Commercial vacancies have "ballooned" in Houston, according to the Houston Chronicle, as the energy slump takes hold of the real estate market. The last time vacancies were this high: the oil bust of the 1980s.
"More than a fifth of Houston office space, about 46.7 million square feet, sits empty - the highest rate among the nation's 20 biggest cities," reports Dylan Baddour.
Baddour also explains that the number of vacancies in the commercial market will continue to grow, as subleases come off the books. "More than 2 million square feet of this sublease space is slated to be returned to property owners in the next two years, according to NAI Partners, portending financial problems for landlords who have loan payments to make."
As a result of the growing number of vacancies, Morningstar Credit Ratings has listed "drastically more" loans on a watch list for risk of default. The article surveys the loans expected to incur the biggest losses as defaults continue to strike the market. The discussion about defaults and vacancies focuses exclusively on the energy industry, though some experts say the market is not in catastrophic condition. Rather, the condition is "typical for an energy slump in an oil town," writes Baddour to paraphrase that take on the situation.
Read the full story: Vacancy rates soar for Houston office space
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