Q3 2022 Houston Office Occupiers Guide

With a continued emphasis on diversification, Houston’s economy is showing signs of recovery heading out of the pandemic. Job growth is strong with the city having finally recouped all those lost during the pandemic last spring. Demand is also slowly returning, seeing an uptick over the first half of 2022. But the city’s office market continues to battle
significant headwinds. Despite gains, leasing is roughly 75% of pre-pandemic levels. Worse, total availability has yet to see the bottom as marketed space continues to climb. Houston’s vacancy rate remains among the highest among major markets in the US. Available sublease space remains at near record levels, tallying an increase of roughly 4.0 MSF since the start of 2020. It now accounts for 2.6% of total inventory, still trailing the 4.5% set during the height of the oil slump. This glut of available space paired with some uncertainty regarding office occupiers and their space needs depress asking rents with rent growth among the weakest in the US. As competition among landlords to ink quality tenants heats up, space occupiers should expect to see competitive rates and elevated concession packages in what was already an occupier friendly environment.