Latest Insights

Houston's office market remained one of the nation's strongest in 3Q25, ranking among only three major U.S. metros with positive absorption year-to-date. Construction activity is limited, with just 2.3 million SF underway, about 80% preleased, primarily for build-to-suit and medical office projects in north and west Houston. This lack of new supply is helping stabilize fundamentals, keeping vacancy near 19.8% and average asking rents above $30 pSF. With few groundbreakings and steady demand for high-quality space, Houston's office sector is positioned for continued gradual improvement into 2026.

The Houston office market showed signs of recovery in 2Q25, bouncing back from prior slowdowns. Despite a dip in leasing activity, there remains a substantial 73 million SF of available office space, creating both opportunities and challenges for landlords and tenants. With only 2.4 million SF under construction, the market's development pipeline remains constrained because of the upward trend in construction costs. Sublease rates have stabilized, offering a more optimistic outlook as we approach 3Q25. The focus is now on managing older office inventory, as there is a limited new supply on the horizon. The market outlook for 3Q25 is cautiously optimistic, bolstered by improving leasing activity and steady vacancy rates, despite ongoing challenges with older inventory.

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.