The absorption rate remained negative for the fifth quarter in a row – meaning more tenants moving out of than into Houston offices.
At the same time, more unused oil and gas offices are being subleased.
Bruce Rutherford, an international director at JLL in Houston, said that’s thanks to industries that are not energy-related and are doing well, such as technology, healthcare or education.
“Tenants from all of these industries are seeing an opportunity to get extraordinarily high quality space at extraordinarily low prices from the current sublease market,” he said.
Rutherford expects the office vacancy rate to continue to rise through early next year.
“And then we’re going to see that vacancy rate begin to fall as sublease spaces continue to be taken off the market by tenants in all industries taking up that space, energy companies taking it back and saying, no, I need it for my operations,” he said.
Rutherford anticipates the glut of office space will go away by late 2018.