With the vaccine rollout ongoing and nearly 50% of local office workers returning to the workplace, there are signs the Houston economy is ramping back up following months of sluggishness spurred by the pandemic. Yet the office market has yet to see demand fully return as leasing remains stalled. Total vacancy is again on the rise topping in at 23.4%, the highest rate in the country among major metros. Leasing activity is flat with only 7.2 MSF taken down year to date, down from the 11.1 MSF total over the same period a year ago. Available sublease space continues to be elevated, tallying an increase of nearly 1.7 MSF SF since Q3 2020 for a total of 7.0 MSF available. At the height of the oil slump in 2016 sublease space accounted for 4.5% of inventory, 50% higher than the current 2.9%. With a full recovery months or possibly years away, landlords will be pressed to stay aggressive offering competitive rates and generous concession packages in what was already a very occupier friendly market.
