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The Woodlands Commercial Real Estate Market Economic Data and Information - Exxon Mobil Campus oil and gas

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The Woodlands continues to outperform the Houston office market as a whole

The Woodlands continued its recent run of healthy office market performance, as the submarket recorded increased positive net absorption and experienced shrinking vacancy rates during the third quarter of 2018. The Woodlands’ steady gains have come during a period where the overall Houston office market has had difficulty gaining a foothold, as continued uncertainty in the oil and gas industry has played a significant role in citywide office space vacancy and rental rates. Major employers are recognizing the appeal of the Woodlands, as global companies like ExxonMobil have opened facilities in the submarket, and demand is only expected to increase as the oil and gas industry makes strides toward recovery.

Vacancy in the Woodlands continues to tighten

As of the end of the third quarter of 2018, the vacancy rate in the Woodlands was down 60 basis points quarter-over-quarter to 15.2% and dropped 240 basis points year-over-year—underscoring the continued interest in space in this submarket. As a point of comparison, Metro Houston’s overall vacancy rate has also decreased to 21.5% in Q3 2018, down 60 basis points quarter-over-quarter, although increasing 60 basis points year-over-year.

Positive net absorption

With 69,000 sq. ft. absorbed in Q3 2018, the Woodlands recorded positive net absorption in eight of the  past nine quarters, experiencing negative 10,206 sq. ft. of absorption in Q2 2018. In contrast, absorption in the Greater Houston area was positive during Q2 and Q3, with more tenants moving in space than tenants moving out—a significant improvement over what occurred during Q1 2018. The aggregate effect of net occupancy was just over 500,000 sq. ft. of negative absorption year-to-date.

Average asking rates on the rise

The Woodlands submarket saw overall full-service average rates increase $0.27 per sq. ft. quarter-over-quarter to close Q3 2018 at $30.12 per sq. ft. Class A rates increased to $32.65 per sq. ft., up from Q2 2018’s $31.94, while Class B rates increased to $26.86 per sq. ft., up from $26.58. Year-over-year asking rents decreased by 1.5%—although they remain substantially elevated, up 26.5% from five years ago.

The Woodlands Commercial Real Estate Market Economic Data and Information - Market Indicators table

The Woodlands Commercial Real Estate Market Economic Data and Information - Vacancy By Class graph oil and gas

The Woodlands Commercial Real Estate Market Economic Data and Information - Supply and Demand graph oil and gas

The Woodlands Commercial Real Estate Market Economic Data and Information - Asking Rent graph oil and gas


Leta Wauson
Director of Research
[email protected]
tel 713 275 9618

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