Forecast: Houston Office Market To Firm Up This Year

HOUSTON (Houston Chronicle )- March 9, 2018 – Houston’s high-end office market will turn up this year after ending 2017 in the red, a new report shows. Class A office absorption — a common measure of a market’s health representing the change in occupied space — will be up by as much as 950,000 square feet in 2018, CBRE said. For 2018’s forecast, CBRE replicated the previous year’s method, adding in modifiers for the market’s increased momentum. Last year CBRE predicted 150K SF of absorption loss, and actual absorption registered as a roughly 214K SF loss.  Class-A space in Houston has been kept afloat by a flight to quality, driving increased demand to offset losses. Class-B and C assets have been on the other end. Given the negative absorption in Class-B and C over the past two years, which have combined for 3M SF of losses, CBRE’s Robert Kramp and Brad Smith predict further absorption loss in both asset classes. CBRE predicts an additional 750K SF to 1M SF of Class-B and C will be vacated.  Combining the predictions for Class-A, B and C, CBRE’s simplified analysis shows that overall office demand will range from a possible 350K SF loss to a 200K SF gain.