Texas Office Building Sales Market Ends Q1 on Strong Note
The financial and technology sectors are two of the main drivers fueling one of the strongest economies in the country. This has made the Texas commercial real estate market an attractive target for investors and appealing destination for young professionals in the growing employment sectors, says COMMERCIAL Café. The Texas markets also exhibit a significantly reduced cost of living when compared to the New York City or San Francisco markets.Texas Office Stats for Q1, 2017:
- Office sales volume tops $1B mark in Q1
- Average price per square foot reaches 5-year peak
- Houston's Greenway Portfolio trades in largest Q1 sale
- $3B Toyota Houston HQ on track for Q2 delivery
According to COMMERCIAL Café, the number of first quarter office transactions in the combined Texas markets was the lowest of the last five years (only 20 major deals closed in Q1 2017), in terms of sales volume, it was one of the market's best Q1 performances. A total of 20 office transactions closed in the first three months of 2017 for $1.19 billion in sales volume (not taking into account undisclosed sales), marking an 89% increase year-over-year. The first quarter of the year was also the second-best Q1 in terms of sales volume since 2013, when 30 sales closed for $1.22 billion. Nevertheless, when measured against overall quarterly sales, the volume recorded in Q1 2017 landed below the 2013-2016 average. The best-performing quarter of the past five years proved to be Q4 2015, when 50 sales closed for a total of $2.5 billion in sales volume.
COMMERCIAL Café further reports the average price per square foot presents a comprehensive picture of the state of the Texas markets. In excluding portfolio transactions and partial stake deals, the average price per square foot appears headed for a five-year high in Q1 2017.
Moreover, not only is the average price of $294 per square foot the best Q1 number we have on record, it is also the highest quarterly average recorded in the last five years in Texas. The average price per square foot rose 85% year-over-year and was 15% higher than the market's previous peak, in Q3 2016. The market saw an overall boost in average price per square foot over the last year, surpassing the $200 mark for four consecutive quarters (Q2 2016 to Q1 2017), signaling increased buyer interest and the growing appeal of the Texas office market.