Q1 2022 Houston Office Market Report

OFFICE Q1 2022 MARKET REPORT HOUSTON

P ro p er t y : One Wes tcha se Ce nte r

w w w.h o l t l u n s fo rd .co m

TABLE OF CONTENTS

03

Houston Office Submarket Coverage

04

Houston Office Market Experts

05

Houston Office Facts & Figures

06

Submarket Intelligence

HOUSTON 11451 Katy Freeway, Suite 300 Houston, Texas 77079 T 713.850.8500 | F 713.850.8550

www.holtlunsford.com

Q1 2022 HOUSTON OFFICE MARKET REPORT 03

HOUSTON OFFICE

Submarket Coverage

MONTGOMERY

OTHER SUBMARKETS CLEVELAND

1 CBD | 51,497,716 SF 2 WEST LOOP | 36,192,979 SF 3 WESTCHASE | 18,123,653 SF 4 GREENWAY PLAZA | 11,330,184 SF 5 MEDICAL CENTER | 11,679,759 SF 6 MIDTOWN | 7,546,809 SF 7 KATY FREEWAY EAST | 10,057,196 SF

CONROE

THE WOODLANDS 21,329,846 SF

MAGNOLIA

THE WOODLANDS

NEW CANEY

TOMBALL SPRING

DAYTON

FM 1960 CORRIDOR 12,957,052 SF

GEORGE BUSH INTERCONTINENTAL AIRPORT

HUMBLE

CYPRESS

SUBURBAN OUTLIERS 20,635,556 SF

GREENSPOINT/IAH 12,683,808 SF WEST BELT 6,184,942 SF NORTHWEST 8,965,567 SF

7

KATY FREEWAY WEST 27,203,268 SF

KATY

2

FAR WEST 4,312,535 SF

MONT BELVIEU

GALLERIA

3

HOUSTON

6

SHIP CHANNEL

4 5

SOUTHWEST 9,561,892 SF

BAY TOWN

1

MEDICAL CENTER

PASADENA LA PORTE

HOBBY AIRPORT

SUGAR LAND

RICHMOND

SUGAR LAND 7,932,564 SF

ELLINGTON AIRPORT

MISSOURI CITY PEARLAND

CLEAR LAKE 6,727,732 SF

LEAGUE CITY

04 Q1 2022 HOUSTON OFFICE MARKET REPORT

HOUSTON OFFICE

Market Experts

BRANDON AVEDIKIAN

BRAD SEGRETO

SKYLER SEIDMAN

KYLE PESEK

Managing Principal bavedikian@holtlunsford.com 713.602.3754

Market Associate bsegreto@holtlunsford.com 713.602.3758

Market Analyst sseidman@holtlunsford.com 713.602.3767

Market Analyst kpesek@holtlunsford.com 713.602.3764

HLC

Outlook

At the close of Q1 2022, the Houston office market as a whole had a vacancy rate of 21.5% which was nearly identical to the vacancy rate of 21.6% in Q4 2021. Absorption shifted positive with 1.08M SF of space absorbed, up from the 146K SF of negative absorption in Q4 2021. Leasing activity decreased with 3.07M SF of deals completed, down from the 3.35M SF of deals completed in Q4 2021. There was 3.9M SF of office space under construction, and 795K SF of space was delivered in Q1 2022.

Q1 2022 HOUSTON OFFICE MARKET REPORT 05

Facts & Figures

HOUSTON OFFICE OVERALL HOUSTON

OVERALL VACANCY

22.0%

25.0%

2,500,000

21.5%

2,000,000

21.0%

1,500,000

20.0%

20.2%

17.7%

1,000,000

16.7%

15.0%

500,000

19.0%

20.0%

0

10.0%

(500,000)

18.0%

(1,000,000)

17.0%

5.0%

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

ABSORPTION

4Q 20

1Q 21

2Q 21

3Q 21

DELIVERIES

4Q 21

1.3%

1.0%

(1,500,000)

1Q 22

0.0% 1Q 19

VACANCY

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

DIRECT

OVERALL ABSORPTION

4Q 20

1Q 21

2Q 21

3Q 21

4Q 21

SUBLET

1Q 22

TOTAL

OVERALL CONSTRUCTION 6,000,000

6,000,000

5,000,000

5,000,000

4,000,000

4,000,000

3,000,000 2,000,000

3,000,000

1,000,000

2,000,000

0 (1,000,000)

1,000,000

(2,000,000) 1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

TOTAL NET

4Q 20

1Q 21

2Q 21

3Q 21

4Q 21

1Q 22

0 1Q 19

LEASING ACTIVITY

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

DELIVERED

EXISTING INVENTORY SUBMARKET

4Q 20

1Q 21

2Q 21

3Q 21

4Q 21

1Q 22

UNDER CONSTRUCTION

VACANCY DIRECT SF TOTAL SF

VAC. %

YTD NET YTD UNDER YTD LEASING ABSORPTION DELIVERIES CONSTRUCTION SF ACTIVITY

# BLDGS.

TOTAL RBA

CBD

91

51,497,716

12,014,757

12,894,573

25.0%

(132,123)

0

386,323

326,276

West Loop

196

36,192,979

8,372,039

8,880,646

24.5%

202,912

0

77,189

438,223

Katy Freeway West

165

27,203,268

5,863,166

6,440,522

23.7%

198,491

0

0

594,352

The Woodlands

178

21,329,846

2,921,443

3,432,554

16.1%

499,225

497,000

118,062

213,210

Westchase

105

18,123,653

4,775,000

5,092,813

28.1%

(115,214)

0

0

181,671

Greenspoint

97

12,683,808

5,526,327

5,595,404

44.1%

68,383

0

0

98,815

FM 1960 Corridor

163

12,957,052

2,420,120

2,446,950

18.9%

(9,363)

0

0

203,145

Greenway Plaza

56

11,330,184

2,347,072

2,610,885

23.0%

(39,733)

0

0

154,388

Medical Center

63

11,679,759

1,068,348

1,084,469

9.3%

86,899

116,500

2,202,459

49,621

Southwest

89

9,561,892

1,893,153

1,950,847

20.4%

(31,700)

0

70,647

27,335

Katy Freeway East

73

10,057,196

963,641

1,078,061

10.7%

135,129

0

186,000

127,905

Northwest

95

8,965,567

1,687,323

1,714,781

19.1%

72,061

0

156,245

121,238

Sugar Land

99

7,932,564

1,350,802

1,470,440

18.5%

(26,366)

0

0

54,031

Clear Lake

95

6,727,732

537,816

545,335

8.1%

(1,240)

0

21,000

69,821

Midtown

68

7,546,809

1,070,498

1,083,238

14.4%

(41,551)

0

40,000

122,962

West Belt

70

6,184,942

1,401,023

1,488,497

24.1%

42,726

0

0

73,478

Far West

59

4,312,535

574,361

693,249

16.1%

15,120

0

20,758

51,893

Suburban Outliers

351

20,635,556

2,685,683

2,709,406

13.1%

164,204

181,272

623,897

162,566

2,113

284,923,058

57,472,572

61,212,670

21.5%

1,087,860

794,772

3,902,580

3,070,930

TOTALS

06 Q1 2022 HOUSTON OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

HOUSTON CBD HLC OUTLOOK The Central Business District (CBD) is the largest Houston office submarket, containing more than 50M SF of class A and B office space in an area totaling less than two square miles. Houston’s CBD continues to command the highest rental rates in the city with a current YTD average of $37 per SF for class A and B property types.

The submarket is home to a large concentration of energy, professional and business services, and government tenants.

Recent residential and retail developments, and the existing infrastructure of the underground tunnel system, have helped Houston’s CBD become a true live-work-play environment.

At the close of Q1 2022, the CBD submarket had a vacancy rate of 25.0% which was slightly higher than the 24.8% at the close of Q4 2021. Absorption remained negative with 132K SF of space vacated, slightly better than the 224K SF of negative absorption in Q4 2021.

Leasing activity dropped with 326K SF of deals completed.

