HOUSTON—In spite of the supply glut across the Houston office market, Greenway Plaza is one of the healthiest office submarkets and has remained relatively insulated from the downturn, according to a Greenway Plaza submarket report by JLL.

“A distinct advantage of the Greenway Plaza submarket is its desirable location,” Bubba Harkins, senior vice president, agency leasing at JLL tells GlobeSt.com. “You have affluent neighborhoods for decision makers in immediate proximity, quick access to the CBD and Uptown/Galleria submarkets, and superb urban amenity offerings. For many companies, large and small, this combination presents an ideal fit.”

Market conditions within Greenway Plaza softened slightly during the third quarter, as leading indicators such as vacancy, leasing activity and asking rental rates were unable to keep pace with second quarter performance. However, despite the slowdown in momentum, the submarket remains one of the healthiest in the Houston market, especially when compared to other submarkets such as Katy Freeway West and Westchase that have experienced significant volatility during the past year.

Total vacancy within the submarket came in at 14.9% during the quarter, a 100 basis point increase from the second quarter. Much of the uptick in vacancy stemmed from the delivery of 3773 Richmond Ave, which delivered 48% leased space, adding 94,600 square feet of vacancy to the submarket during the third quarter. The submarket's vacancy remained well below Houston's total vacancy of 19.7% during that time, says JLL.

Leasing activity decreased by slightly more than 20,000 square feet to 105,411 square feet during the quarter. Asking rental rates decreased by 21 basis points to $23.86 per square feet on a triple-net basis, but remained at elevated levels thanks to the recently delivered class-A construction including One Grove Street and 3737 Buffalo Speedway.

Backed by a strong performance from the class-A inventory, net absorption within the submarket turned positive during the quarter, with 59,169 square feet of net move-ins and positive net absorption of 195,255 square feet. The class-B inventory, on the other hand, had its second consecutive quarter of negative net absorption, says JLL. With only 197,500 square feet of sublease space, of which 65.4% was accounted for by the NALCO Champion sublease at Phoenix Tower, the submarket remained largely insulated from the glut of sublease space arriving to market throughout Houston during the past seven quarters. Low vacancy, coupled with modest leasing activity, should help Greenway Plaza remain one of the top performing submarkets in 2016, says JLL.

As previously reported, JLL's third quarter report detailed the benefits of ship channel manufacturing on the Southeast submarket.

Instant Insights /

Greenway Plaza One of the Healthiest Office Markets

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