Energy Sector Juices Houston Office Space Market
by: Andrew Schneider, January 6, 2012 9:01:00 am
Of the fourth quarter’s largest leases, the top nine transactions were completed by energy companies. Shell’s renewal of its leases at One and Two Shell Plaza downtown alone accounted for more than a million square feet. In addition, BP occupied the whole of Three Eldridge Place in west Houston, accounting for more than 300,000 square feet.
Real estate firm Jones Lang LaSalle estimates those and other fourth-quarter moves pushed the total of Houston office space newly leased in 2011 to over 2.5 million square feet. Executive vice president Steve Burkett says 2012 will be an even stronger year, but it will definitely be a landlord’s market.
“The rents are going to go, continue to increase because there are not that many options now. In the western part of town, there’s probably fifteen to eighteen different developers who want to build buildings, but they haven’t yet. And in downtown, there’s probably five or six options that would like to build buildings but would need a prelease.”
Jones Lang LaSalle says rents will continue rising at least until late this year, when recent construction starts enter the market.