Empty Houston Office Space Hits 20-Year High With More In the Pipeline

EMPTY HOUSTON OFFICE SPACE HITS 20-YEAR HIGH WITH MORE IN THE PIPELINE 609 Main St., Downtown, Houston, 77002“The damage has been done,” writes Ralph Bivins this morning: although developers in the city have mostly stopped starting new office buildings, the past quarter “was the first time in 21 quarters that Houston had negative absorption, meaning more office space was emptied than filled.” And the office space availability rate, brushing up against 20 percent, is also higher than it has been at any time since 1995; real estate scrutinizer CBRE estimates that the rate could shoot past the 20-year record to 21 percent in 2017 as more sublease space hits the market (and more of the space already under construction, on the order of 4.2 million sq.ft., wraps up). [Realty News Report] Photo of 609 Main construction: Katherine Feser (bottom)

6 Comment

    Great, so now Houston has an abundance of space that it lacked for sooooooooooooooooo long. Prior to this recent boom our skyline looked like a relic from the 80’s. Now it’s been refreshed and can welcome new and growing businesses. When ‘progressive’ cities are blessed with an abundance of space like this, their city leaders don’t keep whining, complaining and belly-aching about things, and writing stupid articles about it everyday; instead, they get off their asses, get innovative, “further diversify”, and generate growth and new economic development…including doing aggressive trade missions in the US and around the world to EXPAND CURRENT AND BRING/RECRUIT NEW BUSINESS TO HOUSTON (and yes, in industries in addition to those oil-related ). For example, Dallas recently scored the relocation of the Toyota Corporation…Atlanta recently scored the relocation of Mercedes Benz. Meanwhile, Houston is scratching its ass and head wondering what oil is doing. Oil, oil, oil. Oil, oil, oil. F*ck oil, it’s going to do what it always does, fluctuate. To fill the space, Houston leaders are going to have to do what the ‘progressive’ cities’ leaders do, get off their lazy sorry asses, get their hustle on, and create/innovate and go get the business and make it happen. Houston is the growing 4th-largest city in America, if only it would ‘consistently’ act like it. There is no doubt that others would love to bring it down and takes its place. By its sheer size and importance, their is no reason this city can’t fill its space. The problem is the lack of leadership excellence.

  • To me, this is only bad news if you own one of those buildings, are a lender on the building, or are on the hook for a lease and can’t find a sublessee. But it is good news for the rest of us. New lease and lease renewal rates will fall, which will increase profitability for those companies and attract new companies to Houston.

  • @ Honest Truth: exactly. Houston’s “leaders” for decades have used the default position of : “let’s rely on tired ole oil to base our economic future on.” Oil’s economic track record is miserable. It DOES fluctuate wildly and inconsistently. The same ,tired mind set has done nothing to IMPROVE Houston’s quality of life standing. The City is over $26 BILLION in debt, the infrastructure is in need of a massive overhaul, traffic is horrible, public transportation is a joke, etc,etc,etc.

  • It is not just the oil bust but the major relocation of a couple of corporate HQs to new campuses (ExxonMobil, Phillips, etc.) that has also been a big factor in stacking up empty office space.

  • Yeap. When are we going to understand our foundation? The Allen bros came here to build the “New York of the South”, financial capital of the Americas. This bust is a blessing in disguise, time to sow a seed and step into our future.

  • We’re currently about 7 years into an expansion…average post WWII expansion is 5.8 years…CAPE ratio of stocks is 26…Cushing storage levels are at 66k(basically record)….Guess what’s coming? Recession hits= driving falls =oil falls, then you’ll see some real Houston vacancy given that Houston is still an 80% oil town…this run may have a year or 2 left, but that day is coming soon…