Q3 2022 HOU Office Market Report

Property: Cypresswood Crossing

BELVIEU

HOUSTON OFFICE Market Experts

Managing Principal bavedikian@holtlunsford.com 713.602.3754

HLC Outlook

Market Analyst sseidman@holtlunsford.com 713.602.3767

Market Director bsegreto@holtlunsford.com 713.602.3758

Market Analyst kpesek@holtlunsford.com 713.602.3764

At the close of Q3 2022, the Houston office market as a whole had a vacancy rate of 21.6% which was slightly higher than the vacancy rate of 21.4% in Q2 2022. Net absorption shifted negative to 403K SF, down from the 302K SF of positive absorption in Q2 2022. Leasing activity increased slightly with 3.7M SF of deals completed this quarter, up from the 3.5M SF of deals completed in Q2 2022. There is currently 4.6M SF of office space under construction throughout the Houston metro, and 124K SF of space delivered.

BRANDON AVEDIKIAN

BRAD SEGRETO

SKYLER SEIDMAN

KYLE PESEK

Facts & Figures

OVERALL HOUSTON

OVERALL VACANCY

SUBMARKET

OVERALL ABSORPTION

EXISTING INVENTORY VACANCY

# BLDGS. TOTAL RBA DIRECT SF TOTAL SF VAC. %

CBD 91 50,235,945 11,619,876 12,627,893 25.1% (109,662)

West Loop 160 31,281,979 8,473,637 8,805,230 28.1% (421,707)

Katy Freeway West 165 27,367,892 5,809,394 6,367,423 23.3% 263,460

OVERALL CONSTRUCTION

386,323 2,017,653 $40.95

95,055 1,438,717 $33.01

1,266,170 $25.56

The Woodlands 178 21,328,223 2,815,380 3,272,888 15.3% 554,368 472,912 156,722 749,226 $30.31

Westchase 104 17,403,527 4,058,488 4,467,302 25.7% (119,743)

494,028 $17.72

20,000 854,761 $27.92 Greenspoint 119 13,920,614 6,192,702 6,255,180 44.9% (50,804)

FM 1960 Corridor 134 11,874,900 1,901,215 1,921,409 16.2% (142,241) 0 313,004 $21.59 Inner Loop 161 23,799,360 4,134,154 4,556,686 19.1% (3,100) 66,924 1,053,975 $32.28

Medical Center 64 11,665,698 1,059,159 1,087,944 9.3% 393,924 427,000 1,960,459 536,277 $32.06

Southwest

9,706,871 1,789,377 1,850,795 19.1% 30,739

10,121,047 938,594 1,014,234 10.0% 155,687

70,647 155,133 $18.71

355,694 605,673 $30.30

15,114,428 3,058,426 3,237,959 21.4% 214,607 57,571 129,294 573,367 $23.69

7,933,984 1,402,865 1,524,317 19.2% (100,681)

6,864,150 930,043 947,411 13.8% (28,458)

Suburban

239,856 $29.47

783,871 247,304 $24.91

25,245,203 3,218,721 3,345,058 13.3% 307,073 287,312 694,685 580,718 $26.45

283,863,821 57,402,031 61,281,729 21.6% 943,462 1,311,719 4,652,750 11,125,862 $27.66

QUOTED GROSS RATES

HOUSTON CBD

HLC OUTLOOK

The Central Business District (CBD) is the largest Houston office submarket, containing more than 50M SF of class A and B office space in an area totaling less than two square miles. Houston’s CBD continues to command the highest rental rates in the city with a current YTD average of $40 per SF for class A and B property types. The submarket is home to a large concentration of energy, professional services, and government tenants. Recent residential and retail developments, and the existing infrastructure of the underground tunnel system, have helped Houston’s CBD become a true live-work-play environment.

At the close of Q3 2022, the CBD submarket had a vacancy rate of 25.1% which was slightly better than the 25.4% at the close of Q2 2022. After having three consecutive quarters of negative absorption, absorption finally shifted positive with 147K SF of space absorbed. Leasing activity increased with 891K SF of deals completed. 1550 on the Green is the only office building under construction in the CBD submarket which will bring an additional 386K SF of class A office space into the market.

TOP LEASE TRANSACTIONS

• EOG Resources has signed a 374K SF renewal in Heritage Plaza.

• Baker Botts has signed a 172K SF renewal in 910 Louisiana.

• Macquarie Americas Corporation has signed a 56K SF renewal in One Allen Center.

• Reed Smith LLP has signed a 46K SF lease in LyondellBasell Tower.

• Addison Group has signed a 24K SF lease in 4 Houston Center.

• Kohlberg Kravis Roberts & Co. LP has signed a 23K SF lease in Chase Tower.

DEALS IN THE MARKET

• 717 Texas | 717 Texas Avenue – a 698K SF class A office building

• Citizens Bank Building | 402 Main Street – a 45K SF class B office building

• McCrory Building | 1004-1008 Prairie Street – a 29K SF class B office building

• Theater District | 720 Rusk Street – a 25K SF class B office building

• 421 Fannin Street – a 20K SF class B office building

NEW DEVELOPMENTS

• 1550 on the Green | 1550 Lamar Street – a 386K SF class A office building

LARGE EXISTING VACANCIES

• 800 Bell | 800 Bell Street – 1,314,350 SF

• 1001 Fannin Street – 784,598 SF

• North Tower | 700 Milam Street – 780,045 SF

• Wells Fargo Plaza | 1000 Louisiana Street – 631,578 SF

• 4 Houston Center | 1331 Lamar Street – 577,038 SF

• Fulbright Tower | 1301 McKinney Street – 566,980 SF

• 919 Milam | 919 Milam Street – 542,078 SF

• 1600 Smith Street – 501,300 SF

• One City Centre | 1021 Main Street – 483,226 SF

• 2 Houston Center | 909 Fannin Street – 474,005 SF

• Texas Tower | 845 Texas Avenue – 455,300 SF

• Two Allen Center | 1200 Smith Street – 445,563 SF

• Three Allen Center | 333 Clay Street – 426,859 SF

• Heritage Plaza | 1111 Bagby Street – 416,651 SF

• TC Energy Center | 700 Louisiana Street – 401,511 SF

• One Allen Center | 500 Dallas Street – 365,612 SF

• JP Morgan Chase Tower | 600 Travis Street – 353,725 SF

WEST LOOP

VITAL STATS

HLC OUTLOOK

CoStar’s Galleria, Uptown, Post Oak Park, San Felipe/ Voss, Richmond/Fountain View, and Riverway submarkets make up HLC’s West Loop submarket. This submarket contains approximately 31M SF of class A and B office space.

