Houston's office market invigorated by energy giant's growth
Houston’s strong job growth, spurred by growth in the energy sector, continued to boost Houston’s office market in Q2 2013. Although leasing momentum slowed in the first quarter due in part to a lack of quality inventory, absorption increased in the second quarter as newly constructed space was delivered. Houston’s office market posted 286,000 SF of positive net absorption in the second quarter, much less than the 688,000 SF posted in the same quarter one year ago. Absorption will pick up momentum again later in the year when a portion of the 9.4 million SF of office space under construction is delivered. Additionally, energy giants such as Chevron, Apache, BHP, and many others have announced plans to build new office buildings to accommodate growth. Approximately 9.9M SF of office space is either under construction (ExxonMobil, Shell and Anadarko) or planned over the next two to three years.
The citywide average rental rate increased slightly from $23.98 per SF to $24.26 per SF over the year and from $24.06 per SF between quarters. Some of the top-performing Class A building rental rates increased by as much as 1.5% to 7.1% between quarters.
The Houston metropolitan area added 91,600 jobs between May 2012 and May 2013, an annual increase of 3.4% over the prior year’s job growth. Further, Houston’s unemployment fell to 6.4% from 6.8% one year ago and Houston area home sales increased significantly, growing by 28.0% over the year.
With continued expansion in the energy industry and a strong housing market, Houston’s economy is expected to remain healthy for both the near and long-term.
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