Navigating the Future: Houston Office Market Embraces Change

BY BRANDI SMITH

The Houston office market continues to undergo a period of recovery and adaptation in the aftermath of the COVID-19 pandemic. As businesses and employees explore new work models and redefine their office space requirements, the market landscape is experiencing shifts that reflect the changing needs and expectations of tenants. REDnews spoke with industry experts to gain insights into the current state of the Houston office market, emerging trends, the evolving amenities used to attract workers and predictions for the upcoming year.

According to Abby Alford, transaction management director for CBRE, Houston has felt the impact of the current economic conditions, but that does not imply a complete halt in activity.

“While leasing activity slowed overall this quarter, we're seeing submarkets identified in drive time analysis studies to be a convenient location for employees, such as West Houston, strengthen,” Alford says.

The North Houston District is home to major global companies that deliver goods and products to your door – and doorsteps nationwide. From light manufacturing to warehouse and supply chain distribution, companies in the North Houston District keep business moving.

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In Q1 2023, Houston posted negative net absorption, but the overall average vacancy rate slightly decreased to 23.1 percent. It’s worth noting, however, that CBRE analysis found roughly 80 percent of that vacancy rate can be attributed to 10 percent of buildings.

Bob Cromwell, managing director of office services for Moody Rambin, notes that large users are contracting their office footprints, leading to negative absorption. However, the amenities-rich environment in areas like Memorial City/CityCentre have fared well with vacancy rates as low as 3 percent.

“There is no space,” adds Cromwell. ”That amenity-rich environment is actually doing quite well.”

COVID-19 significantly reshaped the use and perception of office space. Cromwell emphasizes that the dust has yet to settle, as businesses navigate the new normal. He observes that tenants are gravitating toward spec suites, highlighting the need for flexibility and ready-to-use spaces. Furthermore, tenant lounges and recreational areas, incorporating features such as golf simulators, are emerging as new trends.

Alford adds that landlords are rethinking traditional amenities and exploring innovative ways to create collaborative environments. The emphasis is on fostering a comfortable and destination-like workspace that encourages employee interaction and engagement. Common areas, break rooms and huddle rooms are receiving increased attention to promote a dynamic and productive environment.

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