Houston Real Estate Market Reports

Houston Office Market

Average annual full-service asking rental rates rose to a new all-time high of $30.31/SF, reflecting a 2.9% increase year over year. Direct rates increased by 2.8% year over year to $30.47/SF while sublease rents rose by 9.9% annually to $25.59/SF, resulting in a narrowing rent spread of $4.88/SF. Overall vacancy rates fell by 20 basis points year over year to 25.6% in the fourth quarter of 2025. On a quarterly basis, vacancy was unchanged, indicating that occupancies may be stabilizing. The fourth quarter of 2025 closed with positive absorption of 221,555 SF, a decrease from the previous quarter. Annual absorption totaled 1.2 MSF for 2025, the market’s best year for demand since 2014. Total leasing activity closed the quarter at 2.2 MSF, below the 16-year fourth-quarter average of 4.6 MSF. Fewer deals transacted during the quarter, with deal volume falling 35.5% year over year, with average lease size also decreasing by 22.9% to 3,528 SF.

Houston Industrial Market

The market realized 3.6 MSF of positive absorption in the fourth quarter of 2025, a quarterly increase of 19.9%. Overall rental rates rose 13.4% year over year to $10.67/SF, reaching a new all-time high for the seventh consecutive quarter. Construction deliveries slowed to 4.2 MSF in the fourth quarter of 2025, while the pipeline grew to 24.6 MSF under construction. The vacancy rate rose by 10 basis points quarter over quarter and by 90 basis points year over year to 7.4%, as new supply outpaced demand for a fourth consecutive quarter.