Houston Office Market Melts Down
Houston Office Market Melts Down
by Wolf Richter May 2, 2016
[font color="blue"]Leasing activity plunges, availability & sublease space balloon[/font]
Office leasing activity in Houston in the first quarter plunged 25% from the already beaten-down levels a year ago, to 1.56 million square feet (msf), worse even than during the Financial Crisis, according to commercial real estate services firm Savills Studley.
Thats down 59% from the 3.8 msf of signed deals in the fourth quarter 2014, back when the oil bust was still considered a blip and hadnt yet impacted the office market.
The availability rate rose by 4 percentage points from a year ago to 24.5%, or 47.4 msf for Greater Houston. A horrendous office glut! The availability for Class A buildings jumped by 5.3 percentage points to 26.5%, the highest mark in more than a decade as sublease space continues to hit the market.
There were large variations: In Houston downtown, where only half of the office space is occupied by energy and engineering firms, the availability of Class A buildings soared 5.7 percentage points during the quarter to 21.5%; but in the Katy Freeway sub-market, where about 90% of the office space is occupied by energy firms, availability hit 33.6%. In the Greenspoint sub-market, it hit a stunning 48%!
These are the effects of the collapse of the energy sector timed impeccably with a majestic construction boom. ...........(more)
http://wolfstreet.com/2016/05/02/houston-office-space-leasing-plunges-availability-soars/