1550 on the Green is the only office building under construction in the CBD which will bring an additional 386K SF of class A office space into the market.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(132,123)

(224,754)

144,125

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

25.0%

24.8%

22.4%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

326,276

393,618

443,080

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

1,248,269

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$38.41

$39.53

$40.17

TOP LEASE TRANSACTIONS • Baker & McKenzie has signed a 31K SF lease in Bank of America Tower.

• Cox Oil has signed a 23K SF lease in LyondellBasell Tower.

• SWA Group has signed a 17K SF renewal in 712 Main.

• McDermott, Will & Emery has signed a 15K SF lease in Texas Tower.

• The Buzbee Law Firm has signed a 11K SF lease in Chase Tower.

• M-M Properties has signed a 8K SF lease in TC Energy Center.

DEALS IN THE MARKET • McCrory Building | 1004-1008 Prairie Street – a 29K SF class B office building • Theater District | 720 Rusk Street – a 25K SF class B office building • The Tamborello Building | 1901 Milam Street – a 24K SF class B office building • 421 Fannin Street – a 20K SF class B office building

NEW DEVELOPMENTS • 1550 on the Green | 1550 Lamar Street – a 386K SF class A office building

VITAL STATS 26.0%

1,500,000 1,300,000 1,100,000

24.0%

900,000 700,000

22.0%

500,000 300,000 100,000

20.0%

(100,000) (300,000)

18.0%

(500,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • 800 Bell | 800 Bell Street – 1,314,350 SF • 1001 Fannin Street – 784,598 SF • Texas Tower | 845 Texas Avenue – 667,211 SF • Wells Fargo Plaza | 1000 Louisiana Street – 656,342 SF • 4 Houston Center | 1221 Lamar Street – 617,315 SF • Fulbright Tower | 1301 McKinney Street – 574,822 SF • 919 Milam | 919 Milam Street – 542,078 SF • 1600 Smith Street – 501,300 SF • One City Centre | 1021 Main Street – 481,159 SF • 2 Houston Center | 909 Fannin Street – 457,616 SF • Two Allen Center | 1200 Smith Street – 446,283 SF • Heritage Plaza | 1111 Bagby Street – 416,083 SF • TC Energy Center | 700 Louisiana Street – 404,268 SF • Three Allen Center | 333 Clay Street – 397,327 SF • North Tower | 700 Milam Street – 381,225 SF • JP Morgan Chase Tower | 600 Travis Street – 381,014 SF • 1301 Fannin Office Tower | 1301 Fannin Street – 332,950 SF • One Allen Center | 500 Dallas Street – 328,513 SF

SUBMARKET INTELLIGENCE

Q1 2022 HOUSTON OFFICE MARKET REPORT 07

WEST LOOP HLC OUTLOOK

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

202,912

(690,014)

(14,384)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

24.5%

25.1%

22.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

VITAL STATS 26.0%

500,000

24.0%

250,000

22.0%

0

438,223

581,701

614,242

20.0%

(250,000)

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

18.0%

(500,000)

-

-

70,000

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$33.23

$33.53

$33.04

TOP LEASE TRANSACTIONS • Tokyo Gas has signed a 16K SF lease in Galleria Tower II. • SIBS has signed a 13K SF lease in 4411 San Felipe.

• Matthews, Lawson, McCutcheon & Joseph PLLC has signed a 7K SF lease in 5444 Westheimer.

• Datagration has signed a 7K SF lease in 5555 San Felipe Street.

• Hendershot, Cannon & Hisey, PC has signed a 7K SF renewal in 1800 Bering.

• Hunter + Sage has signed a 7K SF lease in 1800 West Loop South.

• JMC Realty, LP has signed a 1K SF lease in 770 South Post Oak Lane.

HLC DEAL

• E.A Gibson Houston, Inc has signed a 1K SF renewal in 770 South Post Oak Lane.

HLC DEAL

• Laurens Fragrances has signed a 1K SF renewal in 5959 Westheimer.

HLC DEAL

• Kendra Snaufer, LLC has signed a 1K SF renewal in 5959 Westheimer.

HLC DEAL

DEALS IN THE MARKET • 9009 West Loop South – a 472K SF class B office building • 5177 Richmond Avenue – a 286K SF class A office building • 50 Briar Hollow Lane – a 202K SF class B two (2) building office complex • 2100 West Loop South – a 162K SF class A office building • S&B Engineering Building | 3535 Sage Road – an 80K SF class B office building • Southwest Freeway Plaza | 5610-5613 Southwest Freeway – a 23K SF class B medical office building • 6105 Beverly Hill Street – a 20K SF class B medical office building

16.0%

(750,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

DELIVERIES

Q3 21

Q4 21

Q1 22

VACANCY

NEW DEVELOPMENTS • 4411 San Felipe Street – a 77K SF class A office building

LARGE EXISTING VACANCIES • Marathon Oil Tower | 5555 San Felipe Street – 881,751 SF • Williams Tower | 2800 Post Oak Boulevard – 694,396 SF • San Felipe Plaza | 5847 San Felipe Street – 378,166 SF • Two Post Oak Central | 1980 Post Oak Boulevard – 265,883 SF • Sage Plaza | 5151 San Felipe Street – 265,786 SF • Galleria Tower I | 2700 Post Oak Boulevard – 261,107 SF • TwentyFour25 | 2425 West Loop South – 255,744 SF • 2000 West Loop South – 236,808 SF • BHP Petroleum | 1500 Post Oak Boulevard – 227,809 SF • Five Post Oak Park | 4400 Post Oak Parkway – 225,007 SF • Schlumberger Building | 5599 San Felipe Street – 223,216 SF • Three Riverway | 3 Riverway – 219,194 SF • Thirty Forty Post Oak | 3040 Post Oak Boulevard – 210,002 SF • Galleria Tower II | 5051 Westheimer Road – 188,728 SF • One Riverway | 1 Riverway – 184,368 SF

CoStar’s Galleria, Uptown, Post Oak Park, San Felipe/ Voss, Richmond/Fountain View, Riverway, and Bellaire submarkets make up HLC’s West Loop submarket.

This submarket contains approximately 36M SF of class A and B office space.

Thanks to the high-profile location and assets, asking rental rates here are among the highest in the city.

At the close of Q1 2022, the West Loop submarket had a vacancy rate of 24.5% which was slightly lower than the 25.1% at the close of Q4 2021. Absorption shifted positive with 203K SF of space absorbed, up from the 690K SF of negative absorption in Q4 2021.

Leasing activity dropped with 438K SF of deals completed. No new office space was delivered in Q1 2022, but there is currently 77K SF of office space under construction.

08 Q1 2022 HOUSTON OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

KATY FREEWAY WEST HLC OUTLOOK Other than the Greenspoint submarket, no major Houston office submarket was hit harder by the oil downturn than the Katy Freeway West submarket. This submarket includes the Energy Corridor which is home to large energy corporations including ConocoPhillips, Shell, and British Petroleum, among other energy and energy service related organizations.

With the downturn of the energy sector, the Katy Freeway West submarket has transformed from a landlorddriven to a tenant-driven submarket. This submarket, along with most of the metro, has experienced a recent and significant flight-toquality helping these large corporations to continue attracting a talented workforce.

At the close of Q1 2022, the Katy Freeway West submarket had a vacancy rate of 23.7% which was slightly lower than the 24.4% at the close of Q4 2021.

Absorption remained positive with 198K SF of space absorbed, up from the 39K SF of positive absorption in Q4 2021. Leasing activity increased with 594K SF of deals completed. There is currently no office space under construction and no space was delivered in Q1 2022.

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

198,491

39,058

(97,179)

25.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

24.0%

23.7%

24.4%

23.7%

23.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

22.0%

594,352

328,247

245,800

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$26.73

$26.82

$27.41

TOP LEASE TRANSACTIONS

500,000 300,000 100,000 (100,000)

21.0%

(300,000)

20.0% 19.0%

(500,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES

• Enbridge has signed a 292K SF sublease in Energy Center V.

• Four WestLake Park | 200 Westlake Park Boulevard – 630,610 SF

• Kentz USA has signed a 27K SF lease in Westgate I.