Thanks to the high-profile location and assets, asking rental rates here are among the highest in the city with a YTD average of $33 PSF.

TOP LEASE TRANSACTIONS

• Brown Sims has signed a 35K SF lease in Three Post Oak Central.

• Commonwealth LNG has signed a 20K SF renewal in 1 Riverway.

• Retina Consultants has signed a 20K SF sublease in Woodside Tower.

• Thompson Coe has signed a 12K SF lease in 1 Riverway.

• The Liberty Group has signed a 11K SF renewal in 5718 Westheimer.

• Patrinely Group has signed a 10K SF renewal in Two Post Oak Central.

• Arbor Energy has signed an 8K SF lease in 1800 Bering.

• PO&G has signed a 5K SF expansion in San Felipe Plaza.

• Ensyte Energy Software has signed a 4K SF renewal in 770 S Post Oak Lane.

• Paragon Outsourcing has signed a 3K SF lease in 770 S Post Oak Lane.

• Amog Consulting has signed a 3K SF renewal in 770 S Post Oak Lane.

• William H. Murphy has signed a 2K SF renewal in 770 S Post Oak Lane.

• Zimmermann Lavine has signed a 2K SF renewal in 770 S Post Oak Lane.

• Preferred Healthcare Group has signed a 1K SF renewal in 5959 Westheimer.

DEALS IN THE MARKET

• One Riverway | 1 Riverway – a 508K SF class A office building

• Three Riverway | 3 Riverway – a 407K SF class A office building

• Two Riverway | 2 Riverway – a 369K SF class A office building

• 6105 Beverly Hill Street – a 20K SF class B office building

NEW DEVELOPMENTS

• 4411 San Felipe Street – a 95K SF class A office building

LARGE EXISTING VACANCIES

• Marathon Oil Tower | 5555 San Felipe Street – 881,751 SF

• Williams Tower | 2800 Post Oak Boulevard – 695,989 SF

• The Lakes on Post Oak | 3000 Post Oak Boulevard – 449,821 SF

• San Felipe Plaza | 5847 San Felipe Street – 380,127 SF

• TwentyFour25 | 2425 W Loop South – 255,744 SF

• Sage Plaza | 5151 San Felipe Street – 255,318 SF

• Galleria Tower I | 2700 Post Oak Boulevard – 245,623 SF

• 2000 W Loop South – 229,638 SF

• Schlumberger Building | 5599 San Felipe Street – 225,555 SF

• Two Post Oak Central | 1980 Post Oak Boulevard – 222,700 SF

• Five Post Oak Park | 4400 Post Oak Parkway – 219,254 SF

• Three Riverway | 3 Riverway – 207,955 SF

• Thirty Forty Post Oak | 3040 Post Oak Boulevard – 206,891 SF

• Woodside Tower | 1500 Post Oak Boulevard – 204,885 SF

At the close of Q3 2022, the West Loop submarket had a vacancy rate of 28.1% which was significantly higher than the 25.9% at the close of Q2 2022. The submarket experienced more than 700K of negative absorption after recording two-consecutive quarters of positive absorption in 2022. Leasing activity decreased from the previous quarter with 462K SF of deals completed. Houston-based developer DC Partner’s 4411 San Felipe Street is the only office building under construction in the West Loop submarket.

Located in Houston’s Uptown District, the building will feature 3-floors of Class A office space along with ground floor retail and restaurants.

HLC OUTLOOK

The Katy Freeway West submarket is an energydriven submarket as it includes the Energy Corridor which is home to large energy corporations including ConocoPhillips, Shell, and British Petroleum, among other energy and energy service related organizations. With the downturn of the energy sector, the Katy Freeway West submarket has transformed from a landlorddriven to a tenant-driven submarket. This submarket, along with most of the metro, has experienced a recent and significant flight-toquality helping these large corporations to continue attracting a talented workforce. Despite the lack of success in recent years, the submarket is easily accessible for a majority of the Houston workforce that resides in West Houston, making it an ideal location for companies looking to get out of the city and into the suburbs.

At the close of Q3 2022, the Katy Freeway West submarket had a vacancy rate of 23.3% which was nearly identical to the 23.2% at the close of Q2 2022.

Absorption shifted negative to 13K SF, down from the 98K SF of positive absorption in Q2 2022. Leasing activity increased with more than 400K SF of deals completed. The Katy Freeway West submarket has not delivered any new office space since The Cannon delivered in 2019, and there is currently no office space under construction.

KATY FREEWAY WEST

TOP LEASE TRANSACTIONS

• Baker Hughes has signed a 129K SF lease in Energy Center II.

• The Denver College of Nursing has signed a 29K SF lease in Ashford 6.

• SKGC-Americas has signed a 23K SF renewal in Energy Tower I.

• Kimley-Horn has signed a 23K SF renewal in Energy Tower I.

