Latest Insights

The Houston office market is progressing through a gradual recovery in early 2025, as hybrid work models persist, and companies continue to reassess their long-term space requirements. Leasing activity remains moderate, but several submarkets are beginning to stabilize, driven by a sustained demand for Class A space and a continued flight to quality. Furthermore, the overall vacancy rate remained at 19.8%, highlighting the continued challenge of backfilling large blocks of space left vacant in recent years. While absorption is expected to remain flat or slightly positive in the near term, steady population and employment growth in Houston's suburbs, combined with targeted office redevelopment offers encouraging signs of future momentum.

Despite a slowdown in construction and new supply, Houstona€™s retail market remained active in 2024, with major retailers expanding their presence. Construction in 4Q24 dropped to its lowest post-pandemic level at 3.0 million SF, marking a 31.7% decline from the previous year. Annual absorption hit a record low of 1.8 million SF, while total deliveries for the year reached 3.2 million SF. Retail giants like Costco, HEB, and Home Depot continued growing, each adding two new locations. The vacancy rate held steady at 5.4%, slightly above last yeara€™s level. Meanwhile, rental rates rose 2.5% to $24.03 PSF, and leasing volume increased 2.4% to 8.3 million SF.

The Houston region land market slowed in 4Q23 while developers are busy getting residential lots on the ground for the next two years. Developers are the most active buyers in the land market right now as the demand for master planned communities and commercial sites is picking up. Therefore, it truly is a developera€™s market. The total number of single-family home sales amounted to 6,103 in December 2023, marking a decrease of 6.2% compared to December 2022. This decline came after a note-worthy 4.7 percent increase in sales volume in November, which marked the first positive trend in homes sales in 19 months. As development projects complete in the next few years, it will be interesting to see how this will affect home sales with more homes coming on the market.