Avison Young releases Second Quarter 2026 Office Market Report for Houston

Office market recovery gains momentum as flight-to-quality drives demand in premium assets

Houston, TX – Avison Young, a global real estate advisory firm, today released its Second Quarter 2026 Office Market Report for Houston. Houston's office market continues to demonstrate a two-speed recovery, with demand increasingly concentrated in trophy and top-tier office properties which recorded 500,000 square feet (sf) of positive absorption during the second quarter, bringing year-to-date gains to nearly 897,000 sf as tenants continue to prioritize high-quality, amenity-rich workplaces.

Houston leasing activity totaled 2.6 msf in the second quarter and 6 msf year-to-date. While overall leasing volume is down 10.6% from the same period last year, the decline reflects fewer large-block transactions rather than a broad weakening of tenant demand. Activity remains supported by a growing pipeline of small- and mid-sized tenant requirements seeking flexibility and quality office environments.

Leases under 10,000 sf accounted for 41% of all leasing activity during the first half of 2026, significantly exceeding pre-pandemic averages and underscoring a more diversified demand base. Conversely, leases greater than 50,000 sf represented just 20.5% of year-to-date volume, highlighting the market's continued shift toward smaller, more flexible space commitments.

As demand intensifies for premier office product, vacancy within the trophy segment has declined to 9.1%, its lowest level since 2015. With limited new construction and a shrinking inventory of large blocks of premium space, recently renovated Class A properties are increasingly well-positioned to capture the next wave of flight-to-quality demand. The market's improving fundamentals are reflected in pricing trends among premium assets. Trophy office vacancy has tightened while asking rents continue to strengthen, with trophy rents reaching $56.70 per sf and Class A+ rents increasing 6.7% year over year to $46.60 per sf. At the same time, concession packages have moderated as landlords gain greater leverage amid declining availability of top-tier space.

“Occupiers remain highly focused on quality, efficiency and employee experience," stated Anthony Squillante, Principal and office tenant representation specialist at Avison Young. "Many tenants that delayed long-term real estate decisions over the past few years are now finding fewer options available at the top end of the market. As premier space becomes more constrained, we're seeing organizations proactively secure high-quality environments that support talent attraction, workplace flexibility and long-term business objectives.”

Houston's investment market also maintained strong momentum during the first half of 2026, with office sales volume surpassing $1.1 billion. Private investors and owner-users continued to drive acquisition activity, taking advantage of pricing that remains well below replacement cost. Institutional investors have also begun to re-enter the market as asset values stabilize and capital market conditions improve.

Houston's broader office recovery also continues to advance. Office visitation reached 59.4% of pre-pandemic levels as of May 2026, slightly exceeding the national average of 59.2%, reflecting steady progress in workplace utilization across the region.