The end-of-the-year numbers for office space in Houston were quite dismal. CB Richard Ellis, in fact, recently reported that Houston’s office market ended with 2.74 million square feet of negative net absorption. In other words, there were nearly three million square feet less office space leased in 2009 than 2008.
Any gains in 2008 were erased – and then some – as 2008 saw a positive net absorption of 2.74 million square feet.
Currently, leasable office space in Houston stands at about 190.6 million square feet. An additional 5.4 million square feet worth of new office space was added to this sector last year, and another 2.4 million square feet of new office space is expected to enter the market in 2010.
Fourth Quarter Woes
The fourth quarter was, no doubt, the root of the problem in 2009, as the market experienced about a one million square feet net loss during this time.
There were, however, key markets that experienced a positive net absorption in 2009, including: Clear Lake, East, Energy Corridor, Greater Pearland and Katy Freeway.
Opportunities for Growing Companies
With Houston’s office space market struggling, a nearly 18 percent of all office space currently vacant, this may prove to be a great opportunity for thriving and growing businesses in the Houston region.
For many companies, 2010 may be the year to reevaluate your office space needs or to renegotiate your lease.
Houston’s office market has no doubt switched from a landlord market to a tenant market over the last year, thereby creating quite an opportunity for business owners everywhere. As businesses cut jobs and the weaker economic climate took over, vacancy rates climbed and office space absorption soared. Rental rates also saw a decline during this period, dropping nearly nine percent between the second and third quarters of 2009.
For renters, that means plenty of opportunities:
- Start looking into office space well in advance of your lease expiration.
- Start analyzing your office space needs – consider hiring an architect to perform a space analysis for you.
- Take a look at your office space efficiency and find ways to improve it. In other words, make sure you are efficiently utilizing your office space so you get your money’s worth. On the other hand, avoid getting into office space that is simply too large for your needs.
- When your lease contract is up, talk to your landlord about restructuring your rental rate to reflect the current market conditions.
- Consider upgrading your office location. With the current market conditions, you may be poised to advance to a better location, which may help your business succeed.
Tags: Commercial, office space