Latest Quarterly Snapshot

Houston's industrial market remained one of the nation's most dynamic in 3Q25, with steady leasing activity and 10.9 million SF absorbed during the quarter. The metro's inventory now totals roughly 838 million SF across more than 20,000 buildings. However, new supply has consistently outpaced demand over the past three quarters, a trend expected to continue into 2026. This has led to modest upward pressure on vacancy, which currently stands at 7.4%. Even with this gradual softening, Houston's industrial fundamentals remain sound, supported by strong tenant demand and long-term economic growth drivers.

Houston's office market remained one of the nation's strongest in 3Q25, ranking among only three major U.S. metros with positive absorption year-to-date. Construction activity is limited, with just 2.3 million SF underway, about 80% preleased, primarily for build-to-suit and medical office projects in north and west Houston. This lack of new supply is helping stabilize fundamentals, keeping vacancy near 19.8% and average asking rents above $30 pSF. With few groundbreakings and steady demand for high-quality space, Houston's office sector is positioned for continued gradual improvement into 2026.

According to Zonda, in 2Q25, the New Home Lot Supply Index (LSI) in Houston was up 21% from 2Q24, reaching 71.8, signifying that the Houston market remained significantly undersupplied. While the LSI was up year-over-year, builders slowed production due to economic uncertainty and oversupply of homes for resale. The overall housing inventory reached 59,492 active listings in July, the highest on record for Houston and a 27.2% increase from the previous year. The economic uncertainty and the slowdown in builder activity was felt across Texas in 2Q25 as softer demand and rising resale inventory reduced the pace of lot-to-start conversions throughout the State. One local silver lining is that Houston and Dallas accounted for nearly 80% of Texasa€™ new residential permits in May. Local or not, new residential permits being filed proved that even in the face of all the uncertainty, well-capitalized buyers and long-term investors continued to target strategic acquisitions.