Commercial Vacancy Rate
Strong Local Economy
Status Indicators: Proceeding as Anticipated | Monitoring Progress | Reviewing for Improvement | Information Unavailable
Proceeding as Anticipated
Reviewing for Improvement
Please note that Q1, Q2, Q3, and Q4 refer to the first, second, third, and fourth quarters of the Fiscal Year. The City’s Fiscal Year runs from October 1st – September 30th and is denoted by FY. To see the annual performance of this measure, click here.
Results for the 4th Quarter show that we are maintaining our overall commercial square footage. The City is largely over-performing against the five-year average of commercial vacancy rates for industrial vacancy (five-year vacancy rate average is 5.9%) and office vacancy (five-year vacancy rate average is 11%); whereas, retail vacancy rates are slightly above the five-year average (five-year vacancy rate average is 4.0%).
Furthermore, it is worth noting that in FY 2016 the Houston economy became a victim of its own success. The shale revolution stimulated tremendous oil and gas production, throwing additional supply on the world market. However, global energy demand has been weak and unable to absorb all the new production. Subsequently, the downturn in Houston’s primary economic driver has affected the region tremendously. Sugar Land’s corporate diversification has softened and delayed the impact within the City, but effects have been experienced in net absorption, and vacancy rate.
Percentage of current capacity not occupied by tenants in Office, Industrial, and Retail commercial space within the City of Sugar Land.
The target is set at less than or equal to 10%, which is considered a sensible target equilibrium in the occupancy of commercial space.
Too little space available presents as much of a challenge as the underutilization of commercial space, and both extremes also would likely cause negative impacts to the market prices for commercial space. In the future, comparing performance against regional economic competitors like The Woodlands and the Energy Corridor presents an opportunity to gain additional value from tracking the performance of this measure.
Strong occupancy rates in Office, Industrial, and Retail commercial space ensure that Sugar Land remains a vibrant regional business hub and promote the continued economic success of the community.