Construction Gears Up And New Leasing Citywide Pushes Down Metro Availability
Houston’s empty construction pipeline reported last quarter was short lived as several projects broke ground this quarter including Midway’s 308,000 SF and Howard Hughes’s 50,000 SF. Both projects are scheduled to come on-line with strong pre-lease commitments, the soonest is Midway’s in spring 2026 with 65 percent already taken by Dow Chemical. Across the metro, both vacancy and availability decreased this quarter, driven primarily by new, big-name leases executing and positive net absorption throughout the market. West Houston submarkets, such as Westchase and Katy Fwy/Energy Corridor, continue their dominance in positive market trends, especially Westchase, experiencing 6-digit net absorption gains due to Noble Corp.’s relocation to 2101 CityWest Blvd.
Demand Back Into the Black After Sluggish Start to Year
Houston’s office sector measured 147,000 SF of net absorption in the second quarter of 2024 led by Class B space clocking 120,700 SF of growth while Class A space registered 23,897 SF of net gains.
The Woodlands submarket took down a net total of 80,063 SF, led by CB&I signing a lease to occupy 43,000 SF at 1725 Hughes Landing Blvd. In the Southwest Freeway submarket, Blue Cross Blue Shield signed a 136,800 SF lease at 8101 W Sam Houston Pky S leading to net gains totaling 53,119 SF for the submarket.
Houston’s office market also experienced a slight decrease in overall competitive space actively being marketed, causing a net change of 20 basis points to 27.6%. Classes A and B each saw drops to 29.1% and 25.6%, respectively.
Historic Buildings Trade in Downtown Houston
Office buyers completed seven property transactions during the second quarter with an average sales price of $131 PSF, a sharp decrease of $35 over Q1 2024. Both the private sector and international investors finished the period with net positive investment activity. REITs did not record any investment activity during Q2 2024, proceeding with a position which has seen no acquisitions or sales activity since 2022.
A noteworthy property trade announced during the quarter came from The Wideman Company, an Orlando, FL-based second-generation real estate investment group, acquiring The Jones at Main and the Great Jones located in Houston’s CBD. The Wideman Company purchased the Class B, 873,000 SF, two-property portfolio from Houston-based Lionstone Investments.
