HOUSTON (Marcus & Millichap) – Although oil prices have rebounded to a level that should sustain operations in most energy companies, the national recession is weighing on office operations in Houston, according to a fourth-quarter Office Research Report by Marcus & Millichap.
The abundance of Fortune 500 headquarters in the area, in particular, is resulting in significant layoffs in the professional and business services segment.
Other findings from the report:
- The rate of job losses is expected to fall dramatically in the next few months. Nonetheless, payrolls are forecast to be thinned by 76,000 positions this year, a 2.9 percent decline. Office-using employment is projected to decrease 4 percent, or by 22,300 jobs.
- Builders are expected to complete 4.2 million sf of office space in 2009.
- As the recession weighs on office properties in the Houston metro, vacancy is projected to rise to 15.7 percent by year end, 300 basis points above the rate at the close of last year.
- Asking rents are forecasted to fall 1.4 percent this year to $23.93 per sf while effective rents retreat 3.7 percent to $19.91 per sf. In 2010, office rents are expected to recede further because of sluggish economic growth.