2Q 2020 Houston Office Market Report
While the calendar continues to flip, it is hard not to feel like time has come to a halt as the impacts of the global pandemic have brought the economy to a standstill. Coupled with the ongoing uncertainty in the energy sector that had yet to recover from the last downturn, Houston’s office leasing market is threatening to unravel. Total vacancy is again on the rise, topping in at 20.6% as the city has posted a negative net absorption of nearly 1 MSF year to date. Leasing activity contracted by nearly 1.4 MSF quarter over quarter as demand continued to dry up.
Available sublease space has yet to see a dramatic increase, but unless there is a kickstart to the economy, the market could very well be soon awash with sublet space. At the height of the oil slump in 2016, sublease space accounted for 4.5% of inventory, more than double the current 2.1%. With a recovery still months or possibly years away, landlords will be pressed to become even more aggressive offering competitive rates and generous concession packages in what was already a very occupier friendly market.