January 16, 2020
Multiple Houston year-end office reports have one thing in common. Namely, positive absorption ended 2019 on an “up” note. Avison Young’s commentary that “Houston’s office market returned to positive absorption levels during fourth quarter, ending the year with limited, but overall positive absorption” was echoed by JLL, which said: “The office market showed signs of life, with a massive spike in net positive absorption,” which, in turn, helped reduce the vacancy rate. NAI Partners was also enthusiastic about the numbers, noting the second straight year of positive absorption experienced by the market.
CBRE pointed out that the construction pipeline is “moderating,” with sublease space shrinking, albeit slowly. As for the outlook in 2020, Madison Marquette commented that there is “a broad consensus for continued recovery,” meaning the office market should “experience slow, but steady growth.” A flight to quality should also mean brisk repositioning activity, the brokerage company continued. Colliers International agreed with the assessment, commenting that “tenants have also shown an appetite to move into a newer project that garners a higher rate than the one they’re vacating.”
While JLL indicated that the downward vacancy trend is creating “some optimism for a prolonged, robust recovery,” concerns are how the office sector will react, “given a less-than-stellar local job forecast and growing macroeconomic concerns.” NAI Partners also shared some challenges in the upcoming year, including still-remaining sublease space. Still, “The bright side is another tenant-friendly year for office-seeking users to take advantage of favorable deals in the market,” NAI Patner’s John Zively noted.
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