• Two WestLake | 580 Westlake Park Boulevard – 455,142 SF

• Smith Seckman Reid, Inc has signed a 20K SF lease in Ashford 7.

• Three WestLake Park | 550 Westlake Park Boulevard – 419,671 SF

• Rockwell Automation has signed a 16K SF lease in Energy Center II.

• Eldridge Oaks | 1080 Eldridge Parkway – 363,086 SF

• Kemira has signed a 14K SF lease in Energy Center II.

• Energy Tower III | 11740 Katy Freeway – 350,813 SF

• Landpoint has signed a 5K SF lease in 1311 Broadfield.

• Three Eldridge | 737 North Eldridge Parkway – 308,186 SF

• Frio Valley Pipeline has signed a 3K SF lease in the Westchester.

• 8 West Centre | 3505 West Sam Houston Parkway North – 293,182 SF

HLC DEAL

HLC DEAL

DEALS IN THE MARKET

• Enclave Business Park | 1200 Enclave Parkway – 286,917 SF

• 16001 Park Ten Place Drive – a 138K SF class B medical office building

• West Memorial Place II | 15377 Memorial Drive – 263,502 SF

• Dairy Ashford Plaza | 2000 South Dairy Ashford Road – a 109K SF class B office building

• Ten West Corporate Center II | 17404 Katy Freeway – 252,931 SF

• Dairy Ashford Plaza | 2020 Dairy Ashford Road – a 107K SF class B office building

• Two Eldridge | 757 N Eldridge Parkway – 208,545 SF

• Eleven Five Eleven Building | 11511 Katy Freeway – a 78K SF class B office building

• 1330 Enclave Parkway – 243,369 SF

• Energy Center II | 575 North Dairy Ashford Road – 203,956 SF • Republic Square | 13501 Katy Freeway – 201,316 SF • Enclave on the Lake | 1255 Enclave Parkway – 171,091 SF • Energy Center I | 585 North Dairy Ashford Road – 160,907 SF

SUBMARKET INTELLIGENCE

Q1 2022 HOUSTON OFFICE MARKET REPORT 09

THE WOODLANDS HLC OUTLOOK VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

499,225

(176,347)

(491,304)

20.0%

550,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

18.0%

350,000

16.1%

16.5%

16.3%

16.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

213,210

188,416

244,927

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

497,000

26,000

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$32.84

$33.46

$33.13

TOP LEASE TRANSACTIONS

150,000 (50,000)

12.0% (250,000)

10.0%

(450,000)

8.0% 6.0%

(650,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES

• Strike Construction has signed a 43K SF lease in 460 Wildwood Forest Drive.

• Hewitt Lake Woodlands Building 3 | 9500 Lakeside Boulevard – 360K SF

• Linde PLC has signed a 40K SF lease in Sierra Pines I.

• The Woodlands Towers at The Waterway | 9950 Woodloch Forest Drive – 310,077 SF

• Southwest E NT has signed a 2K SF lease in the Woodlands Medical Building.

DEALS IN THE MARKET

• Hughes Landing | 1735 Hughes Landing Boulevard – 290,814 SF • South Tower | 10000 Energy Drive – 288,609 SF

• 1776 Woodstead Court – a 37K SF class B office building

• 8800 Technology Forest Place – 247,053 SF

• The Gateway Building | 26865 I-45 – a 24K SF class B office building

• Hughes Landing | 1725 Hughes Landing Boulevard – 222,199 SF • 24955 Interstate 45 North – 148,104 SF

NEW DEVELOPMENTS • Physicians Center at Vision Park | 18354 I-45 South – a 50K SF class A medical office building • Creekside Park Medical Plaza | 26424 Strake – a 32K SF class A medical office building

• Building 9 | 9709 Lakeside Boulevard – 137,938 SF • Parkwood II | 10055 Grogans Mill Road – 101,056 SF • CityPlace 1 | 1700 City Plaza Drive – 86,657 SF

The Woodlands submarket continues to be one of the most active Houston office submarkets. It has grown so much that it now competes with other premier submarkets such as the CBD, West Loop, Greenway Plaza, and the two Katy Freeway submarkets. This submarket continues to outperform averages in Houston by commanding higher rental rates and maintaining a vacancy rate well below the city average.

At the close of Q1 2022, The Woodlands submarket had a vacancy rate of 16.1% which was slightly lower than the 16.5% at the close of Q4 2021. Absorption shifted positive with 499K SF of space absorbed, up from the 176K SF of negative absorption in Q4 2021.

Leasing activity increased with 213K SF of deals completed. There is currently 118K SF of office space under construction with 497K SF delivered in Q1 2022.

10 Q1 2022 HOUSTON OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

WESTCHASE HLC OUTLOOK The Westchase office submarket is located 15 miles west of the CBD and five miles southeast of the Energy Corridor. Historically, this submarket has been popular with oil, gas, and engineering firms, providing an alternative to the nearby Energy Corridor. However, given the concentration of energy related tenants in this submarket, demand in Westchase is affected by changes in the energy sector similar to other energy dependent submarkets.

Westchase surpasses almost all other submarkets with its unrivaled ingress and egress, along with the submarket’s vicinity to Houston’s population center.

These attributes make it an attractive alternative to CBD, West Loop, and other competing submarkets.

At the close of Q1 2022, the Westchase submarket had a vacancy rate of 28.1% which was slightly higher than the 27.5% at the close of Q4 2021. Absorption remained negative with 115K SF of space given back, down from the 52K SF of negative absorption in Q4 2021.

Leasing activity increased with 182K SF of deals completed. There is currently no office space under construction and no space was delivered in Q1 2022.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(115,214)

(52,143)

34,145

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

28.1%

27.5%

25.6%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

181,671

113,100

183,515

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$27.49

$27.51

$27.02

TOP LEASE TRANSACTIONS • The YMCA has signed a 25K SF lease in Westchase Commons.

• Vaalco Energy has signed a 22K SF renewal in 9800 Richmond Avenue.

• Quick Lending has signed a 4K SF sublease in Two BriarLake Plaza.

• A-Plus Conferencing has signed a 3K SF renewal in 3600 S Gessner Drive.

DEALS IN THE MARKET • Millennium Tower II | 10353 Richmond Avenue – a 445K SF class A office building • The Mosing Building | 10260 Westheimer Road – a 130K SF class B office building • 3990 Rogerdale Road – a 125K SF class B office building • 3535 Briarpark Drive – a 66K SF class B office building • 2610 West Sam Houston Parkway South – a 26K SF class B office building

VITAL STATS 30.0%

300,000 240,000

28.0%

180,000 120,000

26.0%

60,000 0

24.0%

(60,000) (120,000)

22.0%

(180,000) (240,000)

20.0%

(300,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • 10200 Bellaire Boulevard – 568,458 SF • Pinnacle Westchase | 3010 Briarpark Drive – 356,648 SF • CityWestPlace Building 3 | 2105 CityWest Boulevard – 200,782 SF • Towers at Westchase II | 10350 Richmond Avenue – 187,452 SF • One BriarLake Plaza | 2000 West Sam Houston Parkway South – 176,746 SF • 2500 CityWest | 2500 CityWest Boulevard – 161,368 SF • Westchase Park I | 3700 West Sam Houston Parkway South – 151,943 SF • Westchase Point | 1250 West Sam Houston Parkway – 147,403 SF • Two BriarLake Plaza | 2050 West Sam Houston Parkway South – 144,518 SF • West8 Tower | 10205 Westheimer Road – 143,539 SF • One Westchase Center | 10777 Westheimer Road – 141,555 SF • CityWestPlace Building 4 | 2103 CityWest Boulevard – 135,084 SF • Royal Oaks Centre | 11490 Westheimer Road – 134,943 SF • 10333 Richmond | 10333 Richmond Avenue – 133,054 SF • Reserve at Westchase | 3250 Briarpark Drive – 125,544 SF • Briarpark Green | 3151 Briarpark Drive – 122,881 SF • Towers at Westchase I | 10370 Richmond Avenue – 115,849 SF

SUBMARKET INTELLIGENCE

Q1 2022 HOUSTON OFFICE MARKET REPORT 11

GREENSPOINT/IAH HLC OUTLOOK

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

68,383

(143,661)

(70,442)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

44.1%

44.7%

44.2%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

98,815

228,604

122,276

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$17.94

$18.06

$18.12

TOP LEASE TRANSACTIONS

VITAL STATS 46.0%

200,000

100,000 44.0% 0

(100,000) 42.0% (200,000)

40.0%

(300,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

•

Sam Houston Plaza | 509 North Sam Houston Parkway East – a 78K SF class B office building

•

397 North Sam Houston Parkway East – a 68K SF class B office building

•

3808 World Houston Parkway – a 22K SF class A office building

•

Air Products has signed a 19K SF renewal in CityNorth 4.

