2023 News Archive

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.

The Houston office market is experiencing a surplus in inventory across all submarkets, especially in the Central Business District where space availability has grown by more than 2.5 million SF since 2020. Therefore, the Houston market continues to have the highest vacancy rate out of all the U.S. metros with 18.9% in Houston vs 13.2% nationwide, as of 2Q23. The majority of the single digit vacancies are occurring with office buildings built in the last five years. Office buildings built before 2010 (which make up 75% of the inventory) are having a difficult time leasing because newer office buildings offer more amenities and the price differential has dramatically decreased.