Q4 Houston Office Market Research & Forecast Report
Houston’s strong job growth boosted office leasing in 2012. Fourth quarter leasing activity reached 2.4 million SF, pushing the year-end total to over 12.2 million SF. The Houston metropolitan area added 85,300 jobs between November 2011 and November 2012, an annual increase of 3.2% over the prior year’s job growth. Further, Houston’s unemployment fell to 5.8% from 7.3% one year ago, which bolstered annual Houston area home sales by 27.9%.
Expansion in the energy industry has driven demand for new office development as tenants find it harder to locate blocks of quality office space. Currently, over 4.2 million SF of office space is under construction and approximately 50.0% of it is pre-leased. A complete list of properties under construction can be found on page 7 of the report below.
Houston’s office market posted 824,000 SF of positive absorption in the fourth quarter, pushing the year-end total to 4.4 million SF.
Houston’s overall vacancy levels fell to 13.8%, and annual decrease of 170 basis points. The city-wide average rental rate increased from $22.20 per SF to $23.97 per SF over the year, a nearly 8% increase. Class A rents in the CBD ended the year averaging $37.02 per SF up from $35.29 a year earlier. Class A rents in the suburban market increased to $28.20 per SF from $27.34 a year ago.