Dallas, Texas – When it comes to empty office space, three Texas cities—Houston, Dallas, and Austin—have become the top three in the country. Moody’s Analytics says that these cities have more empty office spaces than any other, except for smaller markets like Tulsa, Oklahoma; Charleston, South Carolina; and Dayton, Ohio.
Houston is on the top of the list
With a record of 26.3 percent office vacancy rate, Houston is at the front of this trend. There are currently about 300 empty office buildings in the city, with a huge 54.5 million square feet of space available for rent and an extra 5.7 million square feet that can be subleased. With vacancy rates of 25.3% and 25.2%, respectively, Dallas and Austin are not far behind. These rates are much higher than the national average of 19.6%.
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Given the overall growth of the economy and the commercial construction boom that went along with it, the matter is even more interesting. But the persistently high vacancy rates in these Texas metro areas are due to a number of things, such as the move toward hybrid work environments and the fact that big companies are reluctant in deciding to move. This trend is additionally supported by newer buildings’ appeal and modern amenities. This is especially true in cities like Austin, which had a tech boom before the pandemic and now has too many office spaces.
Partners Real Estate says that these cities will also have to deal with the fact that over 50 million square feet of leases will end in the next year. The situation is especially bad in Houston, which has to figure out what to do with buildings that are “functionally obsolete.” Companies no longer need these buildings, which were mostly built during the oil boom from the 1970s to the early 1990s.
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People already liked newer, trendier office spaces before the pandemic, but now that companies are having a harder time getting their employees to go back to a traditional office setting, the trend has only grown. Avison Young data shows that this change is clear: the vacancy rates for offices built after 2010 (12.2% of all offices) are very different from those built from 1980 to 1999 (32% of all offices).
