HOUSTON—Newly hired vice president Jack Russo, part of JLL's expanded agency leasing team, will represent both institutional and private owners in the marketing and leasing of office properties. Russo recently offered insights into just how much the damage from Harvey will factor into the overall real estate market. In this exclusive, Russo recently discussed the office market and some of the trends he is seeing, along with an assessment of Harvey's impact.

Globest.com: Houston's office market is extremely tenant favorable and looks to be so for a while. Why is now the right time to join JLL?

Russo: It's never a bad time to join a great team. Personally, I did not want to transition, start over in a sense, in the chaos of a hot office market. Opportunities to add value abound when the market is tough; not as much when class-A vacancy is in the single digits.

GlobeSt.com: How has Hurricane Harvey impacted the supply and demand dynamics in Houston's office market?

Russo: I don't think Harvey will move the needle too much for the market as a whole, however, some individual buildings will benefit from the unfortunate circumstances of others that sustained flood damage. As a fellow colleague said so eloquently, 'some days you're the bug; some days you're the windshield.'

The long-term effects on buildings that had flooding remains to be seen. I expect people will consider the rare nature of a storm event like Harvey and won't penalize quality assets in the long term. Short-term though, susceptibility to flooding will be top of mind for tenants that are in the market.

GlobeSt.com: What opportunities do you see in Houston's office market right now?

Russo: First, an opportunity for investors to buy good buildings in good submarkets that may have taken a short-term hit in perceived value because they took on water. This same premise should hold true for tenants looking for new space right now. On the flip side, buildings that didn't flood should be marketing that heavily. Post-Harvey emotions are still pretty fresh, so buildings that remained dry may see a short-term increase in perceived value.

Second, if you are a landlord with a big block of vacancy, and you can accommodate one of the many large short-term requirements now in the market, this is an opportunity to secure a great tenant, go above and beyond to take care of them in a time of need, and give them the confidence to stay long term.

GlobeSt.com: Where are you seeing the most demand from tenants and from what type of tenants are you seeing the most demand?

Russo: One submarket doesn't necessarily stand out, but it seems we are seeing the bottoming out of the cycle in most submarkets across the city. Although there is still a hill to climb, sublease space is getting absorbed, there appear to be more and larger deals out there right now, and tenants seem to be a little more committed to doing something.

The type of tenants that drive demand traditionally varies by submarket. Nothing seems to have changed in that regard. The Galleria is still a stronghold for financial and business services, Westchase for tech/engineering/energy and the Energy Corridor for energy, etc.

Instant Insights /

Harvey Shouldn't Move the Needle in The Overall Market

Related Stories

Recommended For You