•

Amegy Bank has signed a 9K SF renewal in 400 North Belt.

•

Avail Security Group LLC has signed a 2K SF lease in 11811 North Freeway.

•

RK Phillips & Associates has signed a 2K SF renewal in Greenbriar Place.

•

North American Venture Capital has signed a 2K SF lease in Bridgewood I.

•

CityNorth 5 | 17001 Northchase Drive – 458,331 SF

•

LaborForce has signed a 1K SF lease in Greenbriar Place.

•

CityNorth 6 | 12450 Greenspoint Drive – 343,495 SF

•

Greater Houston Healthcare Solutions has signed a 1K SF lease in Bridgewood I.

•

CityNorth 1 | 233 Benmar Drive – 253,562 SF

•

363 North Belt | 363 North Sam Houston Parkway East – 204,881 SF

•

222 Benmar | 222 Benmar Drive – 198,256 SF

•

Glenborough Tower | 100 Glenborough Drive – 172,454 SF

•

396 West Greens Road – 164,411 SF

HLC DEAL

HLC DEAL

HLC DEAL

HLC DEAL

•

FTF Care, Inc has signed a 1K SF renewal in Greenbriar Place.

•

Lloyd, Smitha, & Associates has signed a 1K SF renewal in Greenbriar Place.

HLC DEAL

HLC DEAL

DEALS IN THE MARKET

LARGE EXISTING VACANCIES

•

363 North Belt | 363 North Sam Houston Parkway East – a 386K SF class A office building

Greens Crossing II | 820 Gears Road – 157,790 SF

•

North Houston Tech Tower | 12707 North Freeway – 157,276 SF

•

CityNorth 1 | 233 Benmar Drive – a 257K SF class A office building

•

World Houston Plaza | 15710 John F Kennedy Boulevard – 154,747 SF

•

Paragon Center I | 450 Gears Road – a 189K SF class A office building

•

16666 Northchase Drive – 147,135 SF

•

EM Houston | 13401 North Interstate 45 – 143,410 SF

•

Bridgewood II | 652 North Sam Houston Parkway East – 142,431 SF

•

333 Northbelt | 333 North Sam Houston Parkway East – 140,476 SF

•

•

Northpoint Central | 2 Northpoint Drive – a 180K SF class A office building

•

North Houston Tech Tower | 12707 North Freeway – a 157K SF class B office building

•

Meadows at Interwood | 14950 Heathrow Forest Parkway – a 146K SF class A office building

•

•

EM Houston | 13401 I-45 North – a 143K SF class A office building

Northbelt Office Center V | 500 North Sam Houston Parkway West – 135,030 SF

•

•

Imperial 20 | 16800 Imperial Valley Drive – a 112K SF class B office building

CityNorth 2 | 16825 Northchase Drive – 134,362 SF

•

•

Heritage Park | 390 Benmar Drive – a 104K SF class B office building

2350 North Belt Tower | 2350 North Sam Houston Parkway East – 130,114 SF

•

•

Greens Crossing I | 810 Gears Road – a 78K SF class B office building

Paragon Center I | 450 Gears Road – 128,389 SF

•

Greens Crossing II | 820 Gears Road – a 78K SF class B office building

The Greenspoint/IAH office submarket continues to suffer more than any other submarket in Houston.

This northern Houston submarket’s vacancy rate was largely affected by the downturn within the energy sector and remains the highest in the city. Rental rates have fallen significantly and investors have been working persistently to rebrand the submarket.

At the close of Q1 2022, the Greenspoint submarket had a vacancy rate of 44.1% which was slightly lower than the 44.7% at the close of Q4 2021. Absorption shifted back positive with 68K SF of space absorbed, up from the 144K SF of negative absorption in Q4 2021.

Leasing activity dropped with 99K SF of deals completed.

There is currently no office space under construction and no space was delivered in Q1 2022.

12 Q1 2022 HOUSTON OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

FM 1960 CORRIDOR HLC OUTLOOK HLC’s FM 1960 Corridor office submarket includes CoStar’s FM 1960/Highway 249, Champions, and I-45 North submarkets. The submarket follows FM 1960 from Clay Road in West Houston up to Northeast Houston and stops just before George Bush International Airport. This submarket is home to more than 12M SF of class A and B office space.

At the close of Q1 2022, the FM 1960 Corridor submarket had a vacancy rate of 18.9% which was nearly identical to the 18.8% at the close of Q4 2021. Absorption shifted negative with 9K SF of space given back, down from the 115K SF of positive absorption in Q4 2021.

Leasing activity dropped with 203K SF of deals completed.

There is currently no office space under construction and no space was delivered in Q1 2022.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(9,363)

115,484

86,368

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

18.9%

18.8%

18.8%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

203,145

270,967

135,542

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

135,640

77,664

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$21.34

$20.39

$21.06

VITAL STATS 20.0%

200,000 100,000

18.0% 0 16.0%

(100,000) (200,000)

14.0% (300,000) 12.0%

(400,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

TOP LEASE TRANSACTIONS

LARGE EXISTING VACANCIES

• Open Door Pediatric Therapy has signed a 10K SF lease in The Willowbrook Building.

• 11403 Compaq Center West Drive – 246,341 SF

• Arthur J. Gallagher & Co. has signed a 7K SF renewal in Northchase Center.

• Harris County Hospital District has signed a 7K SF renewal in Timbercreek Atrium.

• Process Technical Service has signed a 4K SF renewal in Northchase Center.

• Amcap Mortgage has signed a 2K SF renewal in Cypresswood Crossing.

HLC DEAL

DEALS IN THE MARKET • Creekridge II | 140 Cypress Station Drive – a 163K SF class B office building • Steeplechase Corner Professional | 11301 Fallbrook Drive – a 61K SF class B office building • MainStreet America | 18750 Interstate 45 – a 44K SF class A office building • Century Plaza | 711 Airtex Drive – a 42K SF class B office building • Red Oak Cardiovascular | 17400 Red Oak Drive – a 33K SF class B office building • Building One | 8403 Louetta Road – a 25K SF class B office building • Cairnway Plaza | 16125 Cairnway Drive – a 24K SF class B office building • Red Oak Professional | 17222 Red Oak Drive – a 21K SF class B office building • Butte Creek Professional | 17154 Butte Creek Road – a 20K SF class B office building • 6810 West FM-1960 – a 20K SF class B office building

• University Park – Building 9 & 10 | 11450 Compaq Center West Drive – 208,841 SF • Creekridge II | 140 Cypress Station Drive – 128,782 SF • Chasewood Crossing Three | 19350 State Highway 249 – 97,877 SF • North Cypress POB II | 21212 Northwest Freeway – 73,033 SF • Chasewood Crossing I | 19500 State Highway 249 – 60,010 SF • Cy-Fair Medical Office Building | 13114 FM 1960 West – 59,130 SF • Northwest Medical Plaza I | 800 Peakwood Drive – 56,660 SF

SUBMARKET INTELLIGENCE

Q1 2022 HOUSTON OFFICE MARKET REPORT 13

GREENWAY PLAZA HLC OUTLOOK VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(39,733)

(18,189)

(36,642)

26.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

24.0%

22.7%

19.5%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

18.0%

154,388

126,221

110,407

16.0%

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$34.04

$34.93

$33.92

• Pilot has signed a 17K SF lease in 20 Greenway Plaza.

• Solugen has signed a 15K SF lease at Phoenix Tower.

