2024 News Archive

In 3Q24, the Houston office market exhibited several promising trends, including improved net absorption, stable rental rates at $29.88pSF, and a slight decrease in the overall vacancy rate which stands at 18.9%. Urban offices drove the demand in Houston as companies are wanting to be closer to their employees. Furthermore, in 3Q24, the Central Business District (CBD) led leasing activity, accounting for 32% of the total deal volume.

In 2Q24, the Houston office market showed mild activity, with lease transactions totaling about 2.0 million SF for the third quarter in a row. Despite economic challenges, Houston has demonstrated resilience compared to the national office market, rebounding from a severe recession. The limited availability of capital has restricted new construction, tightening the supply of premium office spaces. Moreover, since roughly 80% of the projects in progress are preleased, the influx of new supply has a minimal effect on the market. Although overall office demand in Houston is on the rise, the momentum in leasing activity has been slower to follow.

The Houston office market is struggling to find its footing as vacancy rates climb and leasing activity slows down. The total leasing activity for 1Q24 reached 2.5 million SF, significantly lower than the long-term average of 4.3 million SF for the first quarter. The decrease in leasing activity is primarily attributed to fewer transactions being completed, possibly due to a more challenging environment regarding debt liquidity. Furthermore, in 1Q24 the construction pipeline fell short of the national development average and lagged behind numerous markets of similar size. Nonetheless, in terms of completed deliveries, the metropolitan area surpassed all its counterparts by delivering 36,497 SF. As the year progresses and tenants seek out office space, we should see leasing activity eventually increase.