Clear Lake A Bright Spot in Houston Office Market

Office markets across the country are still climbing out from the pitfalls of the pandemic. But for most major metros, there’s at least one submarket that’s emerged as a bright spot.

In Houston, one of those submarkets is Clear Lake, where the space industry is keeping occupancy high. While the spotlight has shone mostly on West Houston’s Energy Corridor and The Woodlands, Clear Lake has quietly enjoyed one of the lowest office vacancy rates in the region, the Houston Business Journal reported.

The vacancy rate in Clear Lake, which is about 30 minutes southeast of downtown Houston, fell to 11.6 percent last quarter, considerably lower than the Houston-area average of 20.8 percent, according to Transwestern. It’s also lower than the Energy Corridor, where vacancies stood at 14 percent.

Clear Lake’s net absorption — the amount of space leased minus the amount of space vacated — totalled almost 407,000 square feet over the past year. Only The Woodlands and the Energy Corridor saw higher net absorption between the first quarter of 2023 and last quarter.

Fueling Clear Lake’s success is its alignment with the space industry, primarily driven by the presence of NASA and private space companies. The region’s proximity to the growing Houston Spaceport and the nation’s renewed focus on space exploration has spurred increased activity, translating into a surge in office demand.

“That activity has just spread throughout the business community with ancillary functions supporting all the space initiatives and has led the office building market — particularly Class A, but also Class B — to performance levels that they have not seen in a very long time,” Transwestern’s David Lee told the outlet.

Two new leases at Clear Lake’s Corporate Plaza, a Class A office campus, signal confidence in the market’s trajectory. Anticipated multimillion-dollar renovations at Corporate Plaza aim to enhance tenant experience and further solidify Clear Lake’s appeal.

Clear Lake’s reliance on the space industry is also a soft spot. While the aerospace and defense sectors thrive, it is not a diversified office market. However, recent developments, such as the Great Wolf Lodge indoor waterpark in Webster, hint at broader economic diversification and renewed interest in the area.

—Quinn Donoghue