It’s smack dab in the middle of Spring in Houston and it’s still cold! I feel somewhat vindicated since last year we didn’t get a “real” winter so this one counts double. Now, commercial real estate is historically pretty active in Houston after mid January and pushing pretty hard until we get into the trappings of summer and the children are out of school.
In fact, most leases are signed with dates in spring or fall, specifically April and September being the most active months. So what does the market look like?
Well, after almost eighteen months of a historically weak office market, Houston experienced a positive bump in leasing velocity last quarter. For the first time since late 2016, Houston office buildings leased more than they brought to market, space wise. Don’t fear too much Tenants, the market is still solidly in your favor with almost 2M S.F. of open office space from 2017 that has yet to be absorbed.
Overall vacancy hovers at roughly 20% (millions upon millions of feet available) not including sublease space, which pushes this number to +/-25% vacancy.
Rates? As per usual, quoted rates remain fairly stagnant, averaging $32/PSF/YR Gross. In reality, we’re seeing deals strike closer to $27/PSF/YR Gross for a spread of Ask/Get of approximately 16%. What does this mean? Negotiate, ask for free rent, and push for it. It’s still time to strike.
However, with rising oil prices, home construction picking up and a returning jobs market in the energy sector we expect to see Landlord’s start tightening that spread in the next couple years. If you’re looking for space or have specific lease questions check out our leasing guides
For you retail Tenants, it’s a completely different story. Despite widespread failure and bankruptcy in the mall and big box sectors (with some really interesting use changes to come in the near future) overall retail strength is firmly in the Landlord’s favor.
Vacancy rates have held at +/-5-6% for the last two years, with rates overall averaging around $15/PSF/YR NNN ($10.00 in expenses on average) so $25/PSF/YR Gross. That doesn’t tell us much however since rates vary widely by market and then by type of retail property. So what does this mean for Tenant's? Let's review. If you're interested in a former single tenant restaurant in the Galleria? Good luck, vacancy rates are below 2% and rates are pushing $75/PSF/YR Gross.
On the flipside, outlet centers are struggling with vacancy in the 11-12% range and rates of $20/PSF/YR Gross. Online competition continues to weaken traditional outlets and malls but higher end strip centers and inline pads are firmly in the Landlord’s court for deal making.
As consumers look for better and better deals, comparison shopping and reviews continue to lead the path. 97% of consumers expect to read ratings, reviews and recommendations before making a purchase decision. Yea...that’s pretty much why we brought it commercial real estate with Tenavox...Join the over 200 Tenants who have reviewed their Landlord, safely and anonymously to drive real changes and better lease experiences at Tenavox.
Industrial markets are like Mike Tyson in Super Punch Out (the NES one, come on!). They won’t get beaten down, period. Despite a period of 4 years with energy prices in the relative tank (no pun intended, and over 50% losses to prices on average) along with major job layoffs Houston Industrial remains very tight and strong for the Landlords.
Vacancy rates are less than 7% citywide with asking rates right at $9.50 PSF/YR Gross, for Flex spaces you’ll pay closer to $15/PSF/YR Gross (some office, usually at least 20% of a space.) Retail strength has saved the day, with major CPG and delivery services taking warehousing to the next level as retailers reduce their storefront footprints in favor of on-demand, online delivery services. Bottomline? E-commerce is driving industrial real estate to new highs. Questions on your businesses' preferred real estate needs? We can help.
Look for deals in markets with the most construction and good access for your drivers (since gas is still cheap). We like the North (Spring/Woodlands/Conroe) which have almost 1.5X the vacancy due to increased development. Access has greatly improved with the Hardy’s enhancements along with the new Grand Parkway as well. For more ideas and to get matched with the best available properties in seconds (the Tenavox difference), check us out.
After collecting feedback from over 2,000 Tenants (150+ joining per week now, YAY!) that have joined us here in Houston since our Q4 2017 launch we can say the reviews are in (seriously). Tenant sentiment is above average, with most of our business community focused on the following:
- Responsiveness. This is a running theme and frankly Landlords and reps have no excuse to not call people back. From calling signs for inquiries to management issues the time to respond is critical. This is a big needs improvement item Houston.
- Parking. Not a whole lot most owners can do here but it’s a major complaint and the number one reason Tenants are considering a move. Work is hard enough, getting to/from shouldn’t be a soul suck. Creative Landlords are offering valet, uber-like services and having police manage traffic to help soothe these issues.
- Biggest positive? Renovations. Tenants were extremely complimentary of Landlords who spent moolah making their places stand out. In a market of more than 100K Tenants and 25K+ making a lease decision annually don’t you want to look great?
We’ll be keeping you all up to date on the newest developments, market research and more in our “Business Happens” brief...so keep your inboxes ready. We’re all about empowering Tenants with knowledge so get the skinny on how to make your next lease a great experience today.
Our release out of our MVP will happen very soon, get ready for the best search, matching and connection to the real estate for your business, in the business. Oh, and Tenavox is 100% free, we don't charge our Tenant members and we DON'T force them to sign up as our clients to represent them (we're not brokers...anymore :) That being said, you can join the growing community of empowered, informed and satisfied Tenant's in just a few clicks.
Landlords, Reps? We will show you how to lease your space and keep it leased (hint, keeping Tenants happy is HUGE). Show our business community you care about your building and your Tenants today by claiming your building at Tenavox.
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