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Houston Market Reports

Houston Office Market

Average Asking Rent (Price/SF) $29.69
Vacancy Rate (%) 21.5%
Net Absorption (SF)  825,535

During the fourth quarter, the Houston office market registered tremendous demand activity resulting in a reversal of the negative absorption seen throughout the year. The market absorbed a total of 825,535 square feet (SF). The Energy Corridor, along with the Galleria and South Houston were among leading Submarkets, which saw the lion share of the absorption in the market. For the year, the net absorption in the office market was 538,015 SF and marks the second year following the Energy downturn in which the yearend figure was positive.

Houston Industrial Market

Average Asking Rent (Price/SF) $7.52
Vacancy Rate (%) 6.7%
Net Absorption (SF) 2,223,943

During the fourth quarter, Houston's industrial market continued to showcase healthy fundamentals despite some stagnating metrics. The market absorbed 2.2 MSF of space in the fourth quarter bringing the year end absorption figure to 7.3 MSF. The Northwest submarket registered the highest absorption figure this quarter with a sizeable 1.8 MSF of space absorbed; completely reversing the negative 171,235 SF year-to-date absorption seen in the third quarter. While the Northwest submarket saw a shift to positive absorption, the inverse was true for the Southeast submarket. The submarket had it first negative quarter of the year. On a positive note, the Southwest submarket ended the year with the highest net absorption figure of 2.3 MSF. Vacancy was unchanged at 6.70% despite the addition of 3.38 MSF of new inventory. The overall market average rental rate was relatively flat declining by 13 basis points (bps) to $7.32/SF triple-net (NNN). A potential hinderance facing the market in the medium-term could be the gap with which construction activity outpaced the market demand. Over the course of the year, the market has delivered approximately 16 MSF of new inventory and absorbed 6.5 MSF, roughly translated to a 40% absorption of deliveries. At the end of the fourth quarter, the development pipeline currently holds 21.1 MSF of space; some concerns for 2020 are seen regarding whether the demand came meet the supply.



Houston Office Market Report
4Q19
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Houston Industrial Market Report
4Q19
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