Q4 2022 HOU Office Market Report

HOUSTON OFFICE Market Experts

HLC Outlook

At the close of Q4 2022, the Houston office market as a whole had a vacancy rate of 21.5% which was identical to the vacancy rate of 21.5% in Q3 2022. Net absorption shifted back positive to 72K SF, up from the 610K SF of negative absorption in Q3 2022. Leasing activity decreased with 3.3M SF of deals completed this quarter, down from the 4.1M SF of deals completed in Q3 2022. There is currently 4.6M SF of office space under construction throughout the Houston metro with 149K SF having been delivered this past quarter.

KYLE PESEK

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 Houston office submarket is home to a large concentration of energy, professional and business 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 Q4 2022, the CBD submarket had a vacancy rate of 24.9% which was identical to the 24.9% at the close of Q3 2022. Absorption remained positive with 23K SF of space absorbed, down from the 147K SF of positive absorption in Q3 2022. Leasing activity decreased with 360K SF of deals completed. 1550 on the Green is the only office building under construction in the CBD which will bring an additional 386K SF of class A office space into the market.

HOUSTON CBD

TOP LEASE TRANSACTIONS

• Venture Global LNG, Inc. has signed an 88K SF renewal in Five Houston Center.

• Chamberlain Hrdlicka has signed a 55K SF renewal in Two Allen Center.

• Symplr has signed a 17K SF renewal in Bayou Place II.

• Symplr has also signed a 12K SF new lease in Bayou Place II.

• Medidata has signed a 10K SF lease in 1301 Fannin Office Tower.

• Cushman & Wakefield has signed a 6K SF lease in Texas Tower.

• Kohlberg Kravis Roberts & Co. L.P. has signed a 5K SF lease in JP Morgan Chase Tower.

• Sixth Street Partners has signed a 5K SF lease in Texas Tower.

DEALS IN THE MARKET

• 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 – 793,537 SF

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

• Wells Fargo Plaza | 1000 Louisiana Street – 613,862 SF

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

• Fulbright Tower | 1301 McKinney Street – 546,174 SF

• 919 Milam | 919 Milam Street – 534,262 SF

• 1600 Smith Street – 501,300 SF

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

• 2 Houston Center | 909 Fannin Street – 467,929 SF

• Two Allen Center | 1200 Smith Street – 458,501 SF

• Texas Tower | 845 Texas Avenue – 448,076 SF

• Three Allen Center | 333 Clay Street – 423,380 SF

• TC Energy Center | 700 Louisiana Street – 416,993 SF

• Heritage Plaza | 1111 Bagby Street – 404,734 SF

• 1100 Louisiana | 1100 Louisiana Street – 365,123 SF

• One Allen Center | 500 Dallas Street – 356,114 SF

• JP Morgan Chase Tower | 600 Travis Street – 311,810 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

• Cushman & Wakefield has signed a 30K SF renewal in Four Oaks Place.

• Luna Med has signed an 8K SF sublease in 515 Post Oak.

• Merlin Law Group has signed an 8K SF lease in 515 Post Oak.

• Henderson Rodgers has signed a 7K SF lease in the Schlumberger Building.

• Zehl & Associates, P.C. has signed a 4K SF lease in Galleria Tower I.

• DeGrasse Law Firm PC has signed a 3K SF lease in 1800 Bering.

• Cordax Evaluation has signed a 2K SF sublease in Two Riverway.

• DCS has signed a 2K SF lease in the Schlumberger Building.

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.

• 17 South Briar Hollow Lane – a 45K SF class B office building.

