Office Market in Houston Melts Down

[marmar]

Office Market in Houston Melts Down
by Wolf Richter • January 26, 2016

Watch the banks.

Commercial real estate is highly leveraged. Debt is everything. The entire math is based on high rental rates and low vacancy rates. Without them, the debts cannot be serviced. But now in Houston, both are shooting in the wrong direction.

OK, Houston’s economy is diversified, they say. The oil bust hurts, and there have been waves of layoffs of highly paid engineers, but it won’t hit the city as bad as the last big oil bust did, they say.

And yet, the amount of office space vacated by companies that are trying to slash their operating expenses and that is now on the market as sublease space has spiked 69% by the end of 2015, to 7.6 million square feet (msf), according to real-estate services firm Savills Studley. And they “continue to sit on the market.” .................(more)

http://wolfstreet.com/2016/01/26/office-market-in-houston-croaks/

[lapfog_1]

1. Denver in 1984

serious over build of office parks and high rise office buildings.

At one point I counted 14 high rise buildings in the Tech Corridor with those cranes they use...

Not a single one of them was occupied in the next few years.

[safeinOhio]

2. let them drink

their damn oil.

[Manifestor_of_Light]

3. They never learn.

Houston and Tulsa are the main oil economy cities that I know about. Houston has been through booms and busts before, yet they still over build and then whine about how broke they are. They are very short sighted. Houston should have the lowest gas prices in the United States due to the many refineries on the Ship Channel, but they don't. My father worked at one of those old and dangerous plants for 30 years. And cussed Harry Sinclair. His pension after they took out his health insurance was 22 dollars a month. He died in 2000.