Houston office market report

While employment gains are starting to slow down to a more normalized pace compared to the rapid rebound experienced in the years immediately following COVID, Houston’s economy continues to demonstrate strength, with a little over 80k jobs created over the trailing 12 months ending August 2024. Furthermore, the unemployment rate in the Bayou City remains relatively low at 4.7%. Office-using jobs have grown by almost 10%, with 71k new positions added since its pre-pandemic peak. However, this healthy job growth has not directly translated into increased office space demand, likely due to companies becoming more efficient with their footprints with the adoption of hybrid and remote work arrangements.

Houston’s office market is showing promising signs of a recovery, with trophy and class A+ properties outperforming the broader market. As the flight-to-quality trend persists and the construction pipