Houston Office Market
| Average Asking Rent (Price/SF) | $29.28 |
| Vacancy Rate (%) | 24.8% |
| Net Absorption (SF) | 463,649 |
At the start of 2022, Houston’s office market is still facing challenges related to the ongoing pandemic. Elevated vacancy rates and the absence of strong leasing demand from the energy sector prior to the pandemic have left the Houston market in a state of prolonged recovery. While Houston had a strong quarter with 463,649 square feet of positive net absorption, new supply is still outpacing demand; leasing activity is down 3.3 million square feet year-over-year. Soft market conditions are allowing tenants longer lead times for decision-making prior to lease expirations, while others are offloading space in attempts to right-size their footprints in conjunction with hybrid work-from-home models. Year-over-year, Houston added 642,289 square feet of sublease space to an already saturated market, with 206,610 square feet added in the first quarter of 2022. Currently, Houston’s office market performance remains near the bottom within the U.S., and the market is expected to struggle through the remainder of 2022.
Houston Industrial Market
| Average Asking Rent (Price/SF) | $8.19 |
| Vacancy Rate (%) | 6.5% |
| Net Absorption (SF) |
5,574,689 |
The year opened to strong growth in the Houston industrial market, due in part to heightened demand for ecommerce, third-party logistics and increased activity in the Port of Houston. The market closed the quarter with 5.5 million square feet of positive absorption, with only the CBD submarket realizing negative absorption. Absorption is still higher than pre-pandemic levels but fell from 9.1 million square feet in the fourth quarter of 2021. The Southwest submarket had robust demand from occupiers, realizing 2.0 million square feet of absorption and 3.0 million square feet of leasing activity. Overall vacancy maintained its downward trend, dropping 220 basis points year-over-year to its current rate of 6.5%. Total availability is also trending toward pre-pandemic levels, ending the quarter at 9.6%, a 3.0% decrease from the prior quarter. Rental rates reached a new high, crossing over $8.00/SF in the first quarter of 2022, driven up by new construction and elevated demand. Total asking rent increased by 9.3% year-over-year and stands at $8.19/SF.
Download Houston Industrial Market Report 1Q22