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The fallout of the oil price crisis has proved to have wide-reaching implications beyond the energy industry. Houston real estate is one of these scathed by the developments in oil and gas.
According to local real estate CBRE, the vacancy rate for office space in the city is at a 20-year high, with 10.2 million sq ft available to sublease at the end of June. This represents almost a fifth of all commercial property available in Houston. The reason: oil companies shrinking their staff to cut costs and survive the price rout.
In April, the Houston Chronicle reported that over the first three months of the year, a total 6,800 jobs were lost in the Houston area, with one Houston University economist predicting that in 2016, the area will lose between 10,000 and 15,000 jobs.
Overall job losses in U.S. oil reached 23,200 in the first quarter of the year. Since the start of 2015, energy companies laid off around 118,000 people, pressured by the deepening oil price rout.
Houston, Reuters notes, flourished when oil prices were sky-high, following first the fracking revolution and then the global financial crisis. During that period, developers bet on growing demand and built more than 26 million sq ft of office space in the city, to house the multitudes of energy companies operating or headquartered in the area.
Now, 10 percent of office space in downtown Houston is vacant, and so is 14 percent of office space in the Energy Corridor neighborhood, notes CBRE. The company predicted that if this trend continues, the vacancy rate will rise to 21 percent by 2017, with more than a million sq ft of empty office space entering the market by this September.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.