As availability continues to rise, companies are reevaluating their real estate after the pandemic disrupted office space needs.
An analysis of activity during the first ten months of the year—October 2022 compared to October 2021.
Houston office vacancy at 25.0%
Ten months into 2022, overall vacancy is at 25.0%, down 10 basis points from last year’s 25.1%. Availability is 30.0%, up 100 basis points from October 2021 at 29.0%. The difference between this figure and the vacancy rate reflects expected future move-outs. The Houston office market has recorded 12.1 million sq. ft. of leasing activity comprised of both new leases and renewals, up 1.6% from this time last year at 11.9 million sq. ft. Net absorption (move-ins minus move-outs) is at positive 909,000 sq. ft., up significantly from negative 2.4 million sq. ft. year-over-year. In addition, the amount of construction underway is at 3.2 million sq. ft., down 3.2% from last year.
Large office leases
Energy firm EOG Resources renewed its 374,000 sq. ft. downtown lease in Heritage Plaza’s 52-story office tower at 1111 Bagby Street; pipeline company Enbridge signed a 14-year sublease for 290,025 sq.-ft. at Energy Center V in the Energy Corridor; and engineering company Bechtel signed a 205,000 sq.-ft. lease in CityWestPlace campus in Building 3 in the Westchase submarket.
Oil moves above $90 per barrel as U.S. rig count up by two
West Texas Intermediate, the U.S. benchmark, was up 5.4% to close trading at $92.61 per barrel ending the first week in November. Meanwhile, the number of active rigs in the U.S. rose by two to 770, according to oil field services company Baker Hughes. Oil and gas companies have added 220 rigs in the last year, a 40% increase from the 550 rigs operating a year ago. In addition, the Federal Reserve increased its key lending rate by three-quarters of a percentage point, indicating that policymakers may be more worried about inflation than a possible recession.
Director of Research
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