HOUSTON – The local office market weakened over the second quarter and will likely not see much short-term improvement, according to Colliers International.
Market-wide office vacancy hit 20.5 percent last quarter, up from 20.1 percent in 1Q2020 and 19.9 percent in 2Q2019. This increase in the vacancy rate was caused by net negative absorption of 513,316 sf and the delivery of 454,523 sf of new product.
Houston’s office leasing activity fell 35 percent over the quarter from 4.5 million sf to 2.9 million sf primarily due to the stay-at-home orders in response to the COVID-19 pandemic.
Local sales volume decreased significantly over the quarter from $462 million in the first quarter to $74 million in the second.
Currently, there is 4.3 million sf of office space under construction that is 64 percent preleased.
Asking rents were relatively flat from the previous quarter and the second quarter last year. Downtown Class A asking rents saw the biggest decline, falling $1.80 from last year to $43.84 per sf.
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Source: Colliers International