Office leasing activity slows while industrial keeps pace

Houston, TX – Avison Young today released both its First Quarter 2021 Office and Industrial Market Reports for Houston. The office sector continues facing challenges as tenants opt for newer properties and leasing activity slows to 1.4 million square feet (msf), almost 50% less than the previous quarter. The industrial market adds more properties to the construction pipeline while deliveries drop to 40% of fourth-quarter’s record 30.2 msf and leasing activity keeps pace.

“It is clear from the conversations I conduct daily with business owners across multiple industries that a return to the office is a priority for these individuals and their firms for the continuity of their business and the sustainability of their culture,” commented Anthony Squillante, Principal in the firm’s Houston office. “This feedback about the importance of office space is substantiated through press from Amazon, who is not giving up any office square footage despite the pandemic, and Google, who is spending $7 billion on real estate this year. People are coveting the personal relationships and mentoring opportunities that can only truly be felt in person.”

“With the continued growth of online sales, Houston’s total available inventory for distribution space is low compared to other large cities in the U.S.,” commented Drew Coupe, a Vice President in the firm’s Houston office specializing in industrial tenant representation. “As a result, we expect more new industrial construction in the form of speculative buildings and large build-to-suits in a widening geographical footprint, particularly in the North/Northwest and Southeast submarkets.”

Large national retailers such as Lowe’s, Home Depot and Floor & Décor are joining Amazon as they expand their regional presence with large new facilities in several sectors.

Download 2021 Q1 Houston Office Market Report or 2021 Q1 Houston Industrial Market Report