DEALS IN THE MARKET

• Eldridge Green | 1293 Eldridge Parkway – a 248K SF class A office building

• The Offices at Park 10 | 16285 Park Ten Place Drive – a 157K SF class A office building

• Park Ten Phase II | 16290 Katy Freeway – a 157K SF class A office building

• The Westchester | 11451 Katy Freeway – a 117K SF class A office building

• Dairy Ashford Plaza | 2000 S Dairy Ashford Road – a 110K SF class B office building

• Dairy Ashford Plaza | 2020 Dairy Ashford Road – a 108K SF class B office building

• Briar Hills Office Building | 1011 Highway 6 South – a 101K SF class B office building

LARGE EXISTING VACANCIES

• Four WestLake Park | 200 Westlake Park Boulevard – 630,610 SF

• Two WestLake | 580 Westlake Park Boulevard – 431,045 SF

• Three WestLake Park | 550 Westlake Park Boulevard – 419,671 SF

• Westgate II | 17320 Katy Freeway – 372,664 SF

• Eldridge Oaks | 1080 Eldridge Parkway – 353,990 SF

• Energy Tower III | 11740 Katy Freeway – 350,813 SF

• Three Eldridge | 737 N Eldridge Parkway – 308,186 SF

• Enclave Business Park | 1200 Enclave Parkway – 286,917 SF

• West Memorial Place II | 15377 Memorial Drive – 263,502 SF

• Ten West Corporate Center II | 17404 Katy Freeway – 252,931 SF

• 8 West Centre | 3505 W Sam Houston Parkway North – 243,706 SF

• 1330 Enclave Parkway – 243,369 SF

• Energy Center V | 915 North Eldridge Parkway – 231,342 SF

• Two Eldridge | 757 North Eldridge Parkway – 203,313 SF

• Republic Square | 13501 Katy Freeway – 188,900 SF

• West Memorial Place I | 15375 Memorial Drive – 185,216 SF

• Enclave on the Lake | 1255 Enclave Parkway – 171,091 SF

THE WOODLANDS

VITAL STATS

HLC OUTLOOK

The Woodlands submarket continues to be one of the most active Houston office submarkets. It has grown so much that it now competes with other premier submarkets such as the CBD, West Loop, Greenway Plaza, and the two Katy Freeway submarkets. This submarket continues to outperform averages in Houston by commanding higher rental rates and maintaining a vacancy rate well below the city average.

TOP LEASE TRANSACTIONS

• Truist Bank has signed a 19K SF lease in 1700 City Plaza Drive.

DEALS IN THE MARKET

• Hewitt Lakes Woodlands Building III | 9500 Lakeside Boulevard – a 360K SF class A office building

• 1776 Woodstead Court – a 37K SF class B office building

• 25814 Budde Road – a 26K SF class B office building

• The Gateway Building | 26865 I-45 – a 24K SF class B office building

NEW DEVELOPMENTS

• Physicians Center at Vision Park | 18354 I-45 South – a 50K SF class A medical office building

• Creekside Park Medical Plaza | 26424 Strake - a 48K SF class A medical office building

• Life Time Co-Work | Six Pine s Drive – 35K SF of coworking space as part of a larger mixed-use development

• 26830 Kuykendahl Road – a 22K SF class A medical office building

LARGE EXISTING VACANCIES

• Hewitt Lakes Woodlands Building III | 9500 Lakeside Boulevard – 360,000 SF

• South Tower | 10000 Energy Drive – 288,609 SF

• 1735 Hughes Landing Boulevard –278,039 SF

• 1725 Hughes Landing Boulevard –259,315 SF

• The Woodlands Towers at The Waterway | 9950 Woodloch Forest Drive – 239,651 SF

• McKesson | 10101 Woodloch Forest Drive – 200,000 SF

• 24955 I-45 North – 148,104 SF

• 8800 Technology Forest Place – 128,790 SF

• Building 9 | 9709 Lakeside Boulevard – 115,213 SF

• 2001 Timberloch Place – 109,024 SF

• Parkwood II | 10055 Grogans Mill Road – 101,056 SF

• One Hughes Landing | 1800 Hughes Landing Boulevard – 95,075 SF

• Alight Solutions | 8770 New Trails Drive – 90,000 SF

At the close of Q3 2022, The Woodlands submarket had a vacancy rate of 15.3% which was slightly lower than the 15.6% at the close of Q2 2022. Absorption shifted positive with 60K SF of space absorbed, up from the 8K SF of negative absorption in Q2 2022. Overall, the Woodlands has experienced 554K SF of positive absorption since the beginning of 2022. Leasing activity nearly doubled from 180K SF in Q2 2022 to 346K SF in Q3 2022. There is currently 156K SF of office space under construction which includes Creekside Park Medical Plaza, a development by The Howard Hughes Corporation, and i3 Interests’ Physicians Centre at Vision Park.

WESTCHASE

HLC OUTLOOK

The Westchase office submarket is located 15 miles west of the CBD and five miles southeast of the Energy Corridor. Historically, this submarket has been popular with oil, gas, and engineering firms, providing an alternative to the nearby Energy Corridor. However, given the concentration of energy related tenants in this submarket, demand in Westchase is affected by changes in the energy sector similar to other energy dependent submarkets. Westchase surpasses almost all other submarkets with its unrivaled ingress and egress, along with the submarket’s vicinity to Houston’s population center. These attributes make it an attractive alternative to CBD, West Loop, and other competing submarkets.

At the close of Q3 2022, the Westchase submarket had a vacancy rate of 25.7% which was nearly identical to the 25.8% at the close of Q2 2022. Absorption shifted positive with 23K SF of space absorbed, up from the 80K SF of negative absorption in Q2 2022. While there was 480K SF of leasing activity in Q2 2022, Westchase only experienced 185K SF of leasing activity for Q3 2022. There is currently 20K SF of office space under construction in Westchase.

TOP LEASE TRANSACTIONS

• Bechtel has signed a 205K SF lease at CityWest Place Building 3.

• Mosaic Paradigm Law Group has signed a 6K SF lease in the Towers at Westchase I.

• BGE, Inc has signed a 8K SF expansion in One Westchase Center.

