During Q1 2019, top leasing transactions totaled 36% more square feet than Q1 2018. This activity was concentrated in the CBD (31%), Energy Corridor (30%), North Houston (22%), and West Loop / Galleria (14%). 87% of tenants leased Class A properties.
While no office space was delivered during Q1 2019, the construction pipeline added Park Place River Oaks, a 207,000 sq. ft. office tower in the West Loop / Galleria submarket. Total space under construction increased to 2.4 million sq. ft.
The Houston office market vacancy rate has seen an increase of 30 bps from 18.7% in Q4 2018 to 19.0% in Q1 2019.
Q1 2019 ended with net absorption of negative 440,000 sq. ft. The Energy Corridor was the biggest contributor to negative absorption where over 220,000 sq. ft. of sublease space expired and rolled vacant. Combined with tenants vacating space, the Energy Corridor gave back 620,000 sq. ft. of space. On a positive note, the North and Westchase submarkets contributed 400,000 sq. ft. of combined positive absorption.