Shifting office market benefits tenants
It’s now a tenant’s market for office leasing, according to a new report from commercial real estate firm Cresa, which represents companies looking for space.
That means lower rental rates, longer periods of free rent and parking and more allowances for tenants to improve their offices.
Office absorption — the rate at which companies occupy space — turned negative in many key submarkets during the second quarter, the report said.
As the price of oil remains low, job cuts, reduced spending and mergers and acquisitions are cutting into the local office market.
Just this week, the Chronicle reported that Noble Energy will close the downtown offices of Rosetta Resources, the company it is buying for $2.1 billion. As a result, some six floors in Heritage Plaza are expected to hit the sublease market.
To make matters worse, 13.1 million square feet of space is under construction throughout the Houston area, adding to the inventory, increasing vacancy and driving landlord concessions even further, the report said.