Houston Office Market Reports | Avison Young US - Houston

Houston office market reports

Q4 2022

Houston’s metro economy continues to gain strength and has fully rebounded from the jarring job losses accumulated in the early months of the COVID-19 pandemic. Houston’s employment sector has created 176k jobs over the trailing 12 months ending November 2022. Office-using jobs have remarkably grown by 5.6% with 40,500 new positions added over the period.

Houston’s office market fundamentals remain soft with a significant amount of availability, but class A properties continue to outperform the broader market. Touring activity has risen as many employers are exploring ways to optimize and reconfigure their space needs. With little construction and flight-to-quality a key trend, leasing activity has been primarily concentrated in highly amenitized, class A assets as tenants are gravitating to better quality space to ensure the luxuries employees experienced while working from home also exist in the office as more companies return to the office.

(5,722) msf

Net absorption

Office market fundamentals remain soft with negative absorption due to subdued demand and tenants shrinking their footprints to accommodate their hybrid work strategies. However, the class A sector continues to outperform the broader market with nearly 1.2 million square feet (msf) of absorption driven by the flight to quality trend.

2.8 msf

Leasing activity

Leasing volume totaled 2.8 msf in the fourth quarter, bringing the yearly total up to 13.2 msf in 2022. Leasing activity has increased by 7.1% year-over-year but remains 30.5% below the pre-pandemic average from 2017 to 2019 due to the combination of many firms trending towards smaller footprints and the lack of large new deal and expansion activity.

27.4%

Availabilities

Total space availability has reached its highest level on record. Sublease space has inched up to 8.2 msf and now represents a 23% year-over-year increase but remains well below its oil crises peak of 12.2 msf in 2016.

23.2%

Vacancy

The total office vacancy rate ended the year at a record high but is showing signs of stabilization as the overall figure only inched up 30 basis points year-over-year – its slowest annual increase since the oil bust emerged in 2015.

1.2 msf

Under construction

The construction pipeline contains 1.2 msf of product underway currently 52% preleased, which has fallen to its lowest point since 2003.

$2.0B

Investment sales

Office investment sales activity was limited during the second half of 2022 largely attributed to rising interest rates that are stressing asset values.

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Get in-depth office market reports and insights from commercial real estate experts in the Greater Houston area. Avison Young advisors look at Houston commercial real estate activities and the latest Houston statistics to provide you expert market research on Houston's office properties.

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