NEW DEVELOPMENTS

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

LARGE EXISTING VACANCIES

• Marathon Oil Tower | 5555 San Felipe Street – 861,751 SF

• Williams Tower | 2800 Post Oak Boulevard – 672,756 SF

• The Lakes on Post Oak | 3000 Post Oak Boulevard – 425,029 SF

• One Post Oak Central | 2000 Post Oak Boulevard – 398,386 SF

• San Felipe Plaza | 5847 San Felipe Street – 396,665 SF

• 2000 West Loop South – 306,091 SF

• Sage Plaza | 5151 San Felipe Street –232,218 SF

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

• Three Riverway | 3 Riverway – 217,609 SF

• Five Post Oak Park | 4400 Post Oak Parkway – 217,264 SF

• Schlumberger Building | 5599 San Felipe Street – 211,970 SF

• Thirty Forty Post Oak | 3040 Post Oak Boulevard – 201,519

At the close of Q4 2022, the West Loop submarket had a vacancy rate of 28.3% which was identical to the 28.3% at the close of Q3 2022. Absorption remained negative with 3K SF of space given back, up from the 791K SF of negative absorption in Q3 2022. Leasing activity decreased from the previous quarter with 278K SF of deals completed. Houston-based developer DC Partners’ 4411 San Felipe Street is the only office building under construction in the West Loop. 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 closer to the suburbs.

At the close of Q4 2022, the Katy Freeway West submarket had a vacancy rate of 23.0% which was nearly identical to the 23.1% at the close of Q3 2022. Absorption shifted positive with 27K SF of space absorbed, up from the 14K SF of negative absorption in Q3 2022. Leasing activity increased with more than 515K 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

• Wood has signed a 226K SF renewal in Westgate III.

• Subsea has signed a 46K SF sublease in Westgate II.

• Sensia has signed a 26K SF sublease in Energy Tower IV.

• Sapura Energy has signed a 24K SF sublease in Woodbranch Plaza IV.

• Skyline Executive Suites has signed a 21K SF renewal in Kirkwood Tower.

• Patrick Broadcasting Company L.P. has signed a 3K SF renewal in The Westchester.

• The Texas State Senate has signed a 1K SF renewal in The Westchester.

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 South 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 – 424,412 SF

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

• Energy Tower III | 11740 Katy Freeway – 360,002 SF

• Eldridge Oaks | 1080 Eldridge Parkway – 332,528 SF

• Westgate II | 17320 Katy Freeway – 326,070 SF

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

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

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

• West Memorial Place II | 15377 Memorial Drive – 248,185 SF

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

• 1330 Enclave Parkway – 243,369 SF

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

• West Memorial Place I | 15375 Memorial Drive – 206,092 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

• Earthstone Energy, Inc. has signed a 28K SF renewal in 1400 Woodloch Forest.

• Nurix Therapeutics Inc. has signed a 20K SF lease in 8800 Technology Forest - Building 100.

DEALS IN THE MARKET

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

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

• 25219 Kuykendahl Road – a 25K SF class B mixed-use office building

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

• 27312 & 27316 Spectrum Way – a 23K SF class B office building

NEW DEVELOPMENTS

• Building 300 | 8800 Technology Forest Plaza – a 71K SF class B medical office building

• Spring Medical Plaza | 21848 Holzwarth Road – a 58K SF class B medical office building

• Creekside Park Medical Plaza | 26424 Strake Drive – a 49K SF class A medical office building

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

• Building 9 | 23935 Gosling Road – a 22K SF class B office building

LARGE EXISTING VACANCIES

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

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

• Hughes Landing | 1735 Hughes Landing Boulevard – 278,039 SF

• The Woodlands Towers at The Waterway | 9950 Woodloch Forest Drive – 261,936 SF

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

• Hughes Landing | 1725 Hughes Landing Boulevard – 179,327 SF

• 24955 Interstate 45 North – 148,104 SF

• 2001 Timberloch Place – 109,024 SF

• Building 9 | 9709 Lakeside Boulevard – 106,849 SF

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

• One Hughes Landing | 1800 Hughes Landing Boulevard – 92,222 SF

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

At the close of Q4 2022, The Woodlands submarket had a vacancy rate of 15.2% which was identical to the 15.2% at the close of Q3 2022. Absorption remained positive with 74K SF of space absorbed, up from the 61K SF of positive absorption in Q3 2022. Overall, the Woodlands has experienced 668K SF of positive absorption since the beginning of 2022. Leasing activity decreased with 96K SF of deals completed. There is currently 234K SF of office space under construction which includes Creekside Park Medical Plaza, a development by The Howard Hughes Corporation. Lastly, two new office buildings totaling 73K SF were delivered in The Woodlands in Q4 2022, including i3 Interests’ Physicians Centre at Vision Park.

