Houston Office Market Snapshot
Like many major office markets around the country the volume of net office space absorption has not moved the needle significantly in terms of lower overall vacancy rates. However, the Houston office market is slowly but steadily beginning to tighten for larger office space users as big blocks of available space begin to melt away with leasing velocity continuing to heat up, particularly among large corporate tenants in the energy sector.
Contiguous Class A Office Space Available by Size
As you would expect the largest submarkets with the most inventory offer larger office space users the most options with core submarkets such as the CBD, Galleria and Katy Freeway currently providing the most opportunities.
Class A: Available Contiguous Blocks < 40,000 SF by Submarket
Not Many Options Downtown
Large office space users looking in the CBD will find surprisingly few options with currently only four buildings offering in excess of 100,000 square feet of contiguous space available. This is of course a fluid situation as a few more larger spaces could potentially be made available with relocation of existing tenants. Furthermore, Continental Airlines is expected to put a significant portion of their 660,000 square feet on the sublease market but how much at this point is pure speculation. There is currently a 342,000 square foot block at Three Allen Center, 296,000 square feet at BG Group Place and 198,000 square foot block at Two Allen Center available.
The largest suburban blocks of Class A space available include 496,000 in the former HP Campus on Highway 249, and 414,000 square feet at 14141 Southwest Freeway in Sugar Land. In the Energy Corridor large available blocks include 350,000 square feet at 15375 Memorial Drive and 305,000 square feet at 3 Eldridge Place. Opportunities “closer in” within the urban core include 272,000 square feet at 515 Post Oak Boulevard and 216,000 square feet at 5444 Westheimer. There are several large deals rumored in the marketplace so we can expect some of the larger suburban blocks to disappear in the second half of 2011.
Largest Available Contiguous Blocks: CBD vs. Suburban Locations
Stay tuned for my 2nd Quarter Houston Office Market Review to be released in early July.