After six straight quarters of negative net absorption, Houston’s office market posted positive net absorption in Q4 2017, a little glimmer of hope that Houston’s office market was finally starting to look up. The optimism was short-lived as several large companies vacated space during Q1 2018 due to layoffs and mergers, causing negative absorption. One of the companies, Technip, which announced its merger with FMC Technologies in 2017 had over 3,000 layoffs nationwide during Q1 and the company vacated over 375,000 SF of class A space in the Katy Freeway submarket.

Developers remain disciplined, only beginning new construction with a lead tenant in place. Currently, there are only four such projects under construction including Capital Tower in the Central Business District and three projects in North Houston within the CityPlace development.

Most of the office buildings that were damaged by Hurricane Harvey in 2017 have been rehabbed and are back on-line and landlords are making contingency plans for future unforeseen events.

According to the U.S. Bureau of Labor Statistics, the Houston MSA created 67,100 jobs (not seasonally adjusted) between February 2017 and February 2018, an annual growth rate of 2.2%, which is above the national average job growth rate of 1.6%.

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