Commercial subleases go to the roof as the economy slows down.
Several small and mid-sized subleases were inked last quarter, many of them less than 20,000 square feet. It's precisely these kinds of sublease deals that are drumming up activity in an otherwise slow office market.
The average size of a Houston sublease transaction signed in 2016 is around 6,200 square feet, according to research from Chicago-based JLL. Only "a handful" of subleases this year have been for more than 20,000 square feet, according to JLL. But in the overall leasing space, including direct leases and subleases, a truism stands: the size of deals signed in 2016 has shrunk more than the amount of deals that have been executed.
"We’re seeing pretty good activity, but it’s not 20,000-square-foot, 50,000-square-foot or 100,000-square-foot leases," Transwestern's Doug Little told the Houston Business Journal. "It's more of the 5,000-square-foot or 10,000-square-foot leases."
The following subleases have been executed this quarter. The subleases show demand from a variety of industries: technology, law firms and even energy-facing companies.
Black Falcon Energy subleased 16,579 square feet from Houston-based Contango Oil & Gas Co. in 717 Texas Avenue in downtown Houston, JLL announced on Nov. 9. Edward Prejean, David Bale and Diana Bridger with JLL represented Contango, while Cushman & Wakefield's Trey Strake represented Black Falcon. 717 Texas Avenue contains 696,228 square feet of office space.
Houston-based Peter Paul Petroleum Co. relocated its headquarters to the Murphy Oil Building at 9805 Katy Freeway, Houston-based NAI Partners announced on Nov. 3. The company subleased 11,596 square feet from OOGC America, the U.S. offshoot of China National Offshore Oil Corp. which is China's state-owned and state-controlled oil company.Jon Silberman, Jason Whittington and Kelly Torian of NAI Partners represented Peter PaulPetroleum and JLL's Chad Baker and Matt Sanderson represented OOGC America. Peter Paul Petroleum had officed in 717 Texas since its founding in 1972, according to the NAI release.
Five subtenants subleased a collective 165,000 square feet from Noble Energy in Heritage Plaza at 1111 Bagby. CBRE's Kevin Kushner, Wyatt McCulloch and Lucian Bukowski represented Noble Energy. No additional information on the subtenants was disclosed.
As of October 26, Houston-based ConocoPhillips Co. (NYSE: COP) has sublet 97,000 square feet of its Westlake office park property, a ConocoPhillips spokesperson told the Houston Business Journal. At the time, the company was working on several other sublease deals that were "in various stages of the process." Information on subtenants was not disclosed.
Through the company's "larger leased footprint" in the Energy Corridor, ConocoPhillips has also sublet 135,000 square feet in 2016 as of October 26, the spokesperson said. Of the nine subleases larger than 20,000 square feet that ConocoPhillips signed in 2016, four subtenants are new to ConocoPhillips, the spokesperson said.
Dallas-based Thompson & Knight LLP will sublease between 68,000 and 70,000 square feet from BG Group at BG Group Place. BG Group will leave its namesake tower by the end of the year. Kevin Kushner, Charles Gordon and Lucian Bukowski of CBRE represented Thompson & Knight in the deal.
Station Houston, the technology co-working space that was founded in the spring of this year, subleased 25,000 square feet from Deutsche Bank in 1301 Fannin Street. CBRE's Matt Dickson represented Station in its sublease. Station Houston is a co-working accelerator space for technology and software startups.