Q3 2023 Houston Office Market Report
The Houston office market continues to wobble despite the market benefiting from a business-friendly environment, competitive cost-of-living standards compared to other large markets, top-tier universities, including Rice University and the University of Houston producing a strong labor pool.
Further, despite a low unemployment rate and a nearly 10 percent increase in office using employment since the end of 2019, Houston’s office market is being weighed down by a near record-high glut of available space. Even with a spate of recent large leases inked in west Houston, activity remains low and occupiers who are transacting are often downsizing their space. Newer, higher quality properties have an upper hand in leasing as tenants have capitalized on the market to lock in increased concessions and enjoy a flight-to-quality of space.
Buildings delivered in the past five years have outpaced the metro average with vacancy closer to 10 percent, strengthening the nationwide-trend of a flight-to-quality. Increased borrowing costs pose further threats to landlords needing to refinance in the near future.
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