DEALS IN THE MARKET • 3000 Weslayan Street – an 81K SF class B office building • 3334 Richmond Avenue – a 26K SF class B office building

LARGE EXISTING VACANCIES • Nine Greenway Plaza | 9 Greenway Plaza – 306,562 SF • Four Greenway Plaza | 4 Greenway Plaza – 242,628 SF • Phoenix Tower at Greenway Plaza | 3200 Southwest Freeway – 236,157 SF • Twelve Greenway Plaza | 12 Greenway Plaza – 191,783 SF • Three Greenway Plaza | 3 Greenway Plaza – 173,568 SF • One Greenway Plaza | 1 Greenway Plaza – 116,718 SF • Weslayan Tower | 24 Greenway Plaza – 102,805 SF • Eight Greenway Plaza | 8 Greenway Plaza – 99,125 SF • Greenway Plaza | 3800 Buffalo Speedway – 97,769 SF

250,000 200,000

22.0%

23.0%

TOP LEASE TRANSACTIONS

300,000

150,000 100,000

20.0%

50,000 0 (50,000) (100,000) (150,000) (200,000)

12.0%

(250,000)

10.0%

(300,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

• Eleven Greenway Plaza | 11 Greenway Plaza – 94,458 SF • Twenty Greenway Plaza | 20 Greenway Plaza – 91,598 SF • Five Greenway Plaza | 5 Greenway Plaza – 85,356 SF • 3900 Essex | 3900 Essex Lane – 81,383 SF • 3555 Timmons Lane – 78,686 SF • 3355 W. Alabama | 3355 West Alabama Street – 73,206 SF • Two Greenway Plaza | 2 Greenway Plaza – 69,056 SF • 3737 Buffalo Speedway Avenue – 64,594 SF

The Greenway Plaza office submarket received its name from the eleven (11) building, 50-acre, masterplanned complex at the heart of the submarket. Given its convenient location between the West Loop, Medical Center, and CBD submarkets, Greenway Plaza continues to be one of the most desirable submarkets in Houston.

Recent improvements to the master-planned Greenway Plaza complex and other recent developments in the area have helped breathe life back into this submarket.

At the close of Q1 2022, the Greenway Plaza submarket had a vacancy rate of 23.0% which was slightly higher than the 22.7% at the close of Q4 2021. Absorption remained negative with 40K SF of space given back, down from the 18K SF of negative absorption in Q4 2021.

Leasing activity increased with 154K SF of deals completed. There is currently no office space under construction and no space was delivered in Q1 2022.

14 Q1 2022 HOUSTON OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

MEDICAL CENTER HLC OUTLOOK The Medical Center submarket is located three miles southwest of the CBD and is a specialty market focused heavily on the healthcare sector. It is home to the Texas Medical Center, the largest medical center in the world. A large majority of the 11.6M SF of office space in this submarket is considered medical office space. Major medical institutions, such as the M.D. Anderson Cancer Center and Memorial Hermann Hospital, are among the top medical office tenants in this submarket. Historically, this submarket holds the lowest vacancy rate in the city.

At the close of Q1 2022, the Medical Center submarket had a vacancy rate of 9.3% which was slightly higher than the 9.1% at the close of Q4 2021. Absorption remained positive with 87K SF of space absorbed, up from the 64K SF of positive absorption in Q4 2021. Leasing activity dropped with 50K SF of deals completed. There is currently 2.4M SF of office space under construction with 116K SF of space delivered in Q1 2022.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

86,899

64,299

(88,653)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

9.3%

9.1%

7.7%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

49,621

67,107

105,796

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

116,500

153,775

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$31.18

$30.60

$28.37

DEALS IN THE MARKET • US Pain & Spine Institute | 5445 La Branch Street – a 34K SF class B medical office building

NEW DEVELOPMENTS • TMC Industry Building I – a 700K SF class A medical office building • Horizon Tower | 6929 Main Street – a 521K SF class A medical office building • 7200 Cambridge Street – a 427K SF class A medical office building • 3131 Holcombe Boulevard – a 270K SF class A medical office building • BayouTech Park | 1615 S Loop West – a 250K SF class A medical office building • TMC3 Collaborative Building – a 250K SF class A office building • 1802 Binz Street – a 39K SF class A medical office building

VITAL STATS 10.0%

200,000

9.5%

160,000

9.0%

120,000

8.5%

80,000

8.0%

40,000

7.5%

0

7.0%

(40,000)

6.5%

(80,000)

6.0%

(120,000)

5.5%

(160,000)

5.0%

(200,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • One Fannin | 7400 Fannin Street – 152,247 SF • 6624 Fannin Tower | 6624 Fannin Street – 137,508 SF • TMC Innovation | 2450 Holcombe Road – 119,260 SF • Museo Plaza Office Building | 5115 Fannin Street – 98,720 SF • Houston Medical Plaza Professional Building | 6655 Travis Street – 96,722 SF • Museum Medical Tower | 1213 Hermann Drive – 81,116 SF • 1919 Pressler Street – 68,607 SF • University Medical Plaza I | 7501 Fannin Street – 68,408 SF

SUBMARKET INTELLIGENCE

Q1 2022 HOUSTON OFFICE MARKET REPORT 15

SOUTHWEST HLC OUTLOOK

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(31,700)

108,008

(12,698)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

20.4%

20.1%

21.8%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

27,335

107,444

133,605

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$18.05

$17.51

$17.34

DEALS IN THE MARKET • American First Tower | 9999 Bellaire Boulevard – a 211K SF class A office building • 7011 Southwest Freeway – a 112K SF class B office building • Southwest Medical Plaza | 8200 Wednesbury Lane – an 83K SF class B medical office building • 8700 Commerce Park – a 79K SF class B office building • 6100 Corporate Drive – a 73K SF class B office building • Harwin International Plaza | 7171 Harwin Drive – a 73K SF class B office building • 7850 Parkwood Circle Drive – a 33K SF class B medical office building • 9200 West Sam Houston Parkway South – a 23K SF class B office building

NEW DEVELOPMENTS • 13930 Bellaire Boulevard – a 70K SF class A medical office building

VITAL STATS 26.0%

125,000 100,000

24.0%

75,000 50,000

22.0%

25,000 0

20.0%

(25,000) (50,000)

18.0%

(75,000) (100,000)

16.0%

(125,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • Houston Technology Center | 5959 Corporate Drive – 333,332 SF • Southwest Corporate Center | 97009702 Bissonnet Street – 217,837 SF • 11111 South Wilcrest Drive – 190,398 SF • Two Arena Place | 7324 Southwest Freeway – 154,974 SF • One Arena Place | 7322 Southwest Freeway – 153,801 SF • 7011 Southwest Freeway – 112,590 SF • Southwest Medical Plaza I | 7777 Southwest Freeway – 83,460 SF • Centre One | 9800 Centre Parkway – 78,088 SF • Westwood Green | 9494 Southwest Freeway – 73,072 SF

HLC’s Southwest office submarket includes CoStar’s Southwest Freeway and Southwest Beltway 8 submarkets. The submarket extends to Missouri City and northwest to the Buffalo Bayou just west of the Energy Corridor. The submarket’s geographic boundaries extend much further than those of neighboring West Houston submarkets but deliveries here have been significantly fewer than in other submarkets recently.

At the close of Q1 2022, the Southwest submarket had a vacancy rate of 20.4% which was slightly higher than the close of Q4 2021.

Absorption shifted negative with 32K SF of space given back, down from the 108K SF of positive absorption in Q4 2021. Leasing activity dropped with 27K SF of deals completed. No new office space was delivered in Q1 2022, but there is currently 71K SF of office space under construction.

16 Q1 2022 HOUSTON OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

KATY FREEWAY EAST HLC OUTLOOK The Katy Freeway East office submarket benefits greatly from the demographics of the Memorial Villages.

The submarket is centrally located along Interstate 10 and Sam Houston Tollway near the Energy Corridor and Houston’s western suburbs. It is home to Midway’s CityCentre and MetroNational’s Memorial City mixed-use developments.

At the close of Q1 2022, the Katy Freeway East submarket had a vacancy rate of 10.7% which was lower than the 12.1% at the close of Q4 2021.

