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TLG Commercial October Market Report

Welcome to TLG Commercial’s October Market Report; providing a summary of the North Houston Commercial Real Estate Market and a spotlight on Montgomery County’s Office and Industrial Real Estate Markets.

October Market Report of North/Northwest Houston

The North/Northwestern Houston Commercial Markets are currently going through two different shifts. Office properties in the Conroe and the Outlying Montgomery County areas are shifting towards a seller’s market, while The Woodlands and Northwest Outlier areas are shifting towards a buyer’s market. The amount of construction for new office spaces is increasing in Conroe and the Northwest Outlier, while construction of office spaces in The Woodlands has been trending downwards.

Buyer’s Market

The Woodlands

Inventory SqFt: 23.2M +

Under Construction SqFt: 351K –

12 Month Net Absorption SqFt: 477K

Vacancy Rate: 10.2%

Market Rent/SqFt: $31.99 +

Annual Rent Growth: 0.2%

Market Sale Price/SqFt: $254 –

12 Month Sales Volume: $177M +

Northwest Outlier

Inventory SqFt: 1.9M +

Under Construction SqFt: 163K +

12 Month Net Aborption SqFt: 74.8K

Vacancy Rate: 14.6%

Market Rent/SqFt: $24.70 +

Annual Rent Growth: 0.4% +

Market Sale Price/SqFt: $208 –

12 Month Sales Volume: $3.3M +

Seller’s Market

Conroe

Inventory SqFt: 2.7M –

Under Construction SqFt: 14K +

12 Month Net Absorption SqFt: – 59.6K

Vacancy Rate: 11.3% +

Market Rent/SqFt: $22.35 +

Annual Rent Growth: 0.4% +

Market Sale Price/SqFt: $174 +

12 Month Sales Volume: $8M –

Outlying Montgomery County

Inventory SqFt: 1.5M +

Under Construction Sq Ft: 0 –

12 Month Net Absorption SqFt: 5.4K

Vacancy Rate: 9.9%

Market Rent/SqFt: $21.46 +

Annual Rent Growth: 1.2% +

Market Sale Price/SqFt: $160 +

12 Month Sales Volume: $5.5M –

Montgomery County Commercial Market Spotlight

Montgomery County area has been growing at an exponential rate over the past few years. Although most of this growth is attributed to the City of Conroe and The Woodlands, the surrounding area has also benefited greatly from the city center’s rise in popularity.

Office

The majority of the office spaces in Montgomery County are situated in suburban areas around Conroe and The Woodlands. With a current vacancy rate of 9.8%, the office space market here experiences far less vacancies that the average for the Houston Metropolitan Area. This is due to the diversity of the office tenant base, which ranges from energy and financial institutions to law and retailers. Projections from CoStar see that vacancies will remain below 11% for the next 5 years.

While the vacancy rate is lower than the Houston Metropolitan area average, the rent growth rate is just around the average. Coupled with the average growth rate, the average asking rent for this area is just $21/SqFt, which is well below the Houston Average. Because of these factors, office space in the Outlying Montgomery County area is in very high demand, making it perfect for sellers.

Industrial

Unlike office spaces, Industrial Properties in Montgomery County are trending to a buyer’s market, as demand is decreasing. The vacancy rate of the industrial property market is 8.4%, which is one of Houston’s highest vacancy rates. Montgomery County’s Industrial Market also has an asking rent average of $9.50/SqFt, which, just like the vacancy rate, ranks as one of Houston’s highest; however, the rent growth rate is just 1.8%, which is below the Houston average.

All data used is sourced from CoStar’s Sub-Market Reports