Mar 11, 2024 - News

Houston companies are renewing office leases

Largest U.S. office leases in 2023 in square footage, by industry
Data: CBRE; Chart: Axios Visuals

More companies in Houston and nationally are staying put, as opposed to moving to new spaces.

The big picture: Most of the biggest U.S. office leases got renewed last year, as companies continue to adjust to a workweek that's part remote and part in office, Sami Sparber reports based on a report first shared with Axios.

By the numbers: 58 of the 100 largest office leases by square footage nationally in 2023 were renewals, per a report from CBRE, a commercial real estate firm.

  • That's a big shift from 2019, when 68% of the top 100 were new leases and 32% were renewals.
  • In Houston, 66 office leases greater than 10,000 square feet were renewals, according to CBRE. Those renewals account for more than 2 million square feet of office space.

The intrigue: At 22.2%, the share of available rental space in Houston last year was among the highest in the country.

The fine print: Employers around the country are shrinking their office footprints and looking to rein in costs, Axios' Emily Peck reports.

State of play: Job growth is expected to slow in Houston this year, per the Greater Houston Partnership.

  • "The Houston region has been running at a sprint ever since emerging from the pandemic," the partnership's chief economist Patrick Jankowski told Axios in December. "So, while growth will slow down [in 2024], Houston's economy remains resilient."

Context: While companies are leasing less space, they're betting higher-quality space in prime locations will get workers to come into the office more often, according to CBRE.

  • Three-quarters of the top 100 leases by square footage were in top-rated buildings, per the report.

Between the lines: Newer buildings have seen more move-ins than move-outs since before the pandemic, Jessica Morin, CBRE's director of U.S. office research, tells Axios.

  • Companies "are striving for the most efficient use of their space as they adapt to hybrid work, and they're often choosing to do so in the best-quality space," Mike Watts, a president at CBRE, said in a press release.
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