2025 News Archive

The Houston office market is progressing through a gradual recovery in early 2025, as hybrid work models persist, and companies continue to reassess their long-term space requirements. Leasing activity remains moderate, but several submarkets are beginning to stabilize, driven by a sustained demand for Class A space and a continued flight to quality. Furthermore, the overall vacancy rate remained at 19.8%, highlighting the continued challenge of backfilling large blocks of space left vacant in recent years. While absorption is expected to remain flat or slightly positive in the near term, steady population and employment growth in Houston's suburbs, combined with targeted office redevelopment offers encouraging signs of future momentum.

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.