Latest Quarterly Snapshot

During the 2Q25, Houston's industrial market saw a substantial increase in new supply, with approximately 3.8 million SF of space delivered. This new inventory surpassed the 2.1 million SF of net absorption during the same period, contributing to a slight rise in the overall vacancy rate, which now stands at 7.1%. The development pipeline remains strong, with 19.1 million SF currently under construction, reflecting a 14% growth from the previous quarter. Despite the higher vacancy rate, the market remains resilient, supported by consistent demand across key submarkets and industries.

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.