Home > New Construction, Uncategorized > These markets saw the highest office rent increases over the last year

These markets saw the highest office rent increases over the last year

December 2, 2014 Leave a comment Go to comments
Rendering provided courtesy of Phillips 66
 .
Phillips 66 HQ July2013rendering

Phillips 66 is building its 1.1 million-square-foot headquarters campus in the Westchase District.

 

While the asking rate for office space in Houston’s Central Business District is the highest of any other market at $42.22 per square foot, these two submarkets saw huge increases in rents over the last year.

The Westchase office market had the highest percent increase over all other submarkets at 18.5 percent year over year. The average rental rate for Westchase is currently $38.11 per square foot, according to JLL’s second quarter report.

Greenway had the second highest office rent increase of 18.3 percent, with an average rental rate of $36.24 per square foot. The Woodlands had the third highest increase at 11.3 percent, charging $37.88 per square foot. In comparison, the Central Business District only increased by 6.4 percent in the last year.

“All three submarkets (Westcahse, Greenway and The Woodlands) are still very landlord favorable in nature, with very limited large block availabilities. With lack of construction options available — within those submarkets, most of what is being built will arrive pre-leased — existing space is able to charge a premium for companies looking to expand or move into the submarket,” said JLL Research Manager Graham Hildebrand.

A market to watch is the Clay Road/West Belt 8 area, said Hildebrand.

“This submarket is rapidly growing as companies, especially energy and the like, are looking there as an option to allow them to be available to clients in the Energy Corridor, Woodlands and inner Loop. Over the next 24 to 48 months, this submarket will be very robust in terms of new construction,” he said.

The West Belt submarket is made up of 53 buildings totaling 4.7 million square feet, and there are five new buildings under construction totaling just under 1 million square feet, according to Jon Lee, senior vice president of brokerage services in CBRE’s Houston office.

“It is a cost-effective alternative for companies in west Houston that need larger spaces and higher parking ratios,” Lee said.

The area has seen so much new activity recently that CBRE’s research office in October added it as one of two new submarkets it tracked. The other new designation was “far west.”

The West Belt has an overall vacancy rate of 5.5 percent and an asking rent of $19.21 per square foot square foot, CBRE reports.

Energy companies led the way in completed real estate transactions for the second quarter of the year, collectively leasing almost 2 million square feet of office space in key markets, according to JLL.

By Jenny Agee-Aldridge covers commercial real estate and retail for the Houston Business Journal.

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: