Houston's office market shows clear stratification by building class

Office space deal size and rates by building class in Houston

Houston's office market caters to diverse needs with an average lease size of 4k sf. A closer look reveals a clear stratification based on building class. Over the past 12 months, Trophy buildings boast the largest average deal size at 28k sf, commanding a premium rent of $50.71 per square foot. These prime locations attracted 44 deals, suggesting a limited but steady market for high-end office space with the lowest vacancy rate at 16.6% and an average lease term of 8.6 years.

Class A buildings saw a significantly higher volume of transactions, with 931 deals at an average size of 7k sf at $37.44 psf, despite a higher vacancy of 27.3% and an average term of 5.1 years, suggesting a willingness for a slightly longer commitment for better quality space.

The most active segment, with 1,836 deals, is class B space, averaging smaller footprints of 2k sf at a cost-effective $22.84 psf. This segment likely appeals to startups, smaller businesses, or those seeking budget-friendly options. However, elevated vacancy (25.9%) and shorter 3.3-year average lease terms suggest more leverage and frequent tenant turnover.

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