Houston Real Estate Market Reports

Houston Office Market

Average annual full-service asking rental rates rose to a new peak of $30.52/SF, reflecting a 6.3% increase year over year. Direct rates increased by 6.2% year over year, hitting a peak of $30.66/SF, while sublease rents rose by 13.3% annually to $25.91/SF, resulting in a narrowing rent spread of $4.75/SF. Overall vacancy rates were unchanged year over year at 25.8% in the first quarter of 2026, returning to the record high of one year ago. On a quarterly basis, vacancy rose by 20 basis points, driven up by the delivery of CityCentre Six and slower demand. The first quarter of 2026 closed with negative absorption of 287,336 SF, a decrease from the previous quarter, driven by large move-outs in the CBD. Total leasing activity closed the quarter at 2.7 MSF, below the 16-year first-quarter average of 4.4 MSF. Fewer deals transacted during the quarter, with deal volume falling 7.5% year over year, and average lease size also decreasing by 8.9% to 3,832 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.