Commercial real estate brokers working in Houston’s already struggling office market were hit by yet another challenge when the coronavirus pandemic took hold in the city.
But some are viewing it as an opportunity to reconnect with clients.
Like many business professionals in this time of coronavirus, real estate brokers have become well versed in making video calls from their homes.
“Right now, many clients just want to hear a friendly voice or see a friendly face while they’re stuck at home,” said Taylor Wright, a vice president on the occupier advisory team in Colliers International’s Houston office.
Wright said the number of leases being signed has fallen sharply in recent weeks as both tenants and landlords struggle to determine the degree of COVID-19’s impact on their businesses. But deals are still getting done.
One of Wright’s clients recently signed a lease for a significant amount of space, and he has been hired to handle another lease for a client looking to move into a new space. However, most of the deals that are closing are renewals, he said.
With in-person tours of office space off the table thanks to social distancing mandates, Wright said most clients are holding off on making moves. Add to that the financial uncertainty created by the combination of COVID-19, plummeting capital markets and dismal oil prices, and many businesses are focusing on keeping cash in reserve, rather than paying for costly office build-outs.
That said, Wright views the current state of affairs as a chance to check in on clients on a personal level, without having business get in the way.
“Most of the time, we’ll talk about what they’re watching on Netflix and whether they’ve seen something we haven’t,” Wright said. “No one knows what the impact of all of this uncertainty will be. Sometimes, it’s just nice to see how people are doing.”
The blow to Houston’s office market caused by COVID-19 couldn’t have come at a worse time.
With office vacancies hovering around 20 percent, the market had already shifted heavily in favor of tenants. That has left landlords and property owners scrambling to launch costly remodel projects in order to compete with new, high-end buildings coming online. Many of those projects were already underway when COVID-19 hit.
The largest office project underway downtown is Houston-based Hines’ Texas Tower, which is slated to open at 845 Texas Ave. in late 2021. The 47-story, 1.1 million-square-foot tower is already 38 percent preleased. Law firm Vinson & Elkins has agreed to lease 214,000 square feet, Hines will occupy 155,000 square feet, and law firm DLA Piper is taking a 31,000-square-foot floor.
But even with the challenges facing the market, brokers still have a role to play, Wright said.
“The biggest thing a real estate professional can be right now is a resource for clients who just need information in an uncertain business climate,” he said “Being able to provide knowledge of what the terms of a lease are or where the opportunities are can be a huge benefit for clients right now.”