The tide is turning for Houston’s office market, which posted positive office absorption in the third quarter, thanks in part to Frazer’s move to Sugar Land.
The ambulance manufacturer moved its headquarters to 1410 Gillingham Lane, signing a full-building lease, according to Colliers. The 150,000-square-foot lease was the market’s biggest absorption in the third quarter.
Frazer announced the move last year and shared plans to invest $4 million updating and expanding the building, which was built in 2001. The property switched hands last summer when Trevor Smith’s San Diego-based CIRE Equity bought it from former owner-operator Thermo Fisher Scientific, deed records show.
The property is in Sugar Land, which accounted for 5.9 percent of leasing activity in the third quarter. It ranked seventh in terms of submarkets with the largest amount of positive absorption. West Loop and the Energy Corridor topped the list; both logged more than 200,000 square feet of positive absorption.
Since the pandemic, Houston’s office market has been on a slow path to recovery, but market indicators are improving, according to Colliers.
The city’s overall vacancy rate dropped from 27.9 percent a year ago to 27.4 percent. In the third quarter last year, the market saw 23,700 square feet of negative absorption. This year, 555,000 square feet was absorbed in July through September, marking the second quarter in a row that more space was leased than vacated, marking the first sustained positive absorption since 2019, Colliers said.
LIke other cities around the country, the flight-to-quality office trend dominates the Houston market.
The average vacancy of buildings constructed since 2015 is 11.9 percent, pointing to companies’ preference for new office space with top-of-the-line amenities.
For example, Skanska delivered Norton Rose Fulbright Tower, a 386,000-square-foot office building at 1550 Lamar Street, last year. The 28-story building is 62 percent leased, with Third Coast Infrastructure being the latest company to sign a deal to move into the trophy building.
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