NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) today released a report summarizing its views on the CMBS Houston Office Market.
The Houston office market, the nation’s tenth largest, has been negatively impacted throughout 2015 as oil and gas price declines took a toll on the fortunes of energy companies. The market ended the year with a vacancy rate of 13.5%, up 2.6 points year-over-year which is the largest annual increase since 1999, and higher than the US average of 10.4%. Area vacancy levels have increased due to new supply and firm downsizings, which doubled the amount of available sublease space. A total of 86 buildings with 12.1 million sf of office space were delivered to the Houston market in 2015, representing 15.1% of the total deliveries in the US and approximately 8.7 million sf is under construction. This is the fourth highest amount of space under construction among the major markets, behind New York, Dallas/Ft Worth and Washington. Of the space under construction, only 63.0% was preleased as of year-end 2015. Houston’s gross rental rates ended the year at $28.05, a 2.9% increase over prior year, which compares favorably to the US average of $23.38.
Although Houston’s economy is diversified as a result of the presence of the Texas Medical Center and the Port of Houston, KBRA believes low oil prices will continue to limit growth in the metro area over the near term as a result of the large amount of new office space that was recently added and/or is still under construction, the increasing amount of sublease space, continued mergers in the energy industry, and macroeconomic and political uncertainty.
Please click on the link below to access the report:
www.krollbondratings.com/show_report/3965
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About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
