As the calendar rolled past the midway point of 2024, the Houston office market continued to exhibit a seemingly contradictory scenario embodied by strong job growth juxtaposed with soft demand. The nearly 2.8 million square feet leased last quarter represented a 30 percent decline year-over-year even as non-farm employment climbed to a record-high 3.4 million in the metro area. With the city recovering more than 170 percent of jobs lost during the pandemic, nearly one in six jobs in Houston was created in the past four years. Yet ongoing economic headwinds coupled with dynamic shifts in work trends has led many companies to consolidate their footprint, keeping the vacancy rate elevated at near historic levels at 21.4 percent.
Available sublease space rose slightly to 6.1 million square feet but remained well below the peaks set during the oil crash in 2014-2016. Tenants continued the flight-to-quality as newer Class A properties captured 80 percent of the 398,672 square feet of net absorption posted last quarter. Demand has focused primarily in the suburban submarkets to the west as companies aimed to be nearer to labor pools amidst intense competition for talent.
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