• Gulf Coast Men’s Clinic has signed a 6K SF lease in One Westchase Center.

• COSL America has signed a 1K SF renewal in One Westchase Center.

• Cody McRae has signed a 1K SF renewal in One Westchase Center.

DEALS IN THE MARKET

• 9801 Westheimer Road – a 211K SF class A office building

• Oak Park Office Center | 5850 Rogerdale Road – a 173K SF class B office building

• Westchase Point | 1250 W Sam Houston Parkway – a 155K SF class B office building

• One Oak Park | 6002 Rogerdale Road – a 153K SF class A office building

• 2929 Briarpark Drive – a 140K SF class B office building

• 3990 Rogerdale Road – a 128K SF class B office building

• 2610 W Sam Houston Parkway South – a 26K SF class B office building

NEW DEVELOPMENTS

• 3860 Westmart Drive - a 20K SF class A office building

LARGE EXISTING VACANCIES

• Pinnacle Westchase | 3010 Briarpark Drive – 356,648 SF

• CityWestPlace Building 4 | 2103 CityWest Boulevard – 194,084 SF

• Towers at Westchase II | 10350 Richmond Avenue – 192,042 SF

• One BriarLake Plaza | 2000 W Sam Houston Parkway South – 168,223 SF

• Westchase Park I | 3700 W Sam Houston Parkway South – 152,086 SF

• Westchase Point | 1250 W Sam Houston Parkway – 147,403 SF

• West8 Tower | 10205 Westheimer Road – 145,390 SF

• 2500 CityWest | 2500 CityWest Boulevard – 141,616 SF

• One Westchase Center | 10777 Westheimer Road – 138,549 SF

• Royal Oaks Centre | 11490 Westheimer Road – 133,151 SF

• 10333 Richmond Avenue – 131,550 SF

• Two BriarLake Plaza | 2050 W Sam Houston Parkway South – 130,415 SF

• Reserve at Westchase | 3250 Briarpark Drive – 125,544 SF

• Briarpark Green | 3151 Briarpark Drive –122,881 SF

GREENSPOINT

VITAL STATS

HLC OUTLOOK

The Greenspoint/IAH office submarket continues to suffer more than any other submarket in Houston. This northern Houston submarket’s vacancy rate was largely affected by the downturn within the energy sector and remains the highest in the city. Rental rates have fallen significantly and investors have been working persistently to rebrand the submarket.

TOP LEASE TRANSACTIONS

• Gary S. Tucker & Associates has signed a 3K SF renewal in Greenbriar Place.

• S&S Texas Properties has signed a 1K SF renewal in Greenbriar Place.

DEALS IN THE MARKET

• CityNorth 1 | 233 Benmar Drive – a 254K SF class A office building

• 2350 North Belt Tower | 2350 N Sam Houston Parkway East – a 166K SF class A office building

• South Spring Office Park | 140 Cypress Station Drive – a 163K SF class B office building

• North Houston Tech Tower | 12707 North Freeway – a 157K SF class B office building

• The Meadows at Interwood | 14950 Heathrow Forest Parkway – a 147K SF class A office building

• 13401 North Freeway | 13401 N Interstate 45 – a 143K SF class A office building

• Imperial 20 | 16800 Imperial Valley Drive – a 110K SF class B office building

• Heritage Park | 390 Benmar Drive – a 104K SF class B office building

• Maritime Center | 523 N Sam Houston Parkway East – a 79K SF class B office building

• Greens Crossing II | 820 Gears Road – a 79K SF class B office building

• 550 Greens Parkway – a 73K SF class B office building

• North Harris Parkway Center | 16416 Northchase Drive – a 64K SF class B office building

• MainStreet America | 18750 Interstate 45 – a 44K SF class A office building

• Century Plaza | 711 Airtex Drive – a 43K SF class B office building

• Red Oak Professional Building | 17320 Red Oak Drive – a 41K SF class B medical office building

• 12400 North Freeway – a 38K SF class B office building

• Timberdale Medical Arts | 607 Timberdale Lane – a 27K SF class B medical office building

• 3808 World Houston Parkway – a 22K SF class A office building

• Red Oak Professional | 17222 Red Oak Drive – a 21K SF class B medical office building

LARGE EXISTING VACANCIES

• CityNorth 5 | 17001 Northchase Drive –458,331 SF

• CityNorth 6 | 12450 Greenspoint Drive –343,495 SF

• CityNorth 1 | 233 Benmar Drive – 253,562 SF

• 222 Benmar | 222 Benmar Drive – 198,256 SF

• 363 North Belt | 363 N Sam Houston Parkway East – 195,770 SF

• Glenborough Tower | 100 Glenborough Drive – 188,463 SF

• 396 W Greens Road – 164,411 SF

• Greens Crossing II | 820 Gears Road –157,790 SF

• North Houston Tech Tower | 12707 North Freeway – 157,276 SF

• 16SIX66 Northchase | 16666 Northchase Drive – 147,135 SF

• 13401 North Freeway | 13401 N Interstate 45 – 143,410 SF

• Bridgewood II | 652 N Sam Houston Parkway East – 142,431 SF

• 333 Northbelt | 333 N Sam Houston Parkway East – 139,672 SF

• World Houston Plaza | 15710 John F Kennedy Boulevard – 139,516 SF

• Northbelt Office Center V | 500 N Sam Houston Parkway West – 135,030 SF

• 2350 North Belt Tower | 2350 N Sam Houston Parkway East – 128,931 SF

At the close of Q3 2022, the Greenspoint submarket had a vacancy rate of 44.9% which was slightly higher than the 44.6% at the close of Q2 2022. Absorption was negative for the second consecutive quarter with 53K SF of space vacated, and leasing activity was identical to the previous quarter with only 165K SF of deals completed.