Absorption decreased with 135K SF of space absorbed, down from the 471K SF of positive absorption in 2021.

Leasing activity decreased slightly with 128K SF of deals completed. No new office space was delivered in Q1 2022, but there is currently 186K SF of office space under construction.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

135,129

471,441

(5,053)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.7%

12.1%

13.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

127,905

133,509

94,080

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

440,000

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$29.14

$29.08

$35.36

TOP LEASE TRANSACTIONS • Kelsey Seybold Memorial City has signed a 26K SF sublease in Memorial Hermann Tower.

• Rystad has signed a 23K SF lease in 920 Memorial City Way. • Coopers Jackson & Boanerges has signed a 9K SF renewal in the Memorial Office Building.

• Jm Trippon & Co has signed a 7K SF lease in West Memorial Park.

• ESRI has signed a 7K SF lease in One Memorial City Plaza.

• AMD has signed a 5K SF lease in Memorial City Place.

DEALS IN THE MARKET • The Orthopedic Sports Clinic | 9090 Gaylord Street – a 26K SF class A office building

NEW DEVELOPMENTS • 9753 Katy Freeway – a 186K SF class A office building

VITAL STATS 16.0%

500,000 400,000

14.0%

300,000 200,000

12.0% 100,000 0

10.0%

(100,000) 8.0%

(200,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • 10777 Clay Road – 222,210 SF • Memorial Hermann Tower | 929 Gessner Road – 92,566 SF • Village Tower II | 9651 Katy Freeway – 85,669 SF • 945 Bunker Hill | 945 Bunker Hill Road – 83,614 SF • CityCentre One | 800 Town & Country Boulevard – 60,790 SF • 920 Memorial City Way – 51,709 SF • One Memorial City Plaza | 800 Gessner Road – 49,671 SF • 9900 Westpark Drive – 43,465 SF • Medical Plaza 3 | 915 Gessner Road – 42,021 SF

SUBMARKET INTELLIGENCE

Q1 2022 HOUSTON OFFICE MARKET REPORT 17

NORTHWEST HLC OUTLOOK

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

72,061

69,784

(112,722)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

19.1%

19.9%

19.9%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

121,238

199,036

126,228

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

23,200

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$19.67

$20.18

$20.97

TOP LEASE TRANSACTIONS

VITAL STATS 22.0%

150,000 100,000

20.0%

50,000 0

18.0%

(50,000) (100,000)

16.0%

(150,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES

• Community in Schools has signed a 10K SF lease at Park Central Plaza One.

• Brookhollow Central II | 2900 North Loop Freeway West – 133,971 SF

• ABIS has signed a 8K SF renewal in 1415 North Loop West.

• Brookhollow Central III | 2950 North Loop Freeway West – 131,840 SF

• McGonagill, Lambert & Bay has signed a 1K SF lease at 600 North Shepherd.

• Northwest Crossing | 13333 Northwest Freeway – 90,527 SF

HLC DEAL

DEALS IN THE MARKET

• North Loop Center | 1235 North Loop West – 74,180 SF

• One Northwind Plaza | 7600 West Tidwell Road – a 280K SF class B office building

• 7000 Hollister Street – 71,372 SF

• 1919 North Loop West Building | 1919 North Loop West – a 143K SF class B office building

• Northwest Crossing II | 7676 Hillmont Street – 65,658 SF

• Citadel Plaza | 2600 Citadel Plaza Drive – a 121K SF class B office building • Northwest Plaza | 5500 Northwest Central Drive – a 75K SF class B office building • 10050 Northwest Freeway – a 42K SF class B office building • 1100 West 23rd Street – a 30K SF class B office building • 10500 Northwest Freeway – a 30K SF class B office building

NEW DEVELOPMENTS

• Northwest One Building | 13100 Northwest Freeway – 66,794 SF

• 5252 Hollister Road – 61,916 SF • Granite Tower at 290 | 13430 Northwest Freeway – 60,962 SF • 13111 Northwest Freeway – 60,780 SF • Park Central Plaza One | 1111 North Loop Freeway West – 57,315 SF • Northwest Crossing III | 13105 Northwest Freeway – 55,880 SF • 5005 Mitchelldale Street – 54,054 SF • One Northwind Plaza | 7600 West Tidwell Road – 52,490 SF • Brookhollow Central I | 2800 North Loop Freeway West – 52,011 SF

• 6900 Hollister Street – a 98K SF class B office building

• Wells Fargo Building | 13201 Northwest Freeway – 47,964 SF

• 13143 Northwest Freeway – a 57K SF class B office building

• Brookhollow Two | 9800 Northwest Freeway – 45,766 SF

HLC’s Northwest office submarket is located northwest of the CBD and starts at the transitioning Heights and Oak Forest/ Garden Oaks communities.

It also includes CoStar’s Northwest Near and Northwest Far submarkets.

The struggles in this submarket over the past few years are primarily attributable to the extensive expansion and reconstruction of the major freeways which have impacted traffic flow within the submarket. The 290 project is now complete and the submarket is starting to see an increase in activity but recovery is sure to take some time. Most of the more than 8.5M SF of class A and B office space is located at Interstate 610 and Highway 290 or in the vicinity of Highway 290 and Hollister Road.

At the close of Q1 2022, the Northwest submarket had a vacancy rate of 19.1% which was slightly lower than the 19.9% at the close of Q4 2021. Absorption remained positive with 72K SF of space absorbed, up from the 70K SF of positive absorption in Q4 2021. Leasing activity decreased with 121K SF of deals completed. No new office space was delivered in Q1 2022, but there is currently 156K SF of office space under construction.

18 Q1 2022 HOUSTON OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

SUGAR LAND HLC OUTLOOK The Sugar Land office submarket in Southwest Houston is home to a variety of energy and engineering firms. Large corporations, such as Fluor Enterprises, Schlumberger, and Nalco Champion, have a large presence in this submarket.

The submarket is also home to a variety of non-energy tenants including CocaCola, Imperial Sugar, and Kelsey-Seybold Clinic. With its proximity to Houston’s growing population centers and workforce, the submarket continues to be a great suburban alternative to other major Houston office submarkets such as West Loop, Westchase, and Greenway Plaza.

At the close of Q1 2022, the Sugar Land submarket had a vacancy rate of 18.5% which was slightly higher than the 18.2% at the close of Q4 2021. Absorption shifted back negative with 26K SF of space given back, down from the 28K SF of positive absorption in Q4 2021. Leasing activity decreased with 54K SF of deals completed. There is currently no office space under construction and no office space was delivered in Q1 2022.

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(26,366)

27,691

(38,583)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

18.5%

18.2%

15.8%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

54,031

134,880

70,317

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$30.23

$30.51

$30.47

TOP LEASE TRANSACTIONS

VITAL STATS 20.0%

100,000 50,000

18.0%

0 16.0% (50,000) 14.0% (100,000) 12.0%

(150,000)

10.0%

(200,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES

• Snap has signed a 9K SF lease in the Offices at Telfair.

• Sugar Creek on the Lake | 14141 Southwest Freeway – 235,236 SF

• Net Worth Realty of Houston has signed a 2K SF lease in 4800 Sugar Grove Boulevard.

• Sugar Creek Tower II | 13131 Dairy Ashford Road – 120,465 SF

• Farmers Insurance has signed a 1K SF lease in the Glenn Lakes Professional Building.

HLC DEAL

• Microlight Corporation has signed a 1K SF lease in the Glenn Lakes Professional Building.

HLC DEAL

• CMR Clinical & LMB Wellness has signed a 1K SF lease in the Oyster Creek Office Condos.

HLC DEAL

• Urgent Cares Home has signed an executive suite lease in the Glenn Lakes Professional Building.

