Research &

Forecast Report

HOUSTON
Q2 2018 | Office Sublease

Sublet leasing activity considerably lower

than a year ago

Houston’s office market is making some progress in reducing Ten Largest Sublease Availabilities – Q2 2018
the amount of sublease space that was placed on the market in
the height of the energy crisis. Although sublease space has Large Sublease Availabilities
decreased over the past few years, additional blocks of sublease (Total available in building and/or complex)
space recently placed on the market have curtailed the downward
BUILDING TENANT SUBMARKET SF
momentum in 2018. The majority of individual blocks of sublease
space currently on the market has 1-3 years of term remaining; 5 Greenway Plaza Oxy Greenway Plaza 807,567
however, there are still some large blocks of space with 5+ years Four WestLake Park BP Katy Freeway 479,483
of remaining term. Energy Tower II KTI Corporation Katy Freeway 375,937
(Technip)
Vacancy and Availability NRG Tower Reliant Energy Retail CBD 262,325
One Shell Plaza Shell Oil CBD 245,785
>> Q2 2018 sublease vacancy rate is 2.5%
Three WestLake Park Phillips 66 Katy Freeway 221,723
>> Q2 2018 total available sublease rate is 4.3%
1100 Louisiana Enbridge CBD 202,680

Rental Rate 10777 Clay Rd AMEC Foster Wheeler Katy Freeway 189,285
Energy Center I Foster Wheeler Katy Freeway 182,966
>> Houston’s average gross sublease rental rates is $22.80 per SF
Westway III GE Oil & Gas West Belt 182,004
>> Houston’s average net sublease rental rates is $14.67 per SF

Net Absorption Available Sublease Space by Select Submarket

>> Q2 2018 sublease net absorption is 914,668 SF and when
>> Most of the sublease space is concentrated in the CBD and West
combined with the negative net absorption from Q1 2018 the
Houston submarkets
2018 year-to-date net absorption total is 326,078 SF
3,000,000

Leasing Activity 2,500,000

>> Sublet leasing activity dropped 28.4% over the quarter from
372,803 SF to 266,863 SF 2,000,000

1,500,000

Market Relative to prior period Q2 2018 Y-O-Y 1,000,000

Indicators *VACANCY RATE 500,000

*AVAILABILITY RATE
0
RENTAL RATE CBD Galleria/West Katy Freeway Greenway Plaza Westchase
Loop
NET ABSORPTION

*An explanation of Vacancy vs. Available space can be

found on the bottom of page 4 of this report.
Available Sublease Space
>> Current cycle available sublet space increased slightly in Q2 2018

CBD Suburban Houston Total

14,000,000

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018

Sublease Leasing Activity

1,200,000
>> Sublease leasing activity decreased marginally over the quarter
1,000,000

800,000

600,000

400,000

200,000

0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018

Current Available Sublease Space

>> Although there are 99 full floors with 5-10 years of term remaining, 69 of those floors are located in 3 large contiguous blocks of space
BY NUMBER OF FULL FLOORS
120

5-10 years, 99
100
84
80

60

37
40 32
25
20 11

-
0-6 months 6-12 months 1-3 years 3-5 years 5-10 years 10 years +

2 Sublease Report | Q2 2018 | Houston Office | Colliers International

 CURRENT FULL FLOOR BLOCKS BY REMAINING TERM AND SUBMARKET

396,309 CBD
251,670 ALLEN PARKWAY
221,723 BELLAIRE
182,966 E FORT BEND SUGAR LAND
113,759 GALLERIA/WEST LOOP
96,144 GREENWAY PLAZA
70,889 KATY FREEWAY
75,033 NORTH BELT/GREENSPOINT
74,540 S MAIN/MEDICAL CENTER
67,334 THE WOODLANDS
63,212 210,157 WEST BELT
53,258 111,176 WESTCHASE
51,968 107,466
50,691 82,471 801,990
45,802 54,774 504,327
41,407 51,941 320,349
40,730 42,364 124,698
26,133 32,962 102,192
26,074 31,673 77,624
25,580 31,350 66,217
25,104 28,515 66,156
24,192 28,065 45,639
22,844 27,748 38,674
22,473 25,879 26,772
21,555 25,104 25,012 194,996
253,562 20,923 25,012 24,897 143,000
113,741 198,256 18,822 24,192 22,982 123,041
40,452 151,372 18,425 22,229 21,763 46,720
31,563 93,785 17,519 20,234 20,575 26,417
24,657 72,325 16,689 19,908 20,226 26,400
21,791 67,606 16,211 19,491 20,073 25,272
20,633 58,408 15,879 18,463 19,130 21,588
0-6 Months 6-12 Months 1-3 Years 3-5 Years 5-10 Years 10 + Years

AVAILABLE VS. VACANT FOR MORE INFORMATION

Available Space Vacant Space Lisa Bridges
The amount of space being This is the amount of square Director of Market Research | Houston
marketed for sale or lease to a feet that is physically empty, +1 713 830 2125
user. It includes both occupied regardless whether it is being lisa.bridges@colliers.com
and physically empty spaced. marketed.

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North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International