Latest Quarterly Snapshot

In 4Q24, the Houston Industrial market saw a shift as demand grew and supply became increasingly constrained. The vacancy rate decreased by 60 basis points, ending the year at 6.2%, while the availability rate dropped by 40 basis points to 7.4%. An influx of international businesses into the region has further fueled this growth, with Houstona€™s favorable location and economic opportunities drawing attention. The rise in tariffs on foreign goods has also encouraged companies to seek local solutions. In the fourth quarter alone, net absorption totaled 4.8 million SF, bringing the annual total to 21 million SF, reflecting a strong and active market.

In 4Q24, Houston's office market remained stable despite ongoing challenges, posting a 19.3% vacancy rate - the second highest in the nation. Leasing activity remained strong, particularly for high-end office spaces, surpassing pre-pandemic levels. However, annual net absorption stood at -1.3 million SF, reflecting continued downsizing, especially in older buildings. Investment activity remained subdued due to high borrowing costs, though potential rate cuts could help stimulate the market. At the same time, redevelopment gained traction, with 3.7 million SF of office space slated for conversion in 2025. Looking ahead, Houston's strengthening economy and an improved GDP outlook could drive office demand in the coming quarters.

In 3Q24, Houston's urban land market remained constrained with limited transaction volume. The scarcity of desirable urban infill land combined with high prices and elevated interest rates discouraged potential buyers. This environment allowed well-capitalized investors to close deals on premium urban parcels, while suburban areas saw more viable development, particularly for industrial and single-family projects. Notable transactions in town included purchases for industrial and mixed-use projects on the northwest side and the Uptown area, where prices per foot vary widely based on location, ranging from $200-300 per SF for prime plots within urban zones.