HLC DEAL

DEALS IN THE MARKET • Sugar Land Business Park | 1410 Gillingham Lane – a 150K SF class B office building • 7619 Branford Place – a 37K SF class B office building

• Sugar Creek Tower I | 13135 Dairy Ashford Road – 118,922 SF • Sugar Creek Place I | 14100 Southwest Freeway – 105,906 SF • The Minute Maid Building | 2150 Town Square Place – 81,501 SF • Imperial Plaza | 3 Sugar Creek Center Boulevard – 71,588 SF • ABB Network Management | 1601 Industrial Boulevard – 69,456 SF • Texas Instruments | 13905 University Boulevard – 55,195 SF • Comerica Office Tower | 1 Sugar Creek Center Boulevard – 53,373 SF • The Texas Drive Building | 2245 Texas Drive – 49,463 SF • Two Sugar Creek Center | 77 Sugar Creek Center Boulevard – 47,346 SF • Sugar Creek Place II | 14140 Southwest Freeway – 41,427 SF • The Plaza Building | 2277 Plaza Drive – 37,846 SF • 7619 Branford Place – 35,395 SF

SUBMARKET INTELLIGENCE

Q1 2022 HOUSTON OFFICE MARKET REPORT 19

CLEAR LAKE HLC OUTLOOK VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(1,240)

24,889

(7,063)

12.0%

100,000

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

80,000

8.1%

8.1%

10.5%

8.0%

60,000

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

6.0%

40,000

69,821

66,444

94,112

4.0%

20,000

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

2.0%

0

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$22.93

$22.66

$21.87

TOP LEASE TRANSACTIONS

0.0%

(20,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

DELIVERIES

Q1 21

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES

• Middough has signed a 8K SF renewal in One Corporate Plaza.

• Two Corporate Plaza | 2625 Bay Area Boulevard – 81,962 SF

• The Beck Group has signed a 1K SF lease in Marina Plaza.

• 13100 Space Center Boulevard – 79,246 SF

DEALS IN THE MARKET

• One Corporate Plaza | 2525 Bay Area Boulevard – 67,828 SF

• Gemini Plaza | 1150 Gemini Street – a 158K SF class B office building

• Boeing | 3700 Bay Area Boulevard – 51,014 SF

• 12000 Aerospace | 12000 Aerospace Avenue – a 79K SF class B office building

• Saturn One | 18050 Saturn Lane – 45,587 SF

• 2222 Bay Area Boulevard – a 65K SF class B office building • Devon Business Park | 17300 El Camino Real – a 26K SF class B office building • 2045 Professional Building | 2045 Space Park Drive – a 25K SF class B office building • 16902 El Camino Real – a 24K SF class B office building

NEW DEVELOPMENTS • 0 N Texas Avenue – a 21K SF class A medical office building

• Hercules I | 1300 Hercules Avenue – 32,113 SF

Located southeast of the CBD, the Clear Lake office submarket is home to the Lyndon B. Johnson Space Center and a large concentration of government jobs. Office space in this submarket relies heavily on the Space Center but is also home to a diverse mix of industries. The area boasts strong demographics given the high volume of NASA scientists, well-paid workers at the Houston Ship Channel, and related downstream industries who choose to live in communities close to the water.

At the close of Q1 2022, the Clear Lake submarket had a vacancy rate of 8.1% which was identical to the 8.1% at the close of Q4 2021.

Absorption shifted negative with 1,240 SF of space given back, down from the 25K SF of positive absorption in Q4 2021. Leasing activity increased with 70K SF of deals completed. No new office space was delivered in Q1 2022, but there is currently 21K SF of office space under construction.

20 Q1 2022 HOUSTON OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

MIDTOWN HLC OUTLOOK The Midtown office submarket is centrally located due west of the CBD and has recently been dubbed the “Millennial Corridor.” The submarket includes the Heights to the north, Montrose, the Museum District and Upper Kirby to the west, and Rice Village to the south. Further west along the Washington Corridor, the submarket has seen considerable interest from developers of all property types along Allen Parkway and Washington Avenue.

At the close of Q1 2022, the Midtown submarket had a vacancy rate of 14.4% which was higher than the 13.8% at the close of Q4 2021.

Absorption shifted negative with 42K SF of space given back, down from the 54K SF of positive absorption in Q4 2021. Leasing activity increased with 123K SF of deals completed. No new office space was delivered in Q1 2022, but there is currently 40K SF of office space under construction.

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

(41,551)

53,967

(1,570)

16.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

14.0%

14.4%

13.8%

12.0%

12.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

10.0%

122,962

82,910

46,225

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$35.65

$34.67

$33.46

DEALS IN THE MARKET • Kirby Mansion | 2000 Smith Street – a 62K SF mansion turned class B office building • 2303 Smith | 2303 Smith Street – a 23K SF class B office building • 3605 Katy Freeway – a 22K SF class B office building • 230 Westcott Street – a 22K SF class B office building

NEW DEVELOPMENTS • Houston Endowment HQ | 3615 Willia Street – a 40K SF class B office building

300,000 250,000 200,000 150,000 100,000 50,000

8.0%

0 6.0%

(50,000)

4.0%

(100,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • America Tower | 2929 Allen Parkway – 229,890 SF • The Ion | 4201 Main Street – 137,719 SF • Wortham Tower | 2727 Allen Parkway – 121,769 SF • Central Square | 2100 Travis Street – 81,294 SF • HCC Building | 3100 Main Street – 73,200 SF • American General Center | 2777 Allen Parkway – 69,010 SF • St. Joseph Professional Building | 2000 Crawford Street – 54,442 SF

SUBMARKET INTELLIGENCE

Q1 2022 HOUSTON OFFICE MARKET REPORT 21

WEST BELT HLC OUTLOOK VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

42,726

79,495

(24,128)

28.0%

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

26.0%

24.1%

24.8%

24.1%

24.0%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

22.0%

73,478

40,195

62,595

20.0%

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$24.64

$24.94

$26.36

TOP LEASE TRANSACTIONS

100,000 50,000 0 (50,000) (100,000) (150,000) (200,000)

18.0%

(250,000) (300,000)

16.0% Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES

• MacroFab has signed a 28K SF sublease in Westway Plaza.

• Westway II | 4424 West Sam Houston Parkway North – 203,153 SF

• Walgreens has signed a 13K SF renewal in 4920 Westway Park Boulevard.

• Westway III | 4425 Westway Park Boulevard – 182,004 SF

DEALS IN THE MARKET • 4601 Westway Park Boulevard – a 84K SF class B office building • 4805 Westway Park Boulevard – a 73K SF class B office building • Legacy Park | 10943 North Sam Houston Parkway West – a 64K SF class B office building • 16060 Dillard Drive – a 24K SF class B office building

• Beltway Lakes Phase III | 5775 North Sam Houston Parkway West – 163,528 SF • Westway One | 11210 Equity Drive – 143,960 SF • Westway Plaza | 11330 Clay Road – 129,902 SF • 4920 Westway Park Boulevard – 108,855 SF • Sam Houston Crossing One | 10343 Sam Houston Park Drive – 96,442 SF • 11000 Corporate Centre Drive – 87,637 SF • 4601 Westway Park Boulevard – 84,562 SF • Legacy Park Business Park | 10943 North Sam Houston Parkway West – 64K SF • Beltway Lakes Phase II | 5875 North Sam Houston Parkway West – 56,770 SF • 10613 West Sam Houston Parkway North – 52,204 SF

The West Belt submarket spans a quarter-mile along the Sam Houston Tollway between Clay Road and Highway 249. This submarket houses more than 6M SF of class A and B office space. The submarket’s proximity to the Energy Corridor makes it one of the most energy-driven office markets in Houston.

With the submarket’s heavy concentration of energy related tenants, the West Belt submarket felt the oil downturn more than most other submarkets.

However, the outlook for this submarket looks promising given its close proximity to the population center of Houston.

At the close of Q1 2022, the West Belt submarket had a vacancy rate of 24.1% which was lower than the 24.8% at the close of Q4 2021. Absorption remained positive with 43K SF of space absorbed, down from the 79K SF of positive absorption in Q4 2021. Leasing activity increased with 73K SF of deals completed. There is currently no office space under construction and no space was delivered in Q1 2022.

