Office investment sales market slows down in Houston

Chart of annual office investment sales volume and sales price for Houston commercial real estate market from 2010 through 2023

Houston office investment sales volume slipped in 2023 to $1.2 billion, dropping 30% below the 5-year pre-pandemic average. This significant decline was primarily driven by the Federal Reserve's interest rate hikes, which made it more expensive for investors to acquire and refinance properties. Tight lending standards further hampered the market, with many deals falling through due to financing challenges. Inflation contributed to the devaluation of office assets, making them less attractive to buyers. Lower-quality assets have already seen lower pricing due to elevated vacancy as the flight-to-quality trend remains prevalent and hybrid work arrangements have become the norm.

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US-TX-HOU Houston