Delving into Office Rents
Effective rent for Houston’s Class-A office space increased 7.9% to $40.23/SF from 2012 to 2013, according to a new report from Studley. (Pictured, research manager Tim Wingfield.) That’s driven mostly by a 9.9% spike in net rent to $27.68, but real estate taxes made their mark, too (the taxman cometh), leaping 7.1% to $3.75. Electricity rose 2.2% to $2.30, and opex ticked up 2.4% to $6.50 (this is one time being in Houston doesn’t help—opex actually declined nationwide). Meanwhile, concession packages decreased 10.3% from $60 to $53.84.
At the end of the day, Studley’s index finds that tenants will pay $32.80 for their Class-A space (a 13.1% rise from the previous year), and landlords will walk away with $20.27/SF, a solid 18.9% jump from 2012. The rest of the US must be boggled—nationwide, tenant effective rent only rose 3.1%, and landlords increased profits 5.9%. Despite this, Houston is still a steal, as total gross rent averaged $55.83 across the country.
