The Houston office market absorbed just over 900,000 square feet in the first three months of the year. Much of the activity reflected job growth in the energy sector. The largest transaction of the quarter was Noble Energy’s lease of the former HP headquarters in the Cypress area.
Omar Nasser is a research manager with commercial real estate firm Jones Lang LaSalle. Nasser says intense competition for limited space will drive up rates until new construction starts coming online towards the end of the year.
“Owners are more aggressive. Tenants, they’ve no choice but to pay increased rates, because there’s not enough space out there.”
Declining activity in the nation’s three largest office markets offset gains in Houston. New York, Washington, DC and Chicago posted combined losses of more than 2 million square feet during the first quarter. The U.S. office market as a whole absorbed just under a million square feet over the period, the lowest rate of occupancy growth in two years.