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 Q4 2022, the Westchase submarket had a vacancy rate of 25.5% which was slightly higher than the 25.2% at the close of Q3 2022. Absorption shifted back negative with 62K SF of space vacated, down from the 25K SF of positive absorption in Q3 2022. Leasing activity more than doubled with 603K SF of deals completed in Q4 2022. There is currently one 20K SF office building under construction in Westchase (3860 Westmart), with no new deliveries since 2018.

WESTCHASE

TOP LEASE TRANSACTIONS

• Apache Corporation has signed a 202K SF renewal in One BriarLake Plaza.

• Apache Corporation has also expanded, signing a new 125K SF lease in One BriarLake Plaza.

• Bechtel has signed an 80K SF lease in CityWest Place - Building 4.

• Healthstore Holdings has signed a 24K SF lease in Woodbranch Tower.

• Dril-Quip, Inc. has signed a 20K SF sublease in Two BriarLake Plaza.

• BASF Catalysts Division has signed a 16K SF lease in Westchase Commons.

• EDG, Inc. has signed an 8K SF expansion in One Westchase Center.

DEALS IN THE MARKET

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

• Westchase Point | 1250 West 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 West Sam Houston Parkway South – a 26K SF class B office building

NEW DEVELOPMENTS

• 3860 Westmart Drive – a 20K SF class B office building

LARGE EXISTING VACANCIES

• Pinnacle Westchase | 3010 Briarpark Drive – 355,443 SF

• Briarpark Green | 3151 Briarpark Drive – 288,106 SF

• Towers at Westchase II | 10350 Richmond Avenue – 168,554 SF

• Woodbranch Tower | 10375 Richmond Avenue – 167,690 SF

• Westchase Park I | 3700 West Sam Houston Parkway South – 161,891 SF

• Royal Oaks Centre | 11490 Westheimer Road – 156,902 SF

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

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

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

• 10333 Richmond Avenue – 136,767 SF

• One Westchase Center | 10777 Westheimer Road – 127,795 SF

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

• Ergotech Controls, Inc. has signed a 2K SF renewal in Greenbriar Place.

DEALS IN THE MARKET

• 2350 North Belt Tower | 2350 North 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

• Intercontinental Park III | 16701 Greenspoint Park Drive – a 119K SF class B office building

• Imperial 20 | 16800 Imperial Valley Drive – a 112K SF class B office building

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

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

• North Harris Parkway Center | 16416

Northchase Drive – a 64K SF class B office building

• 397 North Sam Houston Parkway East – 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

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

• 363 North Belt | 363 North Sam Houston Parkway East – 197,770 SF

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

• 396 West Greens Road – 164,411 SF

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

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

• 400 North Belt | 400 North Sam Houston Parkway East – 152,904 SF

• 16SIX66 Northchase | 16666 Northchase Drive – 144,706 SF

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

• 333 Northbelt | 333 North Sam Houston Parkway East – 135,738 SF

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

• World Houston Place | 15710 John F Kennedy Boulevard – 132,516 SF

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

At the close of Q4 2022, the Greenspoint submarket had a vacancy rate of 44.1% which was slightly higher than the 43.8% at the close of Q3 2022. Absorption remained negative with 44K SF of space vacated, down slightly from the 43K SF of negative absorption in Q3 2022. Leasing activity decreased significantly from last quarter, with only 32K SF of deals completed in Q4 2022. No new office space is under construction, and there have been no deliveries in the submarket since late 2015.

FM 1960 CORRIDOR

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 nearly 12M SF of class A and B office space.

At the close of Q4 2022, the FM 1960 Corridor submarket had a vacancy rate of 16.3% which was slightly higher than the 16.0% at the close of Q3 2022. Absorption shifted back negative with 46K SF of space vacated, down from the 16K SF of positive absorption in Q3 2022. Leasing activity increased with 99K SF of deals completed in Q4 2022. No new office space is under construction, with no new deliveries since the end of 2021.

