Since the oil downturn of 2015-2016, downtown Houston has been plagued by what can only be described as a sublease glut. Sublease space in the Houston area has stood above 9M SF for nearly four years, seemingly with no immediate end in sight. But Houston’s sublease hangover may soon be cured, according to a panel discussion at Bisnow’s recent Future of Downtown event on September 27.
Houston’s medical sector, while still constantly expanding and adding value to Houston’s economy, has failed to boost downtown’s office submarket, despite it being a hotbed of life sciences activity and medical-related commercial real estate development. And while law firms and LNG companies have been slowly chipping away at a 16.7% vacancy rate downtown, some big moves are needed to relieve the sublease issue.
But downtown may soon see a win: Cushman & Wakefield’s Executive Vice Chairman Tim Relyea announced during the panel discussion that his firm is working on deals that would eradicate sublease space in One Shell Plaza, BG Group Place and Hess Tower, amounting to an estimated 1.3M SF. Completing these deals would effectively reduce downtown’s sublease availability by 56%.
Houston’s recovery from the oil downturn has proven to be a slow and steady one, rather than a meteoric rise. But hopeful news continues to break, and while Houston isn’t completely out of the woods, the light at the end of the tunnel is filtering in.