With the popularity of remote working, why are there so many office buildings under construction in Houston?
High rise office buildings are going up in downtown, Memorial, Midtown and the Galleria area. Mike Wong of KW Commercial explains those buildings won't be empty when they open. "Houston has over 5,600,000 square feet in office buildings that have been under construction since 2020. Now at least 60% of that has been leased. That's what is required for these companies to get their loans to start construction."
Wong also says there may be some tough times ahead in commercial real estate, but Houston does have its advantages. "Real Estate is a cycle. There's always going to be up and down markets. We're blessed to be in Houston. We typically weather storms better here than across the country. He adds that many businesses still want "shiny and new" office space.
Companies are changing the way they look at office space - but still there are big bulky buildings under construction in Houston locations. Wong (of KW Commercial) says the construction loans came before Covid and new and old office buildings will have their challenges. "New buildings will be challenged to appeal to those companies that want 'new, shiny corporate image.' But right now with economic uncertainty, those companies are holding back a little bit and look for economical opportunities on the market."
Wong thinks the commercial real estate market will change in the coming years as businesses' needs change. For instance, offices that give employees more individual space and wider hallways will be in demand.
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