“College Station-Bryan is not an office market.”
How can someone say that? Isn’t the metro area home to an enormous employer of white-collar workers in the form of Texas A&M University? Well, yes. In fact, out of almost 30 million square feet of facilities under management, my back-of-the-envelope estimate is that there are several million square feet of office space on the campus. Outside of those hallowed halls, private businesses have less to work with.
According to CoStar, the metro area has a leasable inventory of a little less than 7.5 million square feet. That sounds like a lot. In per capita terms, that’s 26 square feet per man, woman, and child. Statewide, the average is 37 square feet. Thus, the rest of Texas has 42 percent more space per person. This poor comparison is just a snapshot. Over the last five years, the situation has trended in the wrong direction (see table). Controlling for relative job growth, more than twice as much inventory has been added statewide as locally.
The demand for office space almost everywhere has been relatively weak. Work-from-home has been a persistent practice. Further, many companies have delayed expansion or relocation plans in the face of national and global economic and geopolitical uncertainty. At the same time, higher interest rates have dampened new office construction.
From 2015 to 2020, Texas added 85.6 million square feet of space and College Station-Bryan just over a million square feet. In those five years, that amounted to 341 square feet per office worker in Texas and a whopping 723 square feet per new office worker in the metro area. So, while demand has slowed, supply has slowed even faster. That means businesses looking for new space have fewer options than before. The relative tightness in College Station-Bryan is evident in overall office vacancy rates. Locally, that rate has been running at about 8 percent. That is half the statewide average of 16 percent. These rates have persisted for several years.
For businesses and other organizations, the relative scarcity of office space is not just an inconvenience. Firms are dynamic. To accommodate new processes or growth, they often need new spaces. Modern office buildings have larger, more efficient floor plates. They also have upgraded data and environmental systems, not to mention amenities that make life more pleasant for office workers.
While the Brazos County economy lives by the health of the university, a sluggish office market is a real drag on local productivity. Aggieland would benefit from even a modest infusion of new office space.
Views expressed on The 338 are those of the authors and do not imply endorsement by the Texas Real Estate Research Center, Division of Research, or Texas A&M University.
