August 23, 2017
Houston’s CBD has surpassed the Energy Corridor for most sublease space in the market, and subsequently, the U.S.
Following Enbridge’s 294,000-square-foot addition to the sublease market, total sublease inventory in the CBD sits at more than 2.5 million square feet or 23 percent of the indirect market.
The addition also catapulted Houston’s CBD to the top position for sublease space across the country, outpacing New York, Chicago, Washington, DC, and Los Angeles.
Marketwide, Houston’s sublease inventory contracted by 147,000 square feet or 1.3 percent in the second quarter. This represents the third consecutive quarter Houston’s sublease inventory decreased. The city’s sublease inventory contracted by 480,000 square feet in the fourth quarter of 2016 and 395,000 square feet in the first quarter of this year.
The decreases have been welcome news for a market that saw sublease space increase from 4.2 million square feet in the third quarter of 2014 to 12.2 million square feet in the third quarter of 2016. Today, Houston’s total sublease inventory is approximately 11.1 million square feet.
Looking forward, approximately 430,000 square feet of sublease space will expire before the end of the year, pushing Houston’s direct vacancy higher by year-end. 3.3 million square feet of the city’s sublease options have five or more years of term remaining.
Houston submarkets represent five of the top six submarkets for sublease space nationwide. The only non-Houston submarket is Chicago’s West Loop, with the third highest sublease inventory. Additionally, Houston’s energy tenants account for 10 of the 15 largest sublessors among major markets in the U.S.