22 Q1 2022 HOUSTON OFFICE MARKET REPORT

SUBMARKET INTELLIGENCE

FAR WEST HLC OUTLOOK HLC’s Far West office submarket includes CoStar’s Katy Freeway/Grand Parkway submarket which is about 25 miles west of Houston’s CBD. Growth among all product types in West Houston has been a common theme and the office sector has been no exception as it is located close to Houston’s fastestgrowing population center and the expanded Grand Parkway. Nearly 80% of the metro’s population growth since 2010 has occurred in the unincorporated areas of Harris County covering parts of this and neighboring submarkets.

At the close of Q1 2022, the Far West submarket had a vacancy rate of 16.1% which was slightly lower than the 16.4% at the close of Q4 2021. Absorption shifted back positive with 15K SF of space absorbed, up from the 16K SF of negative absorption in Q4 2021. Leasing activity decreased with 52K SF of deals completed. No new office space was delivered in Q1 2022, but there is currently 21K SF of office space under construction.

VITAL STATS

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

15,120

(15,945)

(43,699)

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

16.1%

16.4%

17.1%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

51,893

56,270

53,268

14.0%

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

12.0%

-

-

-

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$30.52

$30.95

$31.10

TOP LEASE TRANSACTIONS • SPB Hospitality has signed a 21K SF sublease in The Offices at Greenhouse.

DEALS IN THE MARKET • Academy Sports HQ | 1540 North Mason Road – a 217K SF class B office building • Westgate Atrium | 1550 Fox Lake Drive – a 113K SF class B office building • 25807 Westheimer Parkway – a 39K SF class B office building • PetroSkills | 25403 Katy Mills Parkway – a 31K SF class B office building • 21734 Provincial Boulevard – a 20K SF class B office building

NEW DEVELOPMENTS • 25220 Kingsland Boulevard – a 20K SF class B office building

20.0%

200,000 150,000

18.0%

100,000 16.0% 50,000 0 (50,000)

10.0%

(100,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

DELIVERIES

Q2 21

Q3 21

Q4 21

Q1 22

VACANCY

LARGE EXISTING VACANCIES • Mason Creek Office Center II | 21700 Merchants Way – 127,955 SF • Katy Ranch Phase II | 24285 Katy Freeway – 92,126 SF • Katy MOB II | 707 South Fry Road – 65,938 SF • The Offices at Greenhouse | 19219 Katy Freeway – 56,432 SF • Det Norske Veritas | 1400 Ravello Road – 51,963 SF • New Park Drilling Fluids | 21920 Merchants Way – 51,256 SF • Greenhouse at Park Row | 2051 South Greenhouse Road – 47,380 SF • Katy Ranch Phase I | 24275 Katy Freeway – 42,763 SF • Horizon Medical Plaza 2 | 19002 Park Row – 35K SF • Building 2 | 2002 West Grand Parkway North – 27,683 SF • Medical Plaza II | 23960 Katy Freeway – 24,134 SF • Katy MOB III | 19770 Kingsland Boulevard – 22,848 SF • Katy Medical Plaza I | 23510 Kingsland Boulevard – 21,338 SF

SUBMARKET INTELLIGENCE

Q1 2022 HOUSTON OFFICE MARKET REPORT 23

SUBURBAN OUTLIERS HLC OUTLOOK

Absorption

vs. Prev. Qtr

vs. 12 Mths Ago

164,204

120,586

339,902

Vacancy

vs. Prev. Qtr

vs. 12 Mths Ago

13.1%

13.2%

13.3%

Leasing Act.

vs. Prev. Qtr

vs. 12 Mths Ago

162,566

228,534

163,607

Delivered SF

vs. Prev. Qtr

vs. 12 Mths Ago

181,272

-

334,032

Quoted Rates

vs. Prev. Qtr

vs. 12 Mths Ago

$24.59

$24.81

$25.64

TOP LEASE TRANSACTIONS •

The Vibration Guys have signed a 2K SF lease in 6302 W Broadway Street.

DEALS IN THE MARKET •

Westland Bunker | 550 Club Drive – a 240K SF class B office building

•

5616 Lawndale Street – a 95K SF class B medical office building

•

Beltway Office Park | 3737-3743 Red Bluff Road – an 85K SF class B office building

•

1001 Shaw Avenue – an 80K SF class B office building

•

7524 Sherman Street – a 75K SF class B office building

•

Magnolia Landmark Building | 18230 FM 1488 Road – a 65K SF class B office building

•

301 South 1st Street – a 58K SF class B office building

•

Towne Lake Office Condos | 10242 Greenhouse Road – a 50K SF class B condo community

•

•

VITAL STATS 16.0%

400,000 300,000

14.0% 200,000 12.0%

100,000 0

10.0% (100,000) 8.0%

(200,000) Q1 19

Q2 19

Q3 19

Q4 19

ABSORPTION

Q1 20

Q2 20

Q3 20

Q4 20

Q1 21

Q2 21

Q3 21

DELIVERIES

Q4 21

Q1 22

VACANCY

NEW DEVELOPMENTS •

100 Jensen Drive – a 300K SF mixed use development

•

24200 Via Mazzini Way – a 80K SF class A office building

•

Highway 35 & Steele Road – a 64K SF class B office building

•

17122 Telge Road – a 59K SF class B office building

•

4410 Reed Road – a 57K SF class B medical office building

•

3776 FM 1488 Road – a 53K SF class B medical office building

•

Towne Lake Office Condos | 10242 Greenhouse Road – a 50K SF class B office condo project

•

Waller Business Center | 31390 FM 2920 – a 35K SF class B office building

LARGE EXISTING VACANCIES •

Central Brazoria County Business Park | 4005 Technology Drive – 257,399 SF

Magnolia Corporate Campus | 32100 Dobbin Huffsmith Road – a 46K SF class A medical office

•

Primary Medical Tower II | 2800 Garth Road – 102,084 SF

•

7524 Sherman Street – 75,280 SF

The Offices of Greatwood | 6514-6548 Greatwood Parkway – a 42K SF class B medical office

•

5616 Lawndale Street – 66,786 SF

•

Conroe Professional Building | 333 North Rivershire Drive – a 40K SF class B medical office

Northeast Medical Tower II | 18980 North Memorial Drive North – 65,269 SF

•

12301 Kurkland Drive – 59,860 SF

•

Westland Bunker | 550 Club Drive – 56,379 SF

•

2401 Termini Street – a 37K SF class B medical office building

•

Magnolia Corporate Campus | 32100 Dobbin Huffsmith Road – 46,832 SF

•

Bank of America | 4000 Garth Road – a 33K SF class B medical office building

•

2301 Commerce Street – 45,647 SF

•

Emancipation Center | 3131 Emancipation Avenue – 45,206 SF

•

1135 Grand Central Boulevard – 45K SF

•

1517 Thompson Road – 42,551 SF

•

Professional Building 6 | 2765-2785 Gulf Freeway South – 41,625 SF

•

Central Brazoria County Business Park | 4001 Technology Drive – 40,681 SF

•

•

Sealy Business Continuity Center | 3063 Outlet Center Drive – a 31K SF class B office building

•

National Oilwell Varco | 10586 Highway 75 North – a 30K SF class B medical office building

•

Republic Business Park | 24130 State Highway 249 – a 28K SF class A office building

HLC’s Suburban Outliers office submarket consists of the remaining submarkets outside of the major Houston submarkets such as the CBD, Greenway Plaza, Westchase, and The Woodlands. These smaller submarkets are located on the outskirts of Houston and include more than 20M SF of class A and B office buildings.

At the close of Q1 2022, the Suburban Outliers submarket had a vacancy rate of 13.1% which was almost identical to the 13.2% at the close of Q4 2021. Absorption remained positive with 164K SF of space absorbed, up from the 120K SF of positive absorption in Q4 2021.

Leasing activity dropped with 162K SF of deals completed.

There is currently 624K SF of office space under construction, and 181K SF of space was delivered in Q1 2022.

DALLAS 5950 Berkshire Lane, Suite 900 Dallas, Texas 75225 T 972.241.8300 | F 972.241.7955

FORT WORTH 1200 Summit Avenue, Suite 300 Fort Worth, Texas 76102 T 817.710.1110 | F 817.810.9017

www.holtlunsford.com

HOUSTON 11451 Katy Freeway, Suite 300 Houston, Texas 77079 T 713.850.8500 | F 713.850.8550