The Houston metro area has a long way to go until its office market fully recovers. Houston led the nation in overall office vacancies at the new year at a staggering rate of 24%, but there is one bright spot in the market: medical leasing. It’s perhaps no surprise that there’s increased demand and growth in the healthcare and medical field across the nation during the pandemic, and the trend is likely to continue in the coming years. While traditional corporate offices sent their workers home throughout the worst months of the pandemic, medical businesses maintained a presence in the workplace as an essential service.
According to recent numbers from brokerage NAI Partners, a number of key metrics in the medical market in Houston reveal some optimistic signs. First, and perhaps most important, is the overall vacancy level of 16.8% from this past February was slightly lower than 17% from the same period a year prior. Additionally, gross average asking rent has increased slightly from $25.02 per square foot in February 2020 to $25.86 this last February.
However, there’s still a lot of space to fill and even more on the way. Overall medical office available increased from 18.5% to 21.1% year-over-year, and net absorption is way down, from nearly 157,000 square feet to -65,278 over the last year. There were no new deliveries to the market in February, but there remains nearly 864,000 square feet of office space currently under construction.
Leases of note mentioned in the report include a deal for a 35,000-square-foot space in the Bissonnet Medical Plaza in suburban Bellaire, a 20,000-square-foot lease at the Texas Medical Center near downtown Houston, and a 14,000-square-foot deal at the River Oaks Medical Center in Greenway Plaza.