The North Loop Office Market Is An Anomaly
Most people think the North Loop office market is as slow as the traffic on 290. But the Class-B sector is flush with activity, defying the flight to quality you might expect. Don’t miss your chance to learn more at Bisnow’s The Future of HWY 290/North Loop on July 13.
Gemini Rosemont managing director Michele Ellis-Felder thinks the North Loop submarket is an anomaly. In every area of the city, there’s a flight to quality, bolstering Class-A assets. But for the past three years, Class-B has been outpacing Class-A in the North Loop.
The biggest factor is Highway 290. Virtually all of the Class-A assets in the area are close to 290, which has become a black hole of traffic due to never-ending road construction. Class-A buildings in Brookhollow (above) are right in the thick of it. Tenants don’t want to deal with it. Until construction on 290 is completed, Class-A is likely to continue to suffer.
For years, the area has been steadily holding at 15% to 20% vacancy. Lately, activity in the Class-B market has created very encouraging absorption stats. Michele says most Class-B properties are at least mid-80s in their occupancy. One year ago, 1111 North Loop was at 80% occupancy, but with a deal on the table, the property will top 90%.
One benefit of a historically slow market is not having to deal with a mountain of sublease space on the market. All of the area's sublease space is tied up in one building, St. Joseph's, and has been for years. The lack of sublease space has stabilized the market, Michele says.
Growth in the area comes down to affordability. Companies want to be in the loop, especially IT operations with young employees. In the North Loop, you can still enjoy being in the Loop but avoid the sticker shock of other dense office areas.
If the area can sort out construction issues, the fundamentals of the market will be strong. The good news for businesses is that construction is set to complete in a year and a half. The Texas Department of Transportation’s Karen Othon will fill everyone in on construction progress as a panelist at Bisnow’s The Future of 290/North Loop. Don't miss out!
