Vacancy rate at 21.5%
The overall vacancy rate in the Houston office market was up 20 basis points quarter-over-quarter, and up 70 basis points year-over-year. The vacancy rate for Class A properties is at 22.2%, and Class B at 22.3%. In the first quarter, overall net absorption totaled negative 207,280 sq. ft.—Class A represented positive 207,297 sq. ft. and Class B corresponded to negative 363,773 sq. ft. Of the 3.4 million sq. ft. currently under construction, about 42% of that space has been spoken for. Of the three properties completed in 2020, totaling 300,000 sq. ft., 97% of that space is leased. The overall Houston average asking full-service rent is at $29.33 per sq. ft.—down from year-end 2019’s $29.84 per sq. ft.—while the Central Business District is averaging $39.34 per sq. ft.
Houston economic indicators Houston started 2020 with healthy job gains—led by leisure and hospitality, and health industries. Serviceproviding industries were accelerating, while goodsproducing sectors had slight contractions, with modest to no growth in manufacturing. However, oil and stock markets have been whirling from the impacts of COVID-19 on world economies and a flood of crude from OPEC. As noted in NAI Partners’ Houston Office Market QuickTake, these factors have cast a weighty shadow over the outlook for the region. On a year-overyear basis, Houston grew 2.3% (71,100 jobs). Houston’s unemployment rate was flat at 3.8% in February. For comparison, the February unemployment rate was 3.5% in Texas and 3.5% in the U.S. This data precedes the coronavirus (COVID-19) outbreak in the U.S.