The Woodlands Office Market Snapshot
The hottest suburban office market in the country may very well be the Woodlands submarket in Houston, Texas. Just South of The Woodlands along Interstate 45, sits a cluster of cranes constructing the sprawling campus for Exxon Mobil Corp. When the project is completed next year, it will house 10,000 employees and 20 buildings in over 3 millions square feet of office space.
You would think that the new 3 million plus square feet campus would be enough accommodate the world’s largest energy company. However in addition to the massive campus, ExxonMobil has leased approximately 478,000 square feet in two 12-story Class A buildings at Hughes Landing on Lake Woodlands. The lease includes an entire building and half of the second building, situated at 1725 and 1735 Hughes Landing Blvd. The Woodlands team is developing the two buildings, each approximately 300,000 square feet, along with an adjacent 13-story, 800,000-square-foot parking garage.
The Woodlands submarket, is one of Houston’s top suburban office submarkets, which saw a flurry of activity in 2013 and that momentum continues into the new year. The Woodlands office submarket contributed 33.1% of Houston’s Q4 2013 total suburban positive net absorption and 35.5% of the 2013 total, which is impressive since the submarket has only a 4.1% share of Houston’s suburban office inventory. Leasing activity has been key to the year-end positive net absorption of 1.1M square feet. Vacancy in the submarket decreased 250 basis points to 6.4% from 8.9% in Q3 2013.
Expansion in the energy sector has spurred demand for office space in Houston and The Woodlands submarket, which is quickly becoming the newest Energy Corridor. Developers have responded by planning and starting new projects. ExxonMobil’s 3.5 million SF north Houston campus just south of The Woodlands is well underway and has fueled development of retail, single-family, multi-family, hotel, and other office projects in the area. Office development is progressing rapidly at Hughes Landing on Lake Woodlands. One Hughes Landing is completed and 98% leased, Two Hughes Landing will be completed in April 2014 and Three Hughes Landing is projected to break ground later this year. Further,Anadarko’s second tower in The Woodlands delivered at the end of the fourth quarter.
With continued expansion in the energy industry and a strong housing market, The Woodlands submarket is expected to remain healthy for the near and long-term.