Despite lingering questions about the possibility of a looming recession, Houston’s economy has shows positive signs of ongoing recovery heading out of the pandemic. Job growth is strong, with the city having surpassed pre-pandemic employment totals in 2022. In addition, employees are heading back to the workplace as Houston ranks among the highest in the nation at 60% workplace occupancy, according to security solutions firm Kastle Systems. Despite this, demand is slow to return with leasing volume down nearly a third from pre-pandemic levels. Office vacancy continues to rise toward historic levels with more than 80 MSF currently for lease. Available sublease space remains elevated, tallying an increase of over 3.0 MSF since the start of 2020. It now accounts for 2.6% of total inventory, still trailing the 4.5% set during the height of the oil slump. This glut of available space paired with some uncertainty regarding office occupiers and their space needs depress asking rents as rent growth is among the weakest in the US. As competition among landlords to ink quality tenants heats up, space occupiers should expect to see competitive rates and elevated concession packages in what was already an occupier friendly environment.