HLC OUTLOOK

HLC’s FM 1960 Corridor office submarket includes CoStar’s FM 1960/Champions and FM 1960/Highway 249 submarkets. The submarket follows FM 1960 from Clay Road in West Houston up to Ella Boulevard in North Houston. This submarket is home to more than 11M SF of class A and B office space.

At the close of Q3 2022, the FM 1960 Corridor submarket had a vacancy rate of 16.2% which was nearly identical to the 16.3% at the close of Q2 2022. Absorption shifted positive with 15K SF of space absorbed, an encouraging sign after the 157K SF of negative absorption in Q2 2022. Leasing activity dropped from the previous quarter with only 68K SF of deals completed.

FM 1960 CORRIDOR

STATS

TOP LEASE TRANSACTIONS

• Dr. Christopher Downing has signed a 5K SF lease at the Cy-Fair Medical Office Building.

DEALS IN THE MARKET

• Northchase Place | 13700 Veterans Memorial Drive – a 75K SF class B office building

• Willowchase Office Building | 8223 Willow Place Drive South – a 63K SF class B office building

• Copperfield Professional Building | 7171 Highway 6 North – a 53K SF class B office building

• Chasewood Bank Building | 8500 Cypresswood Drive – a 30K SF class B office building

• One Cypresswood Building | 9950 Cypresswood Drive – a 30K SF class B office building

• Falling Creek II | 3910 W FM 1960 – a 24K SF class B office building

• Professional Building A | 18425 Champion Forest Drive – a 23K SF class B office building

• Butte Creek Professional Building | 17154 Butte Creek Road – a 21K SF class B office building

LARGE EXISTING VACANCIES

• Noble Energy Center II | 1002 Noble Energy Way – 470,623 SF

• 11403 Compaq Center West Drive – 246,341 SF

• University Park – Building 9 & 10 | 11450 Compaq Center West Drive – 208,841 SF

• Building I | 11911 FM 529 – 161,728 SF

• Chasewood Crossing Three | 19350 State Highway 249 – 97,877 SF

• North Cypress POB II | 21212 Northwest Freeway – 75,690 SF

• Two Chasewood | 20405 State Highway 249 – 74,764 SF

• Centre Cypress Creek (C-3) | 20455 State Highway 249 – 71,042 SF

• Willowchase Office Building | 8223 Willow Place Drive South – 62,538 SF

• Reverse Mortgage Solutions Building | 14405 Walters Road – 58,738 SF

INNER LOOP

VITAL STATS

HLC OUTLOOK

TOP LEASE TRANSACTIONS

• Perry Homes has signed a 77K SF lease in Phoenix Tower.

• WorkSuites has signed a 30K SF lease in 24 Greenway Plaza.

DEALS IN THE MARKET

• 3555 Timmons Lane – a 226K SF class A office building

• 3000 Weslayan Street – an 82K SF class B office building

• 2303 Smith | 2303 Smith Street – a 23K SF class B office building

• 3605 Katy Freeway – a 23K SF class B office building

• 230 Westcott Street – a 22K SF class B office building

LARGE EXISTING VACANCIES

• Twelve Greenway Plaza | 12 Greenway Plaza – 402,284 SF

• Nine Greenway Plaza | 9 Greenway Plaza – 291,975 SF

• America Tower | 2929 Allen Parkway – 258,494 SF

• Four Greenway Plaza | 4 Greenway Plaza – 242,639 SF

• Three Greenway Plaza | 3 Greenway Plaza – 173,568 SF

• Phoenix Tower at Greenway Plaza | 3200 Southwest Freeway – 150,087 SF

• Twenty Greenway Plaza | 20 Greenway Plaza – 129,283 SF

• One Greenway Plaza | 1 Greenway Plaza – 116,718 SF

• Wortham Tower | 2727 Allen Parkway – 116,526 SF

• Eight Greenway Plaza | 8 Greenway Plaza – 106,914 SF

• 3737 Buffalo Speedway Avenue – 103,243 SF

• Loop Central I | 4888 Loop Central Drive – 102,845 SF

• Fournace Place | 4800 Fournace Place – 100,812 SF

• Central Square | 2100 Travis Street – 99,080 SF

• Greenway Plaza | 3800 Buffalo Speedway – 97,769 SF

• Eleven Greenway Plaza | 11 Greenway Plaza – 96,735 SF

The Inner Loop office submarket neighbors some of Houston’s highest-income areas and features smaller submarkets such as Midtown, Bellaire, and Greenway Plaza. Given its convenient location between the West Loop, Medical Center, and CBD submarkets, the Inner Loop continues to be one of the most desirable submarkets in Houston. Recent improvements to the master-planned Greenway Plaza complex and other developments in the area have helped breathe life back into this submarket.

At the close of Q3 2022, the Inner Loop submarket had a vacancy rate of 19.1% which was slightly higher than the 18.8% at the close of Q2 2022. Absorption shifted negative with 36K SF of space vacated, down from the 93K SF of positive absorption in Q2 2022. Leasing activity decreased slightly with 334K SF of deals completed, down from the 400K SF of deals completed in Q2 2022. A total of 66K SF of office space delivered this quarter which includes the Houston Endowment HQ and a new medical office building at 3133 Southwest Freeway.

MEDICAL CENTER

HLC OUTLOOK

The Medical Center submarket is located three miles southwest of the CBD and is a specialty market focused heavily on the healthcare sector. It is home to the Texas Medical Center, the largest medical center in the world. A large majority of the 11.6M SF of office space in this submarket is considered medical office space. Major medical institutions, such as the M.D. Anderson Cancer Center and Memorial Hermann Hospital, are among the top medical office tenants in this submarket. Historically, this submarket holds the lowest vacancy rate in the city.

At the close of Q3 2022, the Medical Center submarket had a vacancy rate of 9.3% which was almost identical to the 9.4% at the close of Q2 2022. Absorption remained positive with 4K SF of space absorbed, down from the 419K SF of positive absorption in Q2 2022. Leasing activity decreased with only 15K SF of deals completed. There is currently 1.9M SF of medical office space under construction which includes Medistar’s Horizon Tower and the new Texas Medical Center Industry Buildings.

