Q4 2023: Houston Office Market Report

Houston’s office sector continues to seek its footing as uneven occupier demand and uncertainty in the economy are keeping vacancy rates elevated above 21 percent. Despite a tight labor market and growing office-using employment, occupancy has plateaued with the rise in popularity of hybrid work models. Many companies are taking advantage of the softness in the market by locking in more favorable terms and shrinking their footprint.

Overall, leasing volume saw a 25 percent decrease in 2023 from 2022. Following the flight-to-quality trend, demand remains stronger in newer, highly-amenitized properties as class A buildings delivered within the past five years accounted for 47 percent of direct net absorption last quarter. Asking rents average around $31.00 per square foot but annual growth is stagnant, posting only a modest one percent gain year-over-year as the glut of vacant space applies downward pressure on landlords.