ICOnic News | Economic Update: Navigating A Shifting Market
ECONOMIC UPDATE: NAVIGATING A SHIFTING MARKET
Houston continues to outperform much of the nation despite ongoing economic headwinds. The metro area's population has surged 8.7% since 2019, outpacing Texas' overall 7% growth, with strong migration into Houston from younger households. Furthermore, U-Haul ranked Houston the ninth best market nationally and Texas second for inbound moves.
Although 2024 was widely characterized as a "train wreck" year for commercial real estate, the market is showing early signs of stabilization. The capital markets freeze is beginning to soften and delinquency rates on commercial loans have remained relatively steady year-over-year. However, challenges remain: $3 trillion in commercial loans are set to mature over the next three years, with the multifamily sector carrying much of that debt load.
Market dynamics show notable variation across asset classes. Office remains in recession, multifamily is softening, industrial appears near its peak, and retail is holding steady at the top of the cycle. Houston's average cap rate is about 7%, the lowest price-per-square-foot levels in a decade, and industrial cap rates have risen as the cost of capital increases.
On the residential side, Houston home prices have returned to 2019 levels, and wage growth continues to outpace inflation, which sits near 2.9% for multi-family projects. Yet, affordability remains a concern as property taxes and insurance costs rise and regulatory burdens, estimated at $93,000 per home, continue to pressure developers.
Looking ahead to 2026, key concerns include sustained high interest rates, ongoing regulatory and political uncertainty, and housing affordability constraints. Still, Texas maintains a competitive edge, ranking #7 in overall tax affordability, and Houston's resilient economy and strong job market provide solid footing for long-term growth.
- Amanda Igo, ICO Marketing Coordinator
** Data Provided by Dr. Ted Jones
ANNUAL THANKSGIVING POTLUCK
Our ICO Team enjoys coming together for our annual Thanksgiving potluck. We enjoy a great feast filled with lots of tasty food as everyone participates by bringing their family's favorite dish!
Beyond the amazing food, this tradition gives us a chance to pause, connect, and celebrate the spirit of gratitude as a team. Sharing a meal together helps strengthen our team and reminds us of the value of community in the workplace. We look forward to enjoying laughter, good conversation, and memorable moments together that help to carry us into the holiday season.
GETTING TO KNOW JANE NODSKOV
1. What's something on your bucket list that you're determined to check off soon?
"Home remodel. We are currently undertaking a renovation project of our second floor and are hoping to be done by December!"
2. If you could live anywhere in the world for a year, where would it be? Why?
"Australia! The country's unique blend of stunning beaches, lush rainforests, vibrant cities, and charming rural areas is incredibly appealing. Additionally, its proximity to other destinations on my travel bucket list would make for exciting weekend trips. My interest was first sparked by my second-grade teacher, who often spoke highly of her home country."
3. What's one thing you always do before entering a new deal to make sure you're fully prepared?
"Prior to engaging in any new transaction, I conduct a thorough review of the specific micro-market involved, recognizing that each submarket has its own dynamics. Market conditions can shift rapidly, such as when a major tenant vacates, altering the balance between tenants, landlords, buyers, and sellers. I also invest significant time in understanding my clients' objectives and desired outcomes to ensure we proceed efficiently and strategically from the outset."
4. What do you think is the biggest misconception about commercial real estate?
"A common misconception is that advancements in technology, particularly artificial intelligence, will eventually replace commercial real estate brokers. While technology has certainly streamlined tasks such as market research, documentation, and marketing, the nuanced negotiations and problem-solving required in each transaction cannot be replicated by algorithms. Every deal is unique, and the value brokers provide lies in their expertise, adaptability, and client-focused approach."
5. Summary of your business and who an ideal client/prospect might be?
"I primarily serve small to medium-sized companies that occupy or invest in office and industrial properties. My role involves assisting businesses in developing and executing long-term real estate strategies, as well as supporting investors with leasing and sales services. Most of my clients are based in Houston's suburban markets and seek a partnership that offers the expertise and responsiveness of an in-house real estate department."
If you missed our October edition of ICOnic News, now's your chance to catch up, we spotlight how the Greater Houston Builders Association is driving real change in permitting and infrastructure across the Houston region. Dive in to see what's shifting behind the scenes in land and development markets, and why it matters for your next move.
Click the link below to read our October newsletter.
