According to business statistics published in Colliers Global Retail Highlights, Houston is one of the most successful cities in America. Office-using employment has recovered 243%, nearly double the national average. Financial activity employment recovered by 109%. Employment among companies needing office space grew by 3.2% in the 2013-2014 year. Some of that growth comes at the expense of higher real-estate cost municipalities like Long Island, NY., Connecticut cities, Los Angeles, Newark, and Orange County, NJ.. Office space cost now averages around $81 per square foot. That is up nearly 23%.
Because of increased employment demand, the vacancy rate for downtown Houston space is gradually declining. Only 10.1% of downtown class A office space is currently vacant. Class B vacancy is a little better at 10.8%. New building is proceeding slowly. A significant vacancy improvement of 1.25 million square feet, when Exon Mobile departs from its 800 Bell offices, will not take place until next year.
Industrial real estate shows trends similar to office real estate. Houston is one of the healthiest industrial markets in the United States. This is largely due to the expansion in the oil and gas industry. Industrial leasing activity reached 5.8 million square feet. Currently, 2.9 million square feet was made available this past quarter and another 4 million square feet are under construction. Because of new construction, Houston’s average industrial vacancy rate rose slightly from 5.2% to 5.4%. Rental rates also increased from an average of $5.92 per square foot to $6.05.
Houston has some 16 major shopping malls including some 20 million square feet of retail space. According to the O’Connor & Associates Annual Retail Forecast, the rate of increase in retail space is declining slowly. Retail expansion had been as high 6 million square feet annually.
Retail expansion depends on new residential development. Much of that is taking place in the Katy area in the western part of the city. New retail space is opening in the long planned re-development of the 34 acre town center. Annual retail development in Houston normally brings around 4 million square feet per year with fluctuations of 15% to 17% per year.
Commercial real estate in office space, industrial use, and retail areas is undergoing slow growth, having recovered from the recessionary dip.
Not only is real estate great in Houston, but see the top 10 reasons to move to Houston.
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