TOP LEASE TRANSACTIONS

• Kelsey-Seybold Clinic has signed a 12K SF lease in 15655 Cypress Woods Medical.

• Dynasol LLC has signed a 4K SF lease in Cypresswood Place.

• Health Advisors has signed a 2K SF lease in Jefferson Park.

• North America Security Services has signed a 1K SF lease in Cypresswood Place.

• IT Training has signed a 1K SF lease in Golden Bank.

• Redbud E&P, Inc. has signed a 4K SF renewal in Cypresswood Crossing.

DEALS IN THE MARKET

• Champions - Wells Fargo Office Building | 5625 West FM 1960 – a 64K SF class A office building

• Torrey Chase I | 14425 Torrey Chase Boulevard – a 59K SF class B office building

• Fallbrook Crossing Medical | 1170011900 FM 1960 Road West – a 58K SF class B medical office building

• Cairnway Plaza | 16125 Cairnway Drive –a 28K SF class B medical office building

• 9700 Louetta Road – a 23K SF class B medical office building

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

VITAL STATS

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

• Chasewood Crossing Three | 19350 State Highway 249 – 103,073 SF

• North Cypress POB II | 21212 Northwest Freeway – 81,374 SF

• Building I | 11911 FM 529 – 80,864 SF

• Centre Cypress Creek (C-3) | 20455 State Highway 249 – 76,043 SF

• Two Chasewood | 20405 State Highway 249 – 69,362 SF

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

• Chasewood Crossing I | 19500 State Highway 249 – 59,702 SF

• North Cypress POB I | 21216 Northwest Freeway – 52,366 SF

INNER LOOP

VITAL STATS

HLC OUTLOOK

TOP LEASE TRANSACTIONS

• Common Desk has signed a 25K SF lease in The Ion.

• 97.9 The Box has signed a 14K SF renewal in Weslayan Tower.

• Imagine Care Pediatrics has signed a 14K SF lease in Phoenix Tower at Greenway Plaza.

• Rise Association Management Group has signed a 7K SF lease in River Oaks Green.

• Lewis Brisbois has signed a 3K SF lease in Weslayan Tower.

• MVMT has signed a 2K SF lease in 1414 West Clay.

DEALS IN THE MARKET

• Phoenix Tower at Greenway Plaza | 3200 Southwest Freeway – a 631K SF class A office building

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

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

• Kirby Mansion | 2000 Smith Street – a 62K SF mansion turned 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 – 289,942 SF

• Eleven Greenway Plaza | 11 Greenway Plaza – 288,338 SF

• Four Greenway Plaza | 4 Greenway Plaza – 270,953 SF

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

• Three Greenway Plaza | 3 Greenway Plaza – 180,951 SF

• Bellaire Station | 6500 West Loop South – 167,813 SF

• One Greenway Plaza | 1 Greenway Plaza – 119,265 SF

• Central Square | 2100 Travis Street – 116,580 SF

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

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

• Phoenix Tower at Greenway Plaza | 3200 Southwest Freeway – 103,602 SF

• Twenty Greenway Plaza | 20 Greenway Plaza – 101,985 SF

• Fournace Place | 4800 Fournace Place –

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 Q4 2022, the Inner Loop submarket had a vacancy rate of 19.2% which was nearly identical to the 19.3% at the close of Q3 2022. Absorption shifted back positive with 35K SF of space absorbed, up from the 36K SF of negative absorption in Q3 2022. Leasing activity decreased with 280K SF of deals completed, down from the 422K SF of deals completed in Q3 2022. No new office space is under construction, and no new buildings have been delivered since the new mixed-use office building at 3133 Southwest Freeway (Grand Forum) and the Houston Endowment HQ were completed in Q3 2022.

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 11.3M 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, having only recently been surpassed by Katy Freeway East.

At the close of Q4 2022, the Medical Center submarket had a vacancy rate of 10.1% which was slightly higher than the 9.9% at the close of Q3 2022. Absorption shifted negative with 22K SF of space vacated, down from the 4K SF of positive absorption in Q3 2022. Leasing activity increased with 92K SF of deals completed. There is currently 2M SF of medical office space under construction which includes Medistar’s Horizon Tower and Beacon Capital’s Dynamic One at TMC Helix Park. No new office buildings have been delivered since O’Quinn Medical Tower completed in Q2 2022.

