Houston sees strong demand in newly delivered office buildings

Since 2020, Houston's office market has added 5.5 million square feet (msf) of new space, with the bulk, 2.7 msf, delivered in 2021. This new inventory represents 2.8% of Houston’s total 200 msf market.

New inventory added to the market has experienced robust leasing activity, with 83.4% of such space, or 4.6 msf, already leased (class A and trophy buildings, which consist of new buildings added to the market, together account for 86.8% of leased space in Houston). Currently, 920k sf of office space delivered since 2020 is available for lease. The Central Business District (CBD) and Katy Freeway East submarkets hold the largest inventory of available office space from newly delivered office buildings.

As of October 2024, almost half of the year’s deliveries have been leased. As flight-to-quality persists and the office construction pipeline remains suppressed, this may lead to shrinking concessions in class A and trophy buildings as the supply of the high-quality space options becomes more constrained.