Office Space In Houston Smart Investments Guide

According to Cresa, Houston's commercial real estate is experiencing high buoyancy and this is not just a flash in the pan

. Houston experienced significant gains in the last quarter of 2011 and is continuing to grow in the first quarter of 2012. A number of energy companies like Greenway, Woodlands and Energy Corridor signed huge leases last year and this has led to a citywide growth in class 'A' office rental space. The occupancy rate has climbed to an impressive 87.7 % in 2012 which is a growth of over 2.3% over the previous year. More than half a dozen sectors have even reported greater growth than the market average by posting 90% occupancy or more. With an increase in tenant demand, developers cannot remain immune to the enthusiasm and several new build-to-suit projects have been signed.

High tenant demand and increasing base of employment coupled with limited availability can lead to surefire growth in commercial leasing rates. In fact, Houston is all set to go against the national trend of shrinking growth figures. As long as oil prices remain stable and employment opportunities follow predicted figures, demand for office space in Houston will continue to go north. Thus, anyone who is interested in investing in commercial real estate in Houston can expect a positive cash flow in the years to come. That said, a new business that is looking for office space in Houston might want to lease office space rather than buy one.

While rental rates in Houston have registered a growth (on an average climbing from $28 per square feet to $28.50 per square feet), the cost of owning new commercial property in Houston has climbed even higher. As large companies open shop in Houston, many of them have plans for expansion in this very healthy market. Add to this the fact that 2012 may witness a couple more of six-digit leases and one can easily surmise that commercial real estate in Houston is on fire. For a fledgling company, owning commercial property in such a market may not be easy if finances are meager.

According to several agencies, market predictions for office space in Houston also favor the leasing option. Here are a few pointers:

-Competition for prime locations on rent is expected to heat up further.

-More new constructions will be announced throughout the city. However, most new building projects will be costlier than at present.

-Concession packages may be available in 2012 too although they may shrink in size and volume.

If you want to rent office space in Houston, there is much to be happy about. Rental properties here are rich in variety, and may vary from modest single occupancy office spaces to high rises that define the skyline of the city. However, to get the best deal, tenants must get involved quite early with the market. The approach must be proactive with the ability to make quick decisions in a fast changing market. Once new construction slows down in 2013, option will be far fewer even though rental rates may continue to grow.

by: Farhan

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