DEALS IN THE MARKET

• US Pain & Spine Institute | 5445 La Branch Street – a 35K SF class B medical office building

NEW DEVELOPMENTS

• TMC Industry Building | 1891 Old Spanish Trail – a 700K SF class A medical office building

• Horizon Tower | 6929 Main Street – a 522K SF class A medical office building

• Levit Green Phase I | 3131 Holcombe Boulevard – a 294K SF class A medical office building

• TMC3 Collaborative Building | Old Spanish Trail – a 250K SF class A medical office building

• 1615 S Loop West – a 156K SF class A medical office building

• 1802 Binz Street – a 39K SF class A medical office building

LARGE EXISTING VACANCIES

• 6624 Fannin Tower | 6624 Fannin Street – 133,807 SF

• TMC Innovation | 2450 Holcombe Road – 120,318 SF

• Museo Plaza Office Building | 5115 Fannin Street – 98,720 SF

• Houston Medical Plaza Professional Building | 6655 Travis Street – 86,113 SF

• 6400 Fannin | 6400 Fannin Street – 75,023 SF

• University Medical Plaza I | 7501 Fannin Street – 73,373 SF

• Museum Medical Tower | 1213 Hermann Drive – 68,868 SF

SOUTHWEST

VITAL STATS

HLC OUTLOOK

DEALS IN THE MARKET

• Southwest Corporate Center | 97009702 Bissonnet Street – a 526K SF class B office building

• Southwest Medical Plaza | 8200 Wednesbury Lane – an 84K SF class B medical office building

• 8700 Commerce Park – a 79K SF class B office building

• 6100 Corporate Drive – a 73K SF class B office building

• 7850 Parkwood Circle Drive – a 34K SF class B medical office building

NEW DEVELOPMENTS

• 13930 Bellaire Boulevard – a 71K SF class A medical office building

LARGE EXISTING VACANCIES

• Houston Technology Center | 5959 Corporate Drive – 353,856 SF

• Southwest Corporate Center | 97009702 Bissonnet Street – 217,837 SF

• One Arena Place | 7322 Southwest Freeway – 151,081 SF

• Two Arena Place | 7324 Southwest Freeway – 150,041 SF

• West Belt Office Center I | 8101 W Sam Houston Parkway South – 104,023 SF

• Southwest Medical Plaza I | 7777 Southwest Freeway – 83,460 SF

• Centre One | 9800 Centre Parkway – 78,416 SF

• Southwest Medical Plaza II | 7737 Southwest Freeway – 69,664 SF

HLC’s Southwest office submarket includes CoStar’s Southwest Freeway and Southwest Beltway 8 submarkets. The submarket extends to Missouri City and northwest to the Buffalo Bayou, just west of the Energy Corridor. The submarket’s geographic boundaries extend much further than those of neighboring West Houston submarkets and deliveries here have been significantly fewer than in other submarkets recently.

At the close of Q3 2022, the Southwest submarket had a vacancy rate of 19.1% which was lower than the 20.5% at the close of Q2 2022. Absorption shifted positive with 136K SF of space absorbed, up from the 73K SF of negative absorption in Q2 2022. Leasing activity decreased slightly with 46K SF of deals completed. Hope Clinic’s building off of Bellaire Boulevard is the only office building currently under construction in the submarket.

KATY FREEWAY EAST

HLC OUTLOOK

The Katy Freeway East office submarket benefits greatly from the demographics of the Memorial Villages. The submarket is centrally located along Interstate 10 and Sam Houston Tollway near the Energy Corridor and Houston’s western suburbs. Home to Midway’s CityCentre and MetroNational’s Memorial City mixeduse developments, this submarket is an attractive option for tenants looking to be in a true live, work, and play environment.

At the close of Q3 2022, the Katy Freeway East submarket had a vacancy rate of 10.0% which was slightly higher than the 9.6% at the close of Q2 2022. Absorption shifted negative with 40K SF of space vacated, down from the 62K SF of positive absorption in Q2 2022. Leasing activity increased with 257K SF of deals completed. MetroNational’s 9573 Katy Freeway and Moody Rambin’s Town Centre Two are the only buildings currently under construction in the submarket.

TOP LEASE TRANSACTIONS

• Greystar has signed a 67K SF lease in Town Centre Two.

• BW Energy has signed a 67K SF lease in 9753 Katy Freeway.

• Quanex has signed a 16K SF lease in 945 Bunker Hill.

• Front Bank has signed a 11K SF lease in Village Tower II.

• Borets Company has signed a 6K SF lease in Two Memorial City Plaza.

• Bonds Ellis has signed a 2K SF lease in 950 Echo Lane.

DEALS IN THE MARKET

• Shadow Wood | 10615 Shadow Wood Drive – a 42K SF class B office building

NEW DEVELOPMENTS

• 9753 Katy Freeway – a 189K SF class A office building

• Town Centre Two | 730 Town & Country Boulevard – a 167K SF class A office building

LARGE EXISTING VACANCIES

• 10777 Clay Road – 203,847 SF

• Memorial Hermann Tower | 929 Gessner Road – 85,933 SF

• One Memorial City Plaza | 800 Gessner Road – 77,726 SF

• Village Tower II | 9651 Katy Freeway – 66,645 SF

• Two Memorial City Plaza | 820 Gessner Road – 57,215 SF

• 9900 Westpark Drive – 43,310 SF

• 920 Memorial City Way – 38,021 SF

NORTHWEST

VITAL STATS

HLC OUTLOOK

TOP LEASE TRANSACTIONS

• Surge Energy has signed a 64K SF lease in Westway Plaza.

• Iland Internet Solutions Corporation has signed a 18K SF renewal in North Loop Center.

