External shocks to the market upend an otherwise healthy start to the year

Uncertainty overcame optimism as the Houston office market took a one-two punch from the rapidly evolving COVID-19 pandemic spread and a splintered Saudi-Russia alliance that’s driven oil prices to their lowest levels in 18 years. No one knows what the market will look like after this crisis has passed, but the impact will be significant. Prior to recent events, Houston’s office market started out strong with 4.3 million square feet (msf) of leasing activity, the highest first-quarter total since before the 2015-2016 energy downturn. Houston’s Central Business District submarket saw 1.2 msf of this activity – 95.5% of which occurred in Class A product as tenant flight to quality continued. Overall availability saw a mere 20 basis point increase over the year, now at 26.1%, but is likely to fluctuate as economic disruption continues.

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