How does the Houston office situation compare to other troubled major metros?
Some CMBS loans shift to special servicing in 2023, Houston office delinquencies still high compared to top 20 markets, says David Putro, head of commercial real estate analytics at Morningstar Credit Information & Analytics.
“Some of the pain in Houston was evident before the last few months,” Putrow said.
The city’s office market, which relies heavily on the oil and gas industry, struggled to sustain itself after energy prices plummeted in 2015.According to statistics, nearly one-third of energy-related projects were canceled or postponed in 2015 Houston Business Journaland Houston-based companies such as Halliburton announces layoffs of more than 8%.
Morningstar Credit Information & Analysis. “Houston has the highest vacancy rate of any major metro.”
Vacancy rate in Houston office market just below 26% According to JLL, in the first quarter of this year, occupancy rates in Hekou City fell for the fourth consecutive year, up 50 basis points year-on-year. According to the Colliers report, the city’s vacancy rate hovered just below 20% in 2019 and crossed the 20% mark in 2020.
One exception is office space in Texas medical centers, where remote work is less feasible. The submarket has an overall office vacancy rate of 12%, one of the lowest housing prices in the metro.
Remote work has had an impact on commercial real estate as office-dependent businesses scale back after readjusting work habits. This is one of the reasons why the entire office market is in trouble.In Houston, office buildings have Selling for almost half the assessed valueand foreclosure has shaken up the market Leasing activity down 29%.
A 2022 McKinsey & Company report It was found that 66% of Houston employees were given remote optional schedules, compared to 58% of employees nationwide. When Houstonians do come into the office, they prefer to be in the middle of the week, according to a report from Placer AI, which used location intelligence to gather demographics for five metropolitan areas (Houston, New York, Chicago, San Francisco and Boston) data. Quarter 2023.
A “full-scale return to the office appears unlikely” in all markets studied by Placer, the report said.
Some other Placer AI findings: Houston stands out as hub for long-distance commuters, About half of commuters drive 10 miles or more each way. In all five cities, one-person households were significantly overrepresented among on-site employees, suggesting that multiperson households are more likely to work remotely.
