What are the 5 Largest Office Buildings in Houston with the Lowest Occupancy?
With over two and a quarter million inhabitants, Houston is the fourth most populated city in the United States. Houston also has the fourth largest economy in the country, producing more than $525 billion annually, larger than the economies of some small countries.
The greater Houston area is also the fifth largest office market in the nation with 212.1 million square feet of rentable office space. Furthermore, Houston is home to most of the world’s largest energy companies like Shell, Marathon, BHP Billiton, Apache and ConocoPhillips. According to a CRESA report, the success of these energy companies is directly tied to office rental rates and available leased space in Houston. As the report says, when, “the price of oil increases or decreases, Class A rents usually follow suit, typically with a six-month lag.”
Negative Absorption in Houston Office Occupancy
According to a report by the Greater Houston Authority, since 2015, there has been an overall decline, termed negative absorption, in Houston’s office occupancy. This may seem like bad news to some, but for potential tenants, this increased supply coupled with decreased demand is positive offering lots of available office space with room to negotiate.
Colliers.com reports that at the end of 2016 Q3, the average office occupancy was at 84.4 percent in Houston. This figure takes into account 89.7 percent occupancy in the Central Business District (CBD) and 83.2 percent occupancy in suburban areas. By the end of 2016 Q4, the Houston office market posted a negative net absorption of 0.1 million, an improvement over the previous quarter..
In a separate January 2017 report, the Greater Houston Authority notes that in 2016, there was a negative absorption of 1.4 million square feet of office space resulting in consecutive years of negative absorption in Houston since 2002. In fact, some of the largest buildings in the Houston area are experiencing significant vacancy rates.
Large Buildings and Low Occupancy
The negative absorption is not concentrated in one part of the greater Houston area. There are vacancies all over. Below are the 5 largest office buildings in Houston with the lowest occupancy according to Colliers International Q4 2016 Houston Research & Forecast Report:
1. The 714 foot (218 meter), 50-story One Shell Plaza is the 10th tallest skyscraper in Houston. Including the antenna mast, it rises 1,000 feet, the highest structure in the Houston area. It houses Shell Oil and currently has 801,990 of available office space.
2. BG Group Place is a 630 foot (192 meter) skyscraper in Downtown Houston. The 15th tallest high-rise in Houston, it was completed in February 2011 and has 46 floors. It houses the BG Group and currently has 194,243 of available office space.
3. Calpine Center/ 717 Texas is the 30th tallest skyscraper in Downtown Houston. Home to Freeport-McMoRan, this 453 foot (138 meter) tall postmodern high-rise building has 33 floors of Class A office space with 355,847 square feet of vacancy.
4. The 25-story 351 foot (107 meter) BHP Billiton Tower (Four Oaks Place) is home to BHP and has 475,070 square feet of office vacancy.
5. CityWestPlace 2 which houses Statoil has 190,214 square feet of vacancy. This 22-story, 306 foot tall (94 meters) high-rise building was finished in 2001.
With so much of Houston’s business being rooted in the energy industry, fluctuations in oil prices have led to cutbacks by some companies producing increased vacancies across the board. Opportunities abound for tenants wishing to lease prime real estate in the greater Houston area.