Houston's office market shows clear stratification by building class

Houston's office market caters to diverse needs with an average lease size of 4k sf. A closer look reveals a clear stratification based on building class. Over the past 12 months, Trophy buildings boast the largest average deal size at 28k sf, commanding a premium rent of $50.71 per square foot. These prime locations attracted 44 deals, suggesting a limited but steady market for high-end office space with the lowest vacancy rate at 16.6% and an average lease term of 8.6 years.

Class A buildings saw a significantly higher volume of transactions, with 931 deals at an average size of 7k sf at $37.44 psf, despite a higher vacancy of 27.3% and an average term of 5.1 years, suggesting a willingness for a slightly longer commitment for better quality space.

The most active segment, with 1,836 deals, is class B space, averaging smaller footprints of 2k sf at a cost-effective $22.84 psf. This segment likely appeals to startups, smaller businesses, or those seeking budget-friendly options. However, elevated vacancy (25.9%) and shorter 3.3-year average lease terms suggest more leverage and frequent tenant turnover.