SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Office Markets to Watch. Not the largest or the most actively contested markets, the 2016 Office Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.
Top Office Market to Watch: Houston, TX
Houston is the hub of oil and energy production in the United States and, as such, is uniquely susceptible to the recent oil price declines that appear to have near-term persistence. It is likely that the office market in Houston will experience some pain in 2016 and beyond on a relative basis. Declines are already being felt in key office sectors with Information and Professional and Business Services declining at -2.5% and -1.8% annualized rates, respectively; however, Financial Activities is growing at 2.0% and thus should balance some of the negative effects. Overall, the Houston economy is actually fairly healthy with a 4.8% unemployment rate as of January ‘16 which has stayed near constant for much of 2015; thus, fears of the oil price declines may be overblown.
Advisor Insights: SVN | HINT Advisors
SVN’s Houston-based Advisors at SVN | HINT Advisors have some office market highlights to share. Here’s what to look out for in the Houston office market in 2016:
- A mild increase in office sublease due to a zero net job growth, following the thousands of jobs lost between December 2014 and April 2016.
- Increase in concessions from landlords when leasing office space is ongoing.
- Job losses appear to have stabilized with an unemployment rate at 4.8%, and a resurgence in the energy sector is expected in the future.
- Due to Houston’s diverse economy in recession proof sectors such as healthcare, petrochemical, and international trade, employment (and demand for office space) is expected to continue.
Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.
To read more on other top office markets, download the full version of the 2016 Office Market Outlook report here.
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