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The Houston office market continues to add new buildings while struggling to lease vintage products. In 1Q23 the vacancy rate remained unchanged from 4Q22 at 18.8%, causing Houston to keep its record of highest vacancy in the nation among major markets, but interestingly is the 8th largest market for new construction with over 108 new office buildings under construction totaling 5,164,000 SF. Houston is the 7th largest US office market with 350 million SF, but the Houston market has struggled to breathe new life into its older buildings as new companies are drawn to its new, LEED and green properties with state-of-the-art amenities and modern, fresh designs. Houston continues to grow and its higher quality properties classed as trophy and class A+, continue to outperform the wider market evidenced by the pre-leasing strength of new buildings under construction at 63.9% before the doors are even opened.

The office market has dealt with a fair number of shortcomings taking the wind out of its sails and causing real questions as to what changes the office market will experience in 2023. Office is still struggling to regain its momentum following the pandemic while facing an uncertain economy. In 4Q22 the square footage of space absorbed was 925,120 leaving the vacancy rate to 22.6% or 80 million square feet of space. Asking rents in Houston increased by 0.7% in 2022, which was under performing the U.S. average of 1.2% as of 4Q22. Rent gains are projected to increase somewhat during 2023; around 1.9%.