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The Houston office market has experienced mixed trends in recent months, influenced by factors such as the ongoing recovery from the COVID-19 pandemic, shifts in demand for office space, and economic conditions. Despite experiencing negative net absorption in the 3Q23, the market rebounded with positive absorption in both 4Q23 and throughout 2023. The market continues to be shaped by evolving workplace dynamics, including remote working trends and changing tenant preferences. For example, numerous companies have downsized their businesses in recent years, only to realize that they may have cut too deeply. These tenants are now actively seeking additional space and are anticipated to engage in further transactions in 2024. As Houston navigates through the recovery phase, stakeholders in the office market must remain vigilant and adaptable to emerging trends and opportunities.

The Houston Office market continued to grapple with ongoing challenges throughout 3Q23. One of those challenges is a continued high office vacancy rate at 18.7% due to overbuilding in the 1980a€™s, tenants downsizing their office footprint, and choosing to sign leases in newer, class A, office buildings instead of older, vintage buildings. This vacancy rate comes as no surprise to the market because it has been a constant obstacle for the past few years. Available inventory of 77.4 million SF for lease continues to be a cloud over the office market. Landlords are still struggling to fill large spaces as tenants are consolidating and reevaluating their needs. Despite these weaknesses, quality lease space and high-end building amenities are factors that are keeping the office market alive.