MEDICAL CENTER

TOP LEASE TRANSACTIONS

• Baylor College of Medicine has signed a 114K SF lease in Dynamic One at TMC Helix Park.

• Houston Cardiovascular Associates has signed a 34K SF lease in Museo Plaza Office Building.

• Sino Biological has signed a 10K SF lease in Levit Green Phase I.

• Katia’s European Spa has signed a 1K SF lease in 2339 University.

• Gulf Coast Spine Care has signed a 1K SF renewal in 1200 Binz.

DEALS IN THE MARKET

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

NEW DEVELOPMENTS

• Dynamic One at TMC Helix Park | 1840 Dynamic Way – 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 290K SF class A medical office building

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

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

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

LARGE EXISTING VACANCIES

• Levit Green Phase I | 3131 Holcombe Boulevard – 256,000 SF

• 6624 Fannin Tower | 6624 Fannin Street – 149,003 SF

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

• 6400 Fannin | 6400 Fannin Street – 77,831 SF

• Houston Medical Plaza Professional Building | 6655 Travis Street – 75,782 SF

• Museo Plaza Office Building | 5115 Fannin Street – 63,866 SF

• University Medical Plaza I | 7501 Fannin Street – 63,495 SF

• 1200 Binz | 1200 Binz Street – 61,319 SF

• Museum Medical Tower | 1213 Hermann Drive – 60,063 SF

• 7807 Main Street – 47,916 SF

• Woman’s Hospital of Texas MOB | 7500 Fannin Street – 43,781 SF

• One Fannin | 7400 Fannin Street – 54,474 SF

TOP LEASE TRANSACTIONS

• Iglesia Pentecostal Unida Hispana ACA has signed a 4K SF lease in The Cube Corporate Park.

• Unconventional Subsurface Integration LLC has signed a 1K SF lease in American First Tower.

DEALS IN THE MARKET

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

• American First Tower | 9999 Bellaire Boulevard – a 212K SF class A office building

• One West Belt | 9555 West Sam Houston Parkway South – a 101K 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

VITAL STATS

HLC OUTLOOK

NEW DEVELOPMENTS

• Hope Clinic | 13930 Bellaire Boulevard –a 71K SF class B medical office building

LARGE EXISTING VACANCIES

• 5959 Corporate Drive – 330,058 SF

• One Arena Place | 7322 Southwest Freeway – 288,693 SF

• Two Arena Place | 7324 Southwest Freeway – 285,368 SF

• Southwest Corporate Center | 97009702 Bissonnet Street – 248,979 SF

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

• Southwest Medical Plaza I | 7777 Southwest Freeway – 81,676 SF

• Centre One | 9800 Centre Parkway –76,559 SF

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

• The Atrium Tower | 9894 Bissonnet Street – 52,168 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 but deliveries here have been significantly fewer than in other submarkets recently.

At the close of Q4 2022, the Southwest submarket had a vacancy rate of 19.3% which was nearly identical to the 19.2% at the close of Q3 2022. Absorption shifted back negative with 13K SF of space vacated, down from the 21K SF of positive absorption in Q3 2022. Leasing activity decreased with 27K SF of deals completed. Hope Clinic’s new 71K SF building at 13930 Bellaire is the only office building currently under construction in the submarket. No new deliveries have occurred since KPRC Channel 2’s building was completed at 8181 Southwest Freeway in 2017.

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 Q4 2022, the Katy Freeway East submarket had a vacancy rate of 9.2% which was slightly lower than the 9.6% at the close of Q3 2022. Absorption shifted back positive with 51K SF of space absorbed, up from the 37K SF of negative absorption in Q3 2022. Leasing activity decreased slightly with 254K SF of deals completed. MetroNational’s 9573 Katy Freeway and Moody Rambin’s Town Centre Two are among the 384K SF of office space currently under construction in the submarket. The most recent delivery is Marathon Oil’s building at 990 Town & Country which was completed near the end of 2021.

