From offices to shopping centers, commercial real estate in high demand

Coming off one of the strongest years on record, Houston’s commercial real estate market is poised for more growth in 2014, industry experts said today.

Activity this year may not be quite as strong as it was in 2013 as the job market moderates, but leasing of office space, apartments and shopping centers is expected to remain strong for the coming years.

“The story continues to be very good,” said Mark Taylor, senior managing director of CBRE in Houston, at the company’s quarterly presentation on the commercial real estate market.

Real estate brokers from CBRE presented their outlooks for their respective specialties at a quarterly event Monday.

Here’s what they are saying:

• The office market — Companies occupied an additional 4.9 million square feet last year. Demand hasn’t been this strong since 2006. There is 14 million square feet of new space under construction and only a portion of that space is coming onto the market vacant.
• The industrial market — Houston-area industrial space is only 5 percent vacant and 8 million square feet of space is under construction. That’s not much, considering the size of the market.
• The apartment market — Some 6,600 apartments are under construction inside the 610 Loop where the trend is to build upscale complexes near shops, bars and restaurants. Demand from young professionals is pushing up rents, which averaged $1.57 per square foot for the newest units with a high-level of amenities. Rents are up for older apartments too, as builders increasingly tear down the city’s aging stock of apartments reducing supply for so-called “workforce housing.”
• The retail market — Rents in shopping centers, as Houston’s overall retail vacancy was 7.4 percent in the fourth quarter, down from 8 percent the previous year. Only about 2 million square feet of space is under construction, nearly half of which is being built for grocers. But if last year was the year of the grocery store, 2014 will be the year of the pizza place as at least a half-dozen new restaurants specializing in pizza expand here.