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Houston’s strong job growth is prompting many companies to look for larger quarters. But the vacancy rate in Houston’s downtown office buildings registers little more than 6%. Counting space available for sublet adds on just a few more tenths of a percentage point. Either way, the Central Business District is one of the tightest markets in the country for Class A office space.
That’s the conclusion of Jones Lang LaSalle in its latest Skyline Review. Graham Hildebrand is the firm’s research manager in Houston.
“Right now there are no new buildings. So the current buildings, these landlords are able to basically maintain all the leverage. Tenants want to be in these buildings. The landlords know that. They can be very aggressive on their rental rates and very tight on their concessions for the tenants.”
Construction of new towers — including the planned Six Houston Center and 609 Main Street — is set to expand office space downtown by about 10%. But Hildebrand says it will be two-to-three years before that activity has any effect on rental rates.
