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Commercial Real Estate Turning Into Latest Casualty Of Oil Bust

Energy companies are scrambling to sublease space they can no longer fill, even as brand new office buildings are popping up all over Houston.

Between layoffs and mergers, Houston’s energy companies are finding themselves with a lot more office space than they need. Many are trying to sublet the extra floors or buildings at what’s turning out to be the worst possible moment.

The Houston office space market now has more than 8 million square feet available for sublease, up from 3.8 million square feet at the end of 2014.

“It was just, you know, a year ago that Houston led the nation in the number of office buildings built,” says Ralph Bivins, editor of Realty News Report. “Seventeen million square feet was under construction – more than New York City, more than anywhere. And that’s coming home to roost.”

The oversupply has turned Houston’s office real estate into a buyers’ market.

“You’ve seen free rent happening with companies,” Bivins says. “You know, it happens in apartments now, and it’s happening in office buildings. And you know actual quoted rental rates have gone down.”

Bivins says that the largest concentration of newly built office space is going up in and around the Energy Corridor. He estimates that more than 2 million additional square feet will become available there over the next year, an amount roughly equivalent to that of the Empire State Building.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas delegations in the U.S. House and Senate, as well as the Texas governorship, the state legislature, and county and city governments. Before taking up his current post, Andrew...

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