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Greenway Plaza—centrally located and highly visible
Located just west of the CBD, and just east of the Galleria/West Loop submarket, Greenway Plaza is a highly visible office submarket. West University Place to River Oaks extend its boundaries, while Richmond Avenue and Buffalo Speedway serve as the submarket’s major roads. The submarket’s current vacancy rate of 16.1% places it at the median of all the office submarkets in the Greater Houston market, and it is currently outperforming many of its peer submarkets, i.e., Westchase at 27.4% vacancy, and the Southwest/Beltway 8 area at 20.2% vacancy.
Vacancy continues to tighten, but changes are on the horizon
As of the end of 2018, the vacancy rate in Greenway Plaza decreased 80 basis points quarter-over-quarter and was unchanged year-over-year. As a point of comparison, Metro Houston’s overall vacancy rate has also decreased to 21.2% as of Q4 2018, down 50 basis points quarter-over-quarter, and down 10 basis points year-over-year. Although there has been a softness in the submarket during the past two years, the resilient tenant base and area demand drivers have kept Greenway Plaza appealing with tenants.
In October, Transocean announced plans to lease the entire 300,000-sq.-ft. Enclave Place in the Energy Corridor. The company is currently leasing over 250,000 sq. ft. in Greenway Plaza, and will be vacating its space before year-end. A few months prior, Occidental Petroleum announced that it would vacate its 800,000-sq.-ft. Houston headquarters in 5 and 3 Greenway Plaza in 2020. At that time, it will make the move to occupy ConocoPhillips’ former campus in the Energy Corridor. The departure of OXY and Transocean will create opportunities for both existing Greenway tenants as well as those considering Greenway in the coming years.
Although Greenway Plaza’s geographic footprint is on the smaller side when compared with some of Houston’s more expansive submarkets, its amount of office inventory is substantial. With more than 11 million sq. ft. of office space, it ranks as the eighth-largest office submarket in Houston. Just over 1.2 million sq. ft. has been delivered in the last 10 years, including the 386,000-sq.-ft. office building at 3737 Buffalo Speedway in 2015 and more recently, the 247,000-sq.-ft. Kirby Collection in late 2017.
Average asking rates on the rise
Greenway Plaza saw overall full-service average rates increase $0.15 per sq. ft. quarter-over-quarter to close Q4 2018 at $31.57 per sq. ft. Class A rates increased to $32.83 per sq. ft., up from Q4 2018’s $32.75, while Class B rates increased to $26.94 per sq. ft., up from $26.67. Overall year-over-year asking rents decreased by 5.1%—although the current rate is still 7.9% higher from where it was five years ago in Q4 2013.
Director of Research
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