• Collaborative for Children has signed a 16K SF sublease in Park Central Plaza One.

• Harris County Toll Road Authority has signed a 12K SF sublease in Northwest Crossing III.

• Phillip Townsend & Associates has signed a 10K SF lease in Heron Lakes.

DEALS IN THE MARKET

• Sam Houston Crossing One | 10343 Sam Houston Park Drive – a 159K SF class A office building

• Citadel Plaza | 2600 Citadel Plaza Drive – a 121K SF class B office building

• 4601 Westway Park Boulevard – an 85K SF class B office building

• Northwest Plaza | 5500 Northwest Central Drive – a 75K SF class B office building

• Building II | 4805 Westway Park Boulevard – a 73K SF class B office building

• Legacy Park Business Park | 10943 N Sam Houston Parkway West – a 64K SF class B office building

• Exterran Energy Solutions | 11000 Equity Drive – a 64K SF class A office building

• 10050 Northwest Freeway – a 43K SF class B office building

• 1100 W 23rd Street – a 30K SF class B office building

• 10500 Northwest Freeway – a 30K SF class B office building

• 16060 Dillard Drive – a 24K SF class B office building

NEW DEVELOPMENTS

• 6900 Hollister Street – a 99K SF class A office building

• Community Impact Newspaper Building | 16250 Dillard Drive - a 30K SF class A office building

LARGE EXISTING VACANCIES

• Westway II | 4424 W Sam Houston Parkway North – 200,082 SF

• Westway III | 4425 Westway Park Boulevard – 182,004 SF

• Beltway Lakes Phase III | 5775 N Sam Houston Parkway West – 163,528 SF

• Westway One | 11210 Equity Drive – 143,960 SF

• Brookhollow Central III | 2950 N Loop Freeway West – 137,737 SF

• Brookhollow Central II | 2900 N Loop Freeway West – 109,172 SF

• Building 4 | 4920 Westway Park Boulevard – 108,855 SF

• Building II | 11000 Corporate Centre Drive – 101,796 SF

• Sam Houston Crossing One | 10343 Sam Houston Park Drive – 91,449 SF

• 13111 Northwest Freeway – 91,221 SF

• Northwest Crossing | 13333 Northwest Freeway – 90,527 SF

• 4601 Westway Park Boulevard – 84,562 SF

• 5252 Hollister Road – 84,218 SF

• North Loop Center | 1235 N Loop West – 77,314 SF

• Westway Plaza | 11330 Clay Road – 75,781 SF

HLC’s Northwest office submarket is located northwest of the CBD and starts at the transitioning Heights and Oak Forest/ Garden Oaks communities. It also includes CoStar’s Northwest Near and Northwest Far submarkets. The struggles in this submarket over the past few years are primarily attributable to the extensive expansion and reconstruction of the major freeways which have impacted traffic flow within the submarket. The 290 project is now complete and the submarket is starting to see an increase in activity, but recovery is sure to take some time. Most of the more than 15M SF of class A and B office space is located at Interstate 610 and Highway 290 or in the vicinity of Highway 290 and Hollister Road.

At the close of Q3 2022, the Northwest submarket had a vacancy rate of 21.4% which was lower than the 22.2% at the close of Q2 2022.

Absorption shifted positive with 158K SF of space absorbed, up from the 75K SF of negative absorption in Q2 2022. Leasing activity increased with 219K SF of deals completed. 58K SF office space was delivered in Q3 2022, and there is currently 129K SF of office space under construction.

SUGAR LAND

HLC OUTLOOK

The Sugar Land office submarket in Southwest Houston is home to a variety of energy and engineering firms. Large corporations, such as Fluor Enterprises, Schlumberger, and Nalco Champion, have a large presence in this submarket. The submarket is also home to a variety of non-energy tenants including CocaCola, Imperial Sugar, and Kelsey-Seybold Clinic. With its proximity to Houston’s growing population centers and workforce, the submarket continues to be a great suburban alternative to other major Houston office submarkets such as West Loop, Westchase, and Greenway Plaza.

At the close of Q3 2022, the Sugar Land submarket had a vacancy rate of 19.2% which was slightly higher than the 18.7% at the close of Q2 2022. Absorption remained negative with 37K SF of space vacated, worse than the 36K SF of negative absorption in Q2 2022. Leasing activity decreased with 85K SF of deals completed. There is currently no office space under construction and no office space was delivered in Q2 2022.

TOP LEASE TRANSACTIONS

• First Choice RX has signed a 1K SF lease in the Glenn Lakes Professional Building.

• White Teeth of Texas has signed a 1K SF lease in the RIverpark Ridge Office Condos.

DEALS IN THE MARKET

• Sugar Creek on the Lake | 14141 Southwest Freeway – a 517K SF class A office building

• Sugar Land Business Park | 1410 Gillingham Lane – a 150K SF class B office building

• 7619 Branford Place – a 38K SF class B medical office building

• Building A | 18722 University Boulevard – a 27K SF class B office building

• Offices at Telfair | 300 Promenade Way – a 21K SF class A medical office building

VITAL STATS

LARGE EXISTING VACANCIES

• Fluor Corporation | 1 Fluor Daniel Drive - 658,400 SF

• Sugar Creek on the Lake | 14141 Southwest Freeway – 235,087 SF

• Sugar Creek Tower II | 13131 Dairy Ashford Road – 118,050 SF

• Sugar Creek Place I | 14100 Southwest Freeway – 100,002 SF

• Sugar Creek Tower I | 13135 Dairy Ashford Road – 99,396 SF

• ABB Network Management | 1601 Industrial Boulevard – 90,219 SF

• The Minute Maid Building | 2150 Town Square Place – 89,605 SF

• Imperial Plaza | 3 Sugar Creek Center Boulevard – 65,954 SF

• Comerica Office Tower | 1 Sugar Creek Center Boulevard – 65,882 SF

• Sugar Creek Place II | 14140 Southwest Freeway – 56,572 SF

• Texas Instruments | 13905 University Boulevard – 55,195 SF

• Offices at Kensington Phase II | 1650 Highway 6 – 45,617 SF

• Two Sugar Creek Center | 77 Sugar Creek Center Boulevard – 42,196 SF

• Commerce Green One | 14090 Southwest Freeway – 39,780 SF

• Churchill Building | 10707 Corporate Drive – 36,566 SF

CLEAR LAKE

VITAL STATS

HLC OUTLOOK

TOP LEASE TRANSACTIONS

• Kuraray America Inc. has signed a 25K SF renewal in Two Corporate Plaza.

