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DEAL VOLUME UP SLIGHTLY
Quarterly leasing volume, which had exceeded 3 million square feet (msf) for the third consecutive quarter, rose to 3.2 msf in the second quarter. Only one lease over 100,000 sf was completed. Tenants have leased 12.2 msf in the four most recent quarters, 4.8% below the long-term market average.
CLASS A AVAILABILITY PUSHES HIGHER
The market’s overall availability rate jumped by 80 basis points from 27.5% to 28.2%. The Class A availability rate increased by 40 basis points to 30.1%.
ASKING RENT UP SLIGHTLY
Average asking rent for the Houston market rose by 2.2% to $28.43. Year-onyear average asking rent was essentially unchanged. The Class A rate rose by 4.5% to $33.30 during the second quarter.
SUBLEASE SUPPLY INCREASES
Despite the reduction in 2017, overall sublease supply remains substantial, totaling 9.5 msf as of mid-year. The addition of Occidental's Greenway campus pushed sublet supply up from 8.9 msf in the first quarter.
"Enjoying ample space options and generous concessions, tenants in the Houston region are displaying both restraint and a moderate flight-to-quality. Propped up by record concessions, rental rates in the CBD are holding up. Availability rates in West Houston remain at multi-year highs, compelling landlords to be very accommodating."
Brad Hauser, Research Director