Buying office space? Why not in Houston?
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by: Debbie Axelrad1
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The sky high prices of gas and oil is starting to affect the U.S. economy. Everywhere you go, the financial crunch and credit restrictions are affecting the economic situation, and this is seen in the way that people are now hesitant to invest in something, no matter how great the potential is. But according to the leading brokers of office space, the increase in gas and oil prices had a good impact on the Houston commercial office market.
One major factor that the tenants are looking in office spaces for lease is the future expansion rights. Commercial buildings that offer this right are very desirable to big companies. Tenants vie with one another to get office space like this. Houston office spaces abide by this right and see a lot of potential tenants in the area.
Some people are concerned about the amount of commercial office space that is under development. There are over 7 million square feet of office spaces still in progress. But the representative of the corporation behind those buildings assures us that Houston, Texas is ready for this and can handle the building addition. If it were in any location that is not as developed and advanced as Houston, it has been a problem and could be a bit overbuilt.
There are two submarkets in the scene vying to outperform the city; the CBD and the Galleria. The former represents 4% of the total of Houston commercial office space; while the Galleria can support a new building of offices up to 500,000 square feet. Today, land cost is rolling high and cost too much that expert say that you need at least 800,000 square feet of commercial land area to build you are building for your financial investment to make logical economic sense.
The problem with submarkets is usually the means of transportation. CBD is lucky; it’s commercial value has strengthened because of the contribution of mass transit which is the light rail transit system. The loyalty of the tenants could be won easily by these mass transits; investors can take advantage of this area if they know that tenant would be lining up as soon as they open to the market.
Compared to the rest of the U.S., Houston, Texas suffered the least in office investment. It has only seen a conservative drop in numbers and sales velocity. This could be the reason for a still robust and active investment in commercial office space.
Due to financial crunch and credit restrictions, office investors are starting to doubt the potential of their investments. But analysts are very reassuring in forecasting that the Houston market is strong and will get stronger in the years to come. If there are cash buyers coming in, the opportunity of buying a great quality asset in a low price should be too good to pass up. Office space in Houston is still a good investment and has a great chance of soaring high in the next few years.
About the Author
Anthony Coleman is author of this article on full-service office space. Find more information about class-a office space here.
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