Impact of ongoing economic disruption is reflected in Houston’s office market metrics

COVID-19’s ongoing negative impact on the regional economy is now beginning to be reflected in Houston’s office market dynamics. Large-scale workforce reductions, numerous local bankruptcy filings, and a massive, albeit mostly temporary, shift to remote work have caused a significant decrease in office demand. Occidental Petroleum signed both the largest and third largest lease of the quarter - a combined 972,000-square-foot (sf) extension - representing more than one quarter of the 3.1 million square feet (msf) leased in total. Excluding this mega-lease, demand declined by 51.4% from the first quarter. With supply outpacing tepid demand, overall availability increased by 90 basis points quarter over quarter, now at 27.0% and is on par with levels seen during the most recent energy downturn of 2015-2016.

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