Why Houston Is Home To The Highest Number Of Vacant Office Buildings At A Time When Businesses Are Flocking To Texas
Real estate developers in 2020 and 2021 used the low-interest rates over the COVID-19 pandemic to monopolize on building or restoring real estate across Texas, and now these new buildings are without renters, even with landlords offering massive discounts as the economy still fails to recover from the pandemic, and inflation still runs rampant.
When it comes to business, Texas is booming, but why are there so many vacant office buildings in Houston? Houston has the highest rate of empty office space in any metropolitan area nationwide, even though they are known for being the leader in the energy sector and innovation.
Houston has always been the home of energy, with several global energy companies setting up bases in the metropolitan city. It has even been coined with the nickname “The Silicon Bayou” for its prevalence in the energy sector. Tech companies have also flocked to Houston as it is one of the country’s top exporting ports, which is a no-brainer for the rapidly expanding tech industry.
Nearly twenty percent of office spaces were available for rent in Houston at the end of last year. These figures for vacant office buildings are well ahead of other US cities, including New York, which has 12.3 percent availability, and San Francisco, which has 16.4 percent.
These figures are even more mind-blowing, considering that many citizens in Houston have opted to return to the physical workplace over hybrid working or working from home. Statistics from Kastle Systems, a property management firm, show that employee attendance in buildings is up by sixty percent in Houston and fifty percent in Dallas, another prominent Texas city.
Texas is a hub for many businesses and is within the top ten economies in the world. It has had the top spot for US exports in the last two decades and has been the highest high-tech export for the previous nine years. This state is home to some of the world’s biggest companies, including Boring Co., Elon Musk’s new company, Alkegen, Chevron, Caterpillar, Hewlett Packard and, of course, Amazon.
It has so much business and innovation spanning across the state that there is a ninety percent graduation rate, making it within the top five states in America. This statistic makes Texas’s population incredibly educated and skilled- what every business is looking for. It also has a large labor force, with over 14.5 million people employed across the state.
So why are so many offices empty? It seems that many real estate developers in 2020 and 2021 used the low-interest rates over the COVID-19 pandemic to monopolize on building or restoring real estate across Texas. Now these new buildings are without renters, even with landlords offering massive discounts as the economy still fails to recover from the pandemic, and inflation still runs rampant.
This building boom in Houston is now returning to bite investors as over $1 billion is owed to several banking institutions for commercial mortgages and security loans. Along with Houston having a high amount of real estate sitting idle, Dallas has the same issue, as they have 17.2 percent of vacant office buildings throughout its commercial real estate sector.
As more business comes to Houston and Texas in general, some of these vacant office buildings may get occupants in the future, but with the economy still threatening a recession, no one knows for sure.
