continues to see tenant demand for new construction, increasing supply in older product
Market sentiment in Houston “feels” as though there has been a severe contraction on the demand side, according to Colliers International’s data; however, Houston office tenants are occupying more space than they were in 2015. Although it is a nominal 2 percent increase in office occupation, it is still an increase nonetheless.
When the oil market retreated in late 2014, new construction still continued, however, and the effects of that additional space have been as much of a detractor to a healthy office market than the demand issues. At the peak of the office market from 2011 to 2014, 14.2 million square feet of new inventory delivered. Since 2015, there has been an additional 23.1 million square feet delivered, and currently there is another 3.6 million square feet under construction, reports Colliers. Houston’s office market added more inventory during the contraction phase of the cycle than the expansion phase.