Q3 2014 Houston Office Market Research & Report Forecast
Houston office market year-to-date positive net absorption reaches 4.4M SF
Houston’s strong economy continues to spur office development with over 17.3M SF currently under construction. Over 1.2M SF of new inventory delivered during Q3, bringing 2014 year-to-date delivered inventory to 4.5M SF. Our forecast projects another 5.3M SF of new inventory will be completed by year-end 2014, which includes the ExxonMobil north campus. Much of the construction activity is tied to the energy industry and includes office buildings that Shell Oil, ExxonMobil, BHP, Phillips 66, and Noble Energy will occupy once completed.
Houston’s office market posted 420,419 SF of positive net absorption in Q3 2014, pushing year-to-date net absorption to 4.4M SF.
The citywide average rental rate increased 1.6% from $26.52 to $26.94 per SF over the quarter. The average CBD rental rate increased 3.3% from $36.35 to $37.56 per SF, while the average suburban rental rate increased 0.1% from $24.95 to $24.98 per SF over the quarter.
The Houston metropolitan area created 107,400 jobs between August 2013 and August 2014, an annual increase of 3.9% over the prior year’s job growth. Sectors creating the most jobs included professional, scientific, and technical services, health care and social assistance, and accommodation and food services. Houston’s unemployment rate fell to 5.4% from 6.3% one year ago.
Houston’s economy is expected to remain strong in 2014 due to healthy job growth and continued expansion in the energy sector.