Latest Quarterly Snapshot

The Houston office market showed signs of recovery in 2Q25, bouncing back from prior slowdowns. Despite a dip in leasing activity, there remains a substantial 73 million SF of available office space, creating both opportunities and challenges for landlords and tenants. With only 2.4 million SF under construction, the market's development pipeline remains constrained because of the upward trend in construction costs. Sublease rates have stabilized, offering a more optimistic outlook as we approach 3Q25. The focus is now on managing older office inventory, as there is a limited new supply on the horizon. The market outlook for 3Q25 is cautiously optimistic, bolstered by improving leasing activity and steady vacancy rates, despite ongoing challenges with older inventory.

The Houston housing market showed positive growth in 1Q25, with a slight increase in new home starts and closings. The annualized pending home sales rose by 12.7%, reaching 9,165 in March 2025, while single-family home closings increased by 2.6%, totaling 7,429. The average home price climbed to $427,221, reflecting a 3.7% year-over-year growth. Today's strong home activity serves as a leading indicator for future land demand rather than a reflection of current land sales and value performance. It typically takes 2-3 years to convert raw land into builder-ready lots, and 6-18 months for construction. Additionally, the unemployment rate stood at 4.2%, while employment growth remained strong, with a 2.4% increase in total nonfarm employment. These economic indicators signal a healthy, expanding market, with continued demand for land and housing development.

Houston's retail market remained balanced in 1Q25, with the vacancy rate inching up to 5.4%, just above the five-year average. This slight increase reflects a market settling into a stable rhythm, with supply and demand largely in sync. While 3.3 million SF of retail space is currently under development, about 40% remains available for lease. Still, brokers report that prime, first-generation space is quickly claimed before hitting the open market, offering little relief for tenants seeking new, high-quality options.