Need Office Space? Dallas and Houston Have Plenty Available in Texas
LAFAYETTE, La. (KPEL News) - As more workers return to the office, more office space is becoming available.
That is the case in the Texas cities of Houston and Dallas as figures from CoStar and JPMorgan point to some concerning trends, the biggest being the value of office buildings falling rapidly as office spaces were apparently overbuilt over the last decade. Yahoo points out the two cities made more new office space available between 2010 and 2021 than all regions, except New York. And the COVID Pandemic didn't slow down construction as millions more square feet are under construction.
The value of office space rose during the last decade as interest rates were low across the country. But now those interest rates have risen significantly and landlords, especially those in Houston and Texas, are now being left with a lot of unused office space with many tenants also opting not to renew their agreements with them. To put in perspective how much more Houston and Texas are struggling in this area, the national average of empty office space was 12.5% at the end of 2022. It was 18.8% in Houston and 17.2% in Dallas.
"There's not a ton of prime space," said Bill Kitchens, director of market analytics at CoStar Group in this Yahoo article. "We really do have to look at the configuration, the quality of the space, all those considerations that the tenants are still focused on."
Now, the good news is that Houston and Dallas also saw more employees heading back into their offices instead of working at home than other big cities. Houston saw more than 60% worker attendance while Dallas saw more than 50%, in recent figures monitored by Kastle Systems. But remote work continues to cause problems for this market and more and more vacancies could be seen across the country unless a reversal of this trend takes place.
"There's a strong likelihood that much of that (empty office space) is going to convert into vacancy when the original lease term expires," said Phil Mobley, National Director of Office Analytics at CoStar in this Axios article while pointing out how much it's been "piling up and up and up."