HOUSTON—Office leasing spiked in the last quarter of 2017 and that activity doesn't show any signs of waning if the first two months are any indication. Quarterly leasing activity totaled 3.6 million square feet, the highest quarterly amount since the third quarter of 2016. Activity was driven by a continued flight to quality, aggressiveness by non-energy tenants and some relocations from spaces affected by Hurricane Harvey, according to the fourth quarter 2017 office market report by Savills Studley.

Overall, Houston's office market emerged largely unaffected by Hurricane Harvey. A fair number of area businesses were active in the market this quarter, with many of them trading up to higher-quality space and capitalizing on favorable lease terms, GlobeSt.com learns.

Houston's overall availability rate rose by 20 basis points during last quarter to 27.3%. The class-A rate fell by 80 basis points to 29.7%. Moreover, asking rent nudged lower as rates for the entire region decreased by 0.5% to $28.81. However, year-on-year, average asking rent increased 2.6%.

Although oil and gas tenants have approached the office market conservatively, new activity may be on the horizon as the price of West Texas Intermediate soared from $43 per barrel to $60 per barrel during the past six months, GlobeSt.com learns.

In addition, leasing is even nudging up in the submarket with the highest vacancy rate. More than 241,700 square feet of new office leases and renewals have been completed in the North Houston submarket in the last 12 months.

This submarket is Houston's seventh largest with more than 13.9 million square feet of office space, 5.7 million of which is class-A product, representing approximately 42% of the submarket. It has the highest vacancy rate in the Houston office market at nearly 40% across all asset classes, with class-A office vacancy at 57% because of vacating tenants that built campuses including Exxon, Southwestern Energy and Noble, GlobeSt.com learns.

Transwestern executive vice president Michelle Wogan, vice president Evelyn Ward and broker associate Paula Musa were involved in the transactions.

“Tenants have been attracted to the class-A opportunities, unmatched fiber hub accessibility and ease of access to the premier freeway systems,” said Wogan. “The North Houston submarket is the best value in Houston for class-A space that tenants from various industries are quickly recognizing.”

Some of the North Houston completed transactions include:

Hunting Energy Services Inc. is relocating its corporate US headquarters to 62,137 square feet at 16825 Northchase Drive. Wogan represented the tenant. Ward and Musa represented the former owner, Northwestern Mutual, and Kevin Wyatt represented the current owner, Lincoln Property Co.

Wogan represented the building owner in a 40,602-square-foot lease at 2 Northpoint.

Vinmar leased 37,671 square feet at 16825 Northchase Dr. Wogan, Ward and Musa represented the building owner, and Don Foster with JLL represented the tenant.

Wogan represented the building owner in a 20,799-square-foot lease at 333 North Belt.

Our Lady of the Lake is relocating its campus from The Woodlands to 20,000 square feet at 600 North Sam Houston Pkwy. Wogan represented the building owner, and Enrique Lima with Real Estate Brokerage Group represented the tenant.

Air Products and Chemicals leased 16,748 square feet at 16945 Northchase Dr. Wogan, Ward and Musa represented the building owner, and Anthony Squillante and Dustin Devine represented the tenant.

Leases are hitting the books in all areas of the metro, even as the calendar flipped over to 2018.

For example, two deals were inked totaling 63,112 square feet, bringing new tenants to Sage Plaza, a 531,000-square-foot building in the Uptown/Galleria submarket. Insgroup Inc. leased 43,296 square feet, and was represented by David Bale with JLL. Legal Access Holding Company LLC leased 19,816 square feet, and was represented by Jay Kyle of Colliers International. Jason Presley and Debbie Wilson of CBRE represented Granite Barnhart Sage Plaza LP.

“Legal Access was drawn to Sage Plaza because of (the landlord's) thoughtfulness in maintaining a neighborhood building feel, while incorporating state-of-the-art amenities, and meeting and common areas,” said Kyle.

The owners of Sage Plaza have recently upgraded the outdoor seating area and added a new fitness center. The landlord is also in discussions with architects to enhance the aesthetics and programming of the building lobby and common areas. The building is located at 5151 San Felipe St., adjacent to a national organic grocer, North Italia and True Foods Kitchen.

Elementia USA signed a 16,505-square-foot lease for the entire third floor of 396 West Greens Rd. Originally built in 1980, the property recently underwent a multi-million-dollar renovation including the lobby, building entryway, exterior plaza, restrooms and elevator banks. JLL's Jessica Ochoa and John Pruitt represented the landlord, GWL Realty Advisors. Tripp Pruet of Savills Studley represented the tenant in the transaction.

Entoro signed a 6,270-square-foot office lease at Woodway Tower at 4900 Woodway Dr. JLL's Diana Bridger represented Entoro in the transaction. Mathew Volz and Craig McKenna of Stream Realty Partners represented the landlord, Sidra Woodway LLC.

Instant Insights /

Office Leases Aplenty in Past 12 Months

Related Stories

Recommended For You