HOUSTON—As the long and grinding year of 2016 came to a close, sentiment surrounding the Houston office sector took a positive turn as several indicators point to the beginnings of a market rebound, GlobeSt.com learns. Unfortunately, these indicators occurred primarily on the economic side with factors such as oil and jobs gaining ground, whereas office metrics have generally continued to weaken following the recent downturn, according to Transwestern.

In the fourth quarter, impacts of the energy downturn were still being realized as net absorption for all classes of office was again negative, posting -737,000 square feet, with class-A product coming in at -230,000 square feet, GlobeSt.com learns. The overall office availability rate (all space marketed as available for lease) declined modestly, down -0.1%, to finish the year at 21.9%, a direct result of the decrease in available sublease supply. Total availability for class-A and B properties closed the year at 23.3% and 21.2%, respectively. Direct vacancy finished at 14.2% and should continue to rise as sublease space and more efficient new construction serve as desirable alternatives for leasing activity, leaving vacant direct space in its wake.

One such vacancy to hit the market is 11451 Katy Freeway, a 121,210-square-foot office building in Houston's Energy Corridor submarket. 11451 Katy Freeway is a boutique office building that features a fully landscaped private courtyard with putting green, full-time concierge service, a delicatessen, on-site security and property management, efficient 20,800 rentable square foot floor plates, abundant covered parking with access to the building, and monument and building signage opportunities for large users.

The Transwestern leasing team of senior managing director, Doug Little, and vice president, Louann Pereira, are seeking medical or office tenants.

The property is intermingled with high-end residential neighborhoods, retail centers, restaurants and an abundance of green space and trails. It is a six-minute drive from a wide variety of restaurants, hotels, parks and shopping, and is in close proximity to Interstate 10 and the Beltway.

Regarding other core metrics from last quarter showing visible improvements, the total available sublease space is also reducing, says Transwestern. The decline in the fourth quarter marked the first decrease since 2012, and sublease space closed the year at 11.6 million square feet available after peaking with more than 12.5 million square feet available in the third quarter. Sublease space reductions were triggered through various scenarios, making it difficult to determine if the decline is the beginning of a trend or simply a short-term break from an endless supply of space, GlobeSt.com learns.

ConocoPhillips represented the largest reduction in sublease availability (597,000 square feet) as it opted to retain its Energy Corridor listing in order to consolidate operations from an aging multi-building campus. Alternatively, tenants such as Thompson & Knight and Breitburn Energy looked to leverage sublease availability to lock in favorable terms at high-quality class-A locations. This is a trend that will continue given the extended term, credit-worthy nature and desirable locations of many sublease offerings, says Transwestern.

The Transwestern leasing team of senior managing director, Doug Little, and vice president, Louann Pereira, are seeking medical or office tenants.

Instant Insights /

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