Even though office space performance in Q2 2022 is still struggling from the effects of the “working from home” phenomenon, occupiers must continue adjusting their offices. In this article, we are discussing Houston office space in 2022
Many companies are still focused on short-term issues instead of long-term solutions.
Unfortunately, this has hindered the office space market, as many large companies that could help improve the performance of office spaces are currently focused on other things.
What are Office Rental Rates Like in Houston?
Class A asking rent for Houston office space in the second quarter of 2022 was $36.00 per sq ft, up from $35.10 in the first quarter of 2022. The second quarter number is also up from the previous year.
This forecast predicts that Q3 will likely be even busier than usual. As a result, employers may want employees back at their desks sooner rather than later.
Construction of Houston office space has increased compared to last quarter: There are 2 million square feet of offices under construction in Houston.
While this is an increase from last quarter’s number, it is a decrease compared to Q2 2021, when there were almost three and a half million square feet of office under construction.
Investors can use several key factors to gauge the direction of the Houston commercial real estate markets.
These include jobless rates and annual percentage increases in employment. For example, the current jobless rate in Houston is 4 percent, and the city has a yearly accumulation of work of 6.1 percent.
These indicators can be helpful when looking at the market forecast for vacancies, net absorption, office spaces under construction, and overall class-A asking leases.
The office vacancy rates for Houston in Q2 were about 17%, which is lower than the national average of 21%. Office net absorption was 224.4 thousand square feet in Q2, somewhat less than the previous quarter’s figure.
2 million square feet are available for development in Q1, but these numbers are expected to decline in subsequent periods. In addition, the overall asking rent rate in Q2 was approximately $36.00 per sq ft, but this figure is expected to rise.
A positive development for office space investors was an uptick in building activity in Q2 2022, which is expected to continue into future quarters.
Investors who own office buildings should watch net absorption and Class A asking for lease rate trends. Investors should be aware that these two metrics are likely to increase, but whether or not their values do so is something that investors need to consider when evaluating commercial property in Houston.