Large blocks of second generation space that need to be backfilled pose one of the highest drags on Houston’s overall office market fundamentals, according to Partners Edge. Currently, there are 183 big blocks of space of 50,000 square feet or more (excluding properties currently under construction).

Class A properties are responsible for the lion’s share of big blocks of space, but many of these blocks of space are too large and/or functionally obsolete in comparison to new construction. Many of these older properties were designed and built to be single-tenant properties—however, now most tenants that occupy 200,000 sq. ft. or more strongly desire newer, more efficient properties.

More often than not, when their leases expire, these very large office tenants opt for build-to-suits or new spec construction. One recent example was Hewlett Packard Enterprise (HPE, which moved into 440,000 sq. ft. of new build-to-suit space in early 2022. HPE vacated an older 1980s vintage office campus in the FM 1960 submarket.