KATY FREEWAY EAST

TOP LEASE TRANSACTIONS

• Callon Petroleum Company has signed a 107K SF lease in 9753 Katy Freeway.

• Solaris has signed a 52K SF lease in Village Tower II.

• Origin Bank has signed a 22K SF renewal in the Murphy Building.

• Catalyze has signed a 12K SF lease in One Memorial City Plaza.

• Scout Surface Solutions, LLC has signed a 3K SF sublease in CityCentre Three.

• Kinley Construction has signed a 3K SF lease in Memorial City Place.

• Smith Law Firm has signed a 1K SF lease in Memorial City Place.

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

• 1106 Witte Road – a 28K SF class A medical office building

LARGE EXISTING VACANCIES

• 10777 Clay Road – 207,275 SF

• One Memorial City Plaza | 800 Gessner Road – 87,296 SF

• Memorial Hermann Tower | 929 Gessner Road – 84,179 SF

• Three Memorial City Plaza | 840 Gessner Road – 80,730 SF

• Two Memorial City Plaza | 820 Gessner Road – 59,481 SF

• 9900 Westpark Drive – 47,190 SF

• 952 Echo Lane – 42,197 SF

• Air Liquide Center – South | 9811 Katy Freeway – 39,312 SF

• West Memorial Park | 8584-8588 Katy Freeway – 36,592 SF

• 945 Bunker Hill | 945 Bunker Hill Road – 33,475 SF

• Kempwood Building | 2930 West Sam Houston Parkway North – 33,448 SF

• Park Centre I | 9950 Westpark Drive – 33,088 SF

TOP LEASE TRANSACTIONS

• Gallen College of Nursing has signed a 71K SF lease in Westway One.

• Salt Creek Midstream has signed a 29K SF lease in Beltway Lakes Phase III.

• Axel Inc. has signed a 2K SF lease in 5200 Hollister.

DEALS IN THE MARKET

• Westway Plaza | 11330 Clay Road – a 327K SF class A office building

• 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 North Sam Houston Parkway West – a 64K SF class B office building

• Tanner Office Building | 11302 Tanner Road – a 43K SF class B office building

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

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

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

VITAL STATS

HLC OUTLOOK

NEW DEVELOPMENTS

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

LARGE EXISTING VACANCIES

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

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

• Brookhollow Central III | 2950 North Loop Freeway West – 133,286 SF

• Beltway Lakes Phase III | 5775 North Sam Houston Parkway West – 129,440 SF

• Invensys Process Systems | 10900 Equity Drive – 109,833 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

• Northwest Crossing II | 7676 Hillmont Street – 90,877 SF

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

• 13111 Northwest Freeway – 88,840 SF

• Brookhollow Central II | 2900 North Loop Freeway West – 87,875 SF

• 4601 Westway Park Boulevard – 84,562 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 Q4 2022, the Northwest submarket had a vacancy rate of 22.2% which was higher than the 21.8% at the close of Q3 2022. Absorption shifted back negative with 38K SF of space vacated, down from the 150K SF of positive absorption in Q3 2022. Leasing activity increased with 294K SF of deals completed. There is 99K SF of office space under construction at 6900 Hollister Street, and a 31K office building was delivered at 16300 Northwest Freeway for Community Impact Newspaper.

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 Q4 2022, the Sugar Land submarket had a vacancy rate of 18.9% which was slightly lower than the 19.1% at the close of Q3 2022. Absorption shifted positive with 14K SF of space absorbed, up from the 38K SF of negative absorption in Q3 2022. Leasing activity increased with 117K SF of deals completed. There is currently no office space under construction and no office space has been delivered since late 2020.

TOP LEASE TRANSACTIONS

• Advanced Medical Resources has signed a 22K SF lease in The Texas Drive Building.

• Orbis Education Services has signed a 21K SF lease in Commerce Green One.

• Lux Psychiatric Services has signed a 1K SF lease in 800 BonaventureBuilding H.

• Uloma Ukonwo has signed a 1K SF lease in the Oyster Creek Office Condos.

• Patel Dentistry has signed a 2K SF lease in 6908 Brisbane.

