HOUSTON—Office market sublease space declined by slightly less than 1 million square feet during third quarter 2017, according to a recent report by Transwestern. With NRG Energy's sublease in the CBD, sublease activity picked up steam near the end of the quarter as tenants impacted by Harvey looked for plug-and-play value options.
NRG is subleasing 431,037 square feet from Shell Oil Company at One Shell Plaza—910 Louisiana in downtown. NRG will occupy 18 floors within the 50-story 1.1 million-square-foot high-rise, with a term through December 31, 2025 when Shell's lease expires. This transaction marks the city's largest sublease deal since the oil slump began more than two years ago, according to NAI Partners.
In other sublease activity, Worley Parson eliminated more than 300,000 square feet of sublease space in the Energy Corridor through a combination of subleasing activity and retracting its remaining space. And, GE Oil & Gas was able to sublease its available block of space of slightly less than 200,000 square feet in the West Belt submarket.
The amount of sublease space as a percentage of the total amount of available space decreased to 16.8%, compared to 17.8% at this time last month. The total amount of available sublease space stands at 10.1 million square feet, according to NAI Partners.
The price for sublease space is also down. The average gross rental rate for sublease space is at $20.73 per square foot, down $6.30 or 23.3% since the oil downturn began in the office market in the third quarter of 2014.
The largest amounts of sublease space are in the Energy Corridor, with BP holding 504,327 square feet at Four WestLake Park, GlobeSt.com learns. In the CBD, also at One Shell Plaza, Shell has another 406,276 square feet of space and at Two Allen Center, Chevron has 368,550 square feet of space. In the Galleria, there is 320,349 square feet at the BHP Billiton Tower.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
