Houston’s sublease availability hits lowest point since mid-2020 

Houston office users are chipping away at the gargantuan block of sublease space that’s epitomized the office market’s struggles since the pandemic spawned the remote-work era.

Houston had about 5.4 million square feet of available office sublease space in the fourth quarter of last year and first quarter of this year, its lowest mark since mid-2020, when roughly 8 million square feet was available, Bisnow reported, citing Savills. 

Houston’s sublease space now accounts for less than 10 percent of the city’s total office availability, a favorable comparison to other major Texas cities. In Dallas, sublease offerings constitute 15 percent of office availability, totaling 9.8 million square feet, while Austin has about 5 million square feet of sublease space, or 24 percent of its availability. 

Declining sublease availability reflects a market that’s starting to rebound even as remote-work trends continue to drive up vacancies, which rose to 25 percent last quarter, according to Partners Real Estate.

“Subleasing is very much an indicator of the health of the office market,” Savills’ Alecia Schneider told the outlet. “It’s an easy exit, a low-hanging fruit.”

There’s still a way to go on the road to recovery, though. The city has 10 office buildings with sublease blocks of at least 90,000 square feet, with six belonging to energy and utility companies. 

The largest offering stems from oil and gas company NOV, which has 400,000 square feet up for grabs across the Parkwood Campus and another two buildings in West Belt Plaza, all in Southwest Houston. NOV Inc. listed the space after relocating its headquarters to Millennium Tower II, at 10375 Richmond Avenue, last year.

Other large sublease offerings include ExxonMobil’s 206,000-square-foot block at 1725 Hughes Landing Boulevard in The Woodlands, Cheniere Energy’s 189,000 square feet in Pennzoil Place’s North Tower, at 700 Milam Street downtown, and McDermott International’s 100,000 square feet at Energy Center V, at 915 North Eldridge Parkway, in West Houston’s Energy Corridor. Those spaces have been on the market for 31, 22 and 19 months, respectively.

Large sublease blocks typically take six to 18 months to fill, Schneider said.

—Quinn Donoghue