HOUSTON – The co-working movement is making a strong entrance into the Houston office market, according to Chip Colvill, president of Colvill Office Properties. Major co-working operators such as WeWork, TechSpace and Regus have been evaluating Houston and are prepared to lease large blocks of space to establish co-working locations.
These shared-office concepts attract both startups and large corporations that need flexible, occasional office space in major markets, Colvill explained. Co-working suits companies that require short-term or scalable footprints while benefiting from shared amenities and a collaborative environment.
Colvill shared his insights as a panelist at a recent Houston event hosted by CoreNet and IFMA.
Another significant trend highlighted at the event is the growing tenant demand for enhanced building amenities. Brandi McDonald of Newmark Grubb Knight Frank noted that tenants increasingly seek fitness centers, conference facilities and mixed-use, walkable environments that support employee lifestyle and convenience.
McDonald told the CoreNet/IFMA audience that properties offering easy walkability to dining and services save employees time and can improve productivity. A rising number of tenants now prioritize locations where staff can easily walk to lunch or run errands during the day.
“It’s all about employee recruitment and retention,” Colvill said, emphasizing that workplace design and neighborhood amenities play a central role in attracting and keeping talent.
The drive to hire and retain Millennials is influencing companies to favor urban office locations popular with younger workers rather than remote suburban campuses. “It’s more expensive inside the Loop, but many companies are willing to pay that premium,” Colvill said, referring to central Houston neighborhoods that offer greater access to transit, dining and amenities.
In recent years the Houston office market softened as nearly 17 million square feet of new supply was absorbed while energy-sector downsizing led to increased vacancy. Over 12 million square feet of sublease space entered the market and overall rental rates declined as a result.
Despite these headwinds, market participants see opportunity for tenants today. With rental rates lower and more space available, tenants who can commit to longer-term leases may secure favorable terms.
“From a tenant representative’s perspective, now is a time to do a deal and go long,” said Colvill, whose practice focuses on representing owners of Class A office buildings. Long-term commitments can lock in current rates and position tenants for upside when the market recovers.
Panelists agreed that the Houston office market has likely reached—or is close to—its low point and should begin to stabilize. McDonald added that while more adjustment may lie ahead, she expects the market to reach its bottom in 2017.
Feb. 21, 2017 Realty News Report Copyright 2017