Massive Office Sublease Opens in Houston Energy Corridor
Jon Silberman
HOUSTON – (Realty News Report) – TechnipFMC, an engineering and construction contractor serving the energy sector, has placed a substantial block of office space on the sublease market in the Energy Corridor, NAI Partners reports.
The available sublease totals 375,937 square feet and is located in Energy Tower II at 11720 Katy Freeway near Kirkwood. CBRE is handling marketing for the sublease opportunity.
Energy Tower II was developed by Mac Haik, who earlier served as a receiver for the Houston Oilers and later became an auto dealer and real estate developer.
While the TechnipFMC sublease represents a notable setback, Jon Silberman, managing partner at NAI Partners, emphasized at the firm’s quarterly press breakfast that the broader Houston office market is showing signs of improvement.
After a steep fall in oil prices in 2016, sublease inventory surged to more than 12 million square feet. West Texas Intermediate crude dropped below $30 per barrel in early 2016, prompting energy companies to lay off thousands of workers in Houston and list surplus office space for sublease. During that period, some national firms identified the Energy Corridor as one of the weakest office submarkets in the country.
Since peaking at roughly 12 million square feet, sublease supply has declined to about 8.8 million square feet, according to NAI Partners. Approximately 1 million square feet of sublease transactions closed in the fourth quarter of 2017.
“We are churning through that sublease space,” Silberman said, noting ongoing absorption of available inventory.
Recent notable sublease transactions include FairfieldNodal’s agreement to sublease 47,000 square feet at Air Liquide Center, a new building near Memorial City, and Costello Engineering’s move into 35,000 square feet at CityWestPlace Building 2 in Westchase, NAI Partners reported.
Dan Boyles, partner and office-sector team leader at NAI Partners, added that the Houston office market is gradually improving. The market posted positive net absorption in the fourth quarter of 2017 after a prolonged period of negative absorption that lifted the city’s overall vacancy rate.