• Saber Power Services has signed a 11K SF sublease in 13100 Space Center Boulevard.

DEALS IN THE MARKET

• Gemini Office Park | 600 Gemini Street – a 363K SF class B office building

• Gemini Plaza | 1150 Gemini Street – a 159K SF class B office building

• Jacobs | 2224 Bay Area Boulevard – a 139K SF class B office building

• 12000 Aerospace | 12000 Aerospace Avenue – an 80K SF class B office building

• 2222 Bay Area Boulevard – a 70K SF class B office building

• Hercules II | 1290 Hercules Avenue – a 66K SF class A office building

• Hercules I | 1300 Hercules Avenue – a 64K SF class A office building

• 2045 Space Park Drive – a 25K SF class B medical office building

• 16902 El Camino Real – a 25K SF class B medical office building

NEW DEVELOPMENTS

• Axiom HQ | 13200 Space Center Boulevard – a 400K SF class A office building

• Intuitive Machines HQ | 13150 Space Center Boulevard – a 125K SF class A office building

• 11603 Aerospace Avenue – a 106K SF class A office building

• 1715 South Friendswood – a 106K SF class A medical office building

• Orion Medical Building | 13009 Gulf Commerce Drive – a 47K SF class A medical office building

LARGE EXISTING VACANCIES

• Gemini Office Park | 600 Gemini Street – 363,050 SF

• Gemini Plaza | 1150 Gemini Street – 158,976 SF

• Two Corporate Plaza | 2625 Bay Area Boulevard – 84,037 SF

• One Corporate Plaza | 2525 Bay Area Boulevard – 79,834 SF

• Boeing | 3700 Bay Area Boulevard – 63,927 SF

• Saturn One | 18050 Saturn Lane – 45,587 SF

• Galaxy II | 455 E Medical Center Boulevard – 41,076 SF

Located southeast of the CBD, the Clear Lake office submarket is home to the Lyndon B. Johnson Space Center and a large concentration of government jobs. Office space in this submarket relies heavily on the Space Center but is also home to a diverse mix of industries. The area boasts strong demographics given the high volume of NASA scientists, well-paid workers at the Houston Ship Channel, and related downstream industries who choose to live in communities close to the water.

At the close of Q3 2022, the Clear Lake submarket had a vacancy rate of 13.8% which was slightly higher than the 13.4% at the close of Q2 2022. Absorption shifted back negative with 27K SF of space vacated, and leasing activity increased with 114K SF of deals completed. No new office space was delivered in Q2 2022, but there is currently 784K SF of office space under construction.

SUBURBAN OUTLIERS

HLC OUTLOOK

HLC’s Suburban Outliers office submarket consists of the remaining submarkets outside of the major Houston submarkets such as the CBD, Greenway Plaza, Westchase, and The Woodlands. These smaller submarkets are located on the outskirts of Houston and includes more than 25M SF of class A and B office buildings.

At the close of Q3 2022, the Suburban Outliers submarket had a vacancy rate of 13.3% which was almost identical to the 13.1% at the close of Q2 2022. Absorption shifted negative with 34K SF of space vacated, down from the 122K SF of positive absorption in Q2 2022. Leasing activity increased with 200K SF of deals completed. There is currently 694K SF of office space under construction.

TOP LEASE TRANSACTIONS

• Knight Materials has signed a 4K SF lease in Beltway Plaza.

• Gabriella’s Beauty Bar has signed a 1K SF lease in the Kingsley Ridge Office Condos.

DEALS IN THE MARKET

• Westland Bunker | 550 Club Drive – a 240K SF class B office building

• Academy Sports HQ | 1540 N Mason Road –a 218K SF class B office building

• Mason Creek Office Center II | 21700 Merchants Way - a 127K SF class A office building

• 5616 Lawndale Street – a 96K SF class B medical office building

• Beltway Office Park | 3737-3743 Red Bluff Road – an 86K SF class B office building

• 11550 Fuqua Street – an 84K SF class B office building

NEW DEVELOPMENTS

• 100 Jensen Drive – a 300K SF class A three (3) building mixed-use development

• 24200 Via Mazzini Way – a 80K SF class A office building

• 17122 Telge Road – a 59K SF class A office building

• 4410 Reed Road – a 57K SF class B medical office building

• Magnolia Medical Specialists | 3786 FM 1488 Road – a 53K SF class A medical office building

• Towne Lake Office Condos | 10242 Greenhouse Road – a 50K SF class A office condo complex

• 8560 Broadway Street – a 47K SF class A medical office building

• 21711 Merchants Way – a 25K SF class A office building

• 25140 Kingsland – a 23K SF class A office building

LARGE EXISTING VACANCIES

• Central Brazoria County Business Park | 4005 Technology Drive – 257,399 SF

• Mason Creek Office Center II | 21700 Merchants Way – 127,953 SF

• Primary Medical Tower II | 2800 Garth Road – 102,084 SF

• The Offices at Greenhouse | 19219 Katy Freeway – 98,722 SF

• 7524 Sherman Street – 75,280 SF

• Katy Ranch Phase II | 24285 Katy Freeway –74,285 SF

• 5616 Lawndale Street – 66,786 SF

• Katy MOB II | 707 S Fry Road – 66,730 SF