Houston’s Office Market on a Boom – 9.4M SF Under Construction
Houston’s strong job growth continues to boost Houston’s office market in Q1 2013. Although leasing momentum slowed in the first quarter, vacancy levels only increased 10 basis points between quarters, and decreased by 120 basis points on an annual basis. Absorption slowed too, due to a lack of quality blocks of space. Houston’s office market posted only 76,000 SF of positive net absorption in the first quarter, much less than the 1.3M SF posted in the same quarter one year ago. Absorption will pick up momentum again later in the year when some of the 9.4 million SF of office space under construction is delivered.
The citywide average rental rate increased slightly from $23.70 per SF to $23.86 per SF over the year; however, some of the top-performing Class A
rental rates increased by as much as 8.5% to 10.0%.
The Houston metropolitan area added 118,700 jobs between February 2012 and February 2013, an astounding annual increase of 4.5% over the prior year’s job growth. Further, Houston’s unemployment fell to 6.3% from 7.3% one year ago, which bolstered annual Houston area home sales by 17.1%.
With continued expansion in the energy industry and a strong housing market, Houston’s economy is expected to remain healthy for both the near and long-term.
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