• Citywide net absorption remains negative in Q2 2018, with 726 KSF of moveouts.
    • The NOB was the largest source of negative absorption, contributing 417 KSF of negative net absorption.
  • Overall vacancy increased substantially quarter-over-quarter as direct available space increased by 1.2 MSF—with sublease availability increasing modestly to 9.7 MSF.
    • WSB saw an increase in vacant space of 135 KSF and NOB saw an increase in vacant space of almost 420 KSF, both driven by energy tenant consolidations and sublease expirations.
  • Office development remains subdued; no new office projects broke ground in Q2 2018.
    • After two spec projects delivered in Q1 2018 —The Post Oak (WEL) and Kirby Collection (GWP)— Capitol Tower (CBD) is the only major spec tower in the pipeline, delivering in mid-2019.
  • Sublease space increased to 9.7 MSF due to energy tenants adding large blocks of space to the market.
    • 5 Greenway added just under 800 KSF of Class A sublease to the GWP submarket.
  • Oil prices have remained stable through the year, averaging above the $60/bbl through Q2 2018, ending the quarter above $70/bbl.
    • Strong global growth is expected to keep demand elevated through 2018.