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

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

LARGE EXISTING VACANCIES

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

• Sugar Creek on the Lake | 14141 Southwest Freeway – 263,698 SF

• Sugar Creek Tower II | 13131 Dairy Ashford Road – 114,585 SF

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

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

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

• Sugar Creek Tower I | 13135 Dairy Ashford Road – 87,266 SF

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

• Imperial Plaza | 3 Sugar Creek Center Boulevard – 62,611 SF

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

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

• 12808 West Airport Boulevard – 51,322 SF

CLEAR LAKE

VITAL STATS

HLC OUTLOOK

TOP LEASE TRANSACTIONS

• Songwon International has signed a 5K SF lease in One Hatcher.

• iCRYO - Recovery & Wellness has signed a 2K SF lease in 14200 Gulf Freeway.

DEALS IN THE MARKET

• Gemini Office Park | 600 Gemini Street

– a 363K 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 Professional 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 B office building

• 11603 Aerospace Avenue – a 106K SF class B 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

• 1322 Space Park Drive – 162,238 SF

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

• Boeing | 3700 Bay Area Boulevard – 86,226 SF

• One Corporate Plaza | 2525 Bay Area Boulevard – 82,084 SF

• Two Corporate Plaza | 2625 Bay Area Boulevard – 62,856 SF

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

• NASA / Clear Lake | 16055 Space Center Boulevard – 33,499 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 Q4 2022, the Clear Lake submarket had a vacancy rate of 15.1% which was slightly higher than the 14.8% at the close of Q3 2022. Absorption remained negative with 8K SF of space vacated, up from the 27K SF of negative absorption in Q3 2022. Leasing activity decreased significantly with only 25K SF of deals completed. There is currently 784K SF of office space under construction in Clear Lake, and a 21K SF medical office building was delivered at 17085 - 17087 North Texas Avenue.

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 include more than 25M SF of class A and B office buildings.

At the close of Q4 2022, the Suburban Outliers submarket had a vacancy rate of 12.8% which was slightly lower than the 13.0% at the close of Q3 2022. Absorption shifted back positive with 60K SF of space absorbed, up from the 49K SF of negative absorption in Q3 2022. Leasing activity increased with 191K SF of deals completed. No new office buildings have been delivered since Q2 2022, but there is currently 616K SF of office space under construction in Houston’s suburban outliers.

SUBURBAN OUTLIERS

VITAL STATS

TOP LEASE TRANSACTIONS

• IBM has signed a 42K SF renewal in 12301 Kurland.

• Audubon Engineering has signed a 14K SF lease in 12301 Kurland.

• Lexicon has signed a 13K SF renewal in 12301 Kurland.

• The Social Security Administration has signed a 12K SF lease in Colony Commons.

• Hillwood Development has signed a 2K SF lease in the Kingsley Ridge Office Condos.

DEALS IN THE MARKET

• Mason Creek Office Center II | 21700 Merchants Way – a 128K SF class A office building

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

• Oakbend Professional Building | 1601 Main Street – a 91K SF class B medical office building

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

• Magnolia Landmark Building | 18230 FM 1488 Road – a 65K SF class B office building

NEW DEVELOPMENTS

• Building F | 100 Jensen Drive – a 101K SF class A office building

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

• Building C | 100 Jensen Drive – a 74K SF class A office building

• Building 17 | 2743 Smith Ranch Road – a 62K SF class B medical office building

• Sunnyside Health and Multi-Service Center | 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 B office condo complex

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

• The Offices at Greatwood | 6514-6548 Greatwood Parkway – a 43K SF class B medical office condo complex

• Building 5 | 21711 Merchants Way – a 25K SF class B office building

• 25140 Kingsland Boulevard – a 23K SF class B 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

• 5616 Lawndale Street – 66,786 SF

• Medical Plaza II | 707 South Fry Road – 66,730 SF

• 12301 Kurland Drive – 64,738 SF

• Katy Ranch Phase II | 24285 Katy Freeway – 64,129 SF

• Building B | 9000 Gulf Freeway – 59,469 SF

• Printhouse | 2410 Polk Street – 51,794