Quarterly Snapshot 4Q24 | Office | The Houston Office Market Balancing Between Decline and Growth
In 4Q24, Houston's office market remained stable despite ongoing challenges, posting a 19.3% vacancy rate - the second highest in the nation. Leasing activity remained strong, particularly for high-end office spaces, surpassing pre-pandemic levels. However, annual net absorption stood at -1.3 million SF, reflecting continued downsizing, especially in older buildings. Investment activity remained subdued due to high borrowing costs, though potential rate cuts could help stimulate the market. At the same time, redevelopment gained traction, with 3.7 million SF of office space slated for conversion in 2025. Looking ahead, Houston's strengthening economy and an improved GDP outlook could drive office demand in the coming quarters.