Tenants' Turn
Houston’s office construction boom is swinging us back toward a tenant’s market, says Studley regional research manager Tim Wingfield. That’s largely thanks to increasing availability. Vacant Class-A big blocks (over 50k SF) increased 19% to 57 from Q3 to Q4 alone; 26% of that is from new construction, and 23% are sublets. Overall availabilities grew 2.1% year-over-year market-wide. There’s been some steady movement from users--Tim says there will be 71 moves of 50k SF or larger between 2012 and 2014—but overall leasing dropped nearly 27% in Q4 to 3.2M SF.
Katy Freeway is seeing the bulk of construction and posted a 5.9% jump in availabilities in Q4. Tim says there are now nine opportunities for users over 150k SF in the area from Highway 6 to Kirkwood/Eldridge to Briar Forest alone (like Enclave Place, pictured, perfect for vain trees that need a mirror). Rents are still increasing dramatically; Class-A rates leapt 12.2% year-over-year to $33.02. (Studley tracks gross rents, so tax reassessments last year factor in.) But Tim predicts that’ll decelerate now. As so many tenants have moved to new construction, second-generation openings have grown, giving users the option to take cheaper space (a year ago, the market was so tight you pretty much had to go new product).
