Latest Quarterly Snapshot

The Houston Industrial market continues to outperform other U.S. markets primarily due to high tenant demand. In 4Q23, the demand for industrial space in Houston increased quickly, reaching 10.2 million SF of transactional leasing activity. This was the highest amount of total space leased in any quarter of 2023, with most of the leases consisting of third-party logistics companies and manufacturers. Furthermore, the market's resilience persists with positive absorption continuing to be a highlight, reaching 4.2 million SF in 4Q23. This trend will more than likely continue throughout 2024, but could be outpaced by supply given the under-construction pipeline.

The Houston office market has experienced mixed trends in recent months, influenced by factors such as the ongoing recovery from the COVID-19 pandemic, shifts in demand for office space, and economic conditions. Despite experiencing negative net absorption in the 3Q23, the market rebounded with positive absorption in both 4Q23 and throughout 2023. The market continues to be shaped by evolving workplace dynamics, including remote working trends and changing tenant preferences. For example, numerous companies have downsized their businesses in recent years, only to realize that they may have cut too deeply. These tenants are now actively seeking additional space and are anticipated to engage in further transactions in 2024. As Houston navigates through the recovery phase, stakeholders in the office market must remain vigilant and adaptable to emerging trends and opportunities.

The Houston land market was robust in 3Q23 as developers continued to sell sites for master planned communities and commercial development, while speculative land investors kept buying well-placed, large, strategic land tracts. Single-family home sales across the market fell by 10.9% in September 2023 with 6,886 units sold compared to 7,728 units sold in September 2022. Continued market pressure from high interest rates artificially suppresses home sales, and is putting significantly more pressure on commercial real estate transactions for buyers using traditional financing sources. As we head into 4Q23, we expect land sales to continue primarily for residential development with less land trading for commercial development.