After a sluggish start, the office leasing market is finally showing signs of recovery this year in an unlikely location: West Houston.
Houston office leasing activity sees uptick in newer offices out west
Instead of moving into the more typical downtown offices, companies have begun moving out west to areas with newer buildings like the Energy Corridor, Memorial City, and CityCentre. In the past three months, Houston saw an uptick in leasing activity of 16 percent in comparison to the last quarter of 2023, according to the latest report from industry research firm Savills. This increase stems from West Houston’s outperformance in the market, with the area accounting for 50 percent of the leasing activity in the overall Houston office market in the first quarter of 2024.
Instead of moving into the more typical downtown offices, companies have begun moving out west to areas with newer buildings like the Energy Corridor, Memorial City, and CityCentre. In the past three months, Houston saw an uptick in leasing activity of 16 percent in comparison to the last quarter of 2023, according to the latest report from Savills attributes the new numbers to companies looking to relocate closer to their workforce. Four of the biggest transactions this quarter occurred in West Houston, including Noble Corporation leasing 110,000 square feet at CityWest Place, Fluor leasing 104,000 square feet at Two Eldridge, BMC Software leasing 77,200 square feet, Enstor leasing 43,000 square feet both at CityWest Place.
The positive leasing numbers seem to confirm a report from VTS, a commercial real estate platform, showing growth in office demand. According to VTS, Houston office demand rose 29 percent from the same time last year. The rise is attributed to the energy industry’s domination of short-term demand, but major technology, advertising, and media information companies are also filling out that demand surge as they look westward, targeting “the Energy Corridor and the outer suburbs of Houston,” VTS said.
The recovering office leasing activity and demand for office space could be a sign that the worst is behind the commercial leasing market. However, growth in the western part of the city doesn’t eliminate the problem of empty offices in Houston’s historical business district downtown. Houston took the top spot in the most-vacant office markets among the nation’s largest 50 metros, according to Moody’s Analytics. Trailing behind it are two other prominent Texas cities, Dallas and Austin.
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