Houston Office Market
Average annual full-service asking rental rates fell to $28.69/SF, reflecting a 2.6% decrease year over year. Direct rates fell by 2.8% year over year to $28.86/SF while sublease rents decreased 3.7% annually to $23.06/SF, resulting in a narrowing rent spread of $5.80/SF. Overall vacancy rates rose by 20 basis points year over year to 25.5%. On a quarterly basis, vacancy fell by 20 basis points, indicating that occupancies may be beginning to stabilize. The second quarter of 2025 closed with positive absorption of 571,948 SF, significantly outpacing supply and reversing a years-long trend, as occupancies steadied and deliveries slowed. Total leasing activity closed the quarter at 2.8 MSF, well below the long-term second-quarter average of 4.5 MSF. Fewer and smaller deals transacted during the quarter, with an average lease size of 3,901 SF, while the number of deals decreased by 35.6% year over year.
Download Houston Office Market Report 2Q25Houston Industrial Market
The market realized 1.2 MSF of positive absorption in the second quarter of 2025, a quarterly increase of 74.3% but an annual decline of 74.9%, that was outpaced by deliveries. Overall rental rates grew 11.4% year over year to $10.27/SF, reaching a new all-time high for the fifth consecutive quarter. Construction deliveries rose to 4.0 MSF in the second quarter of 2025, while the pipeline grew to 18.6 MSF under construction. The vacancy rate rose by 30 basis points quarter over to quarter to 7.1%, driven up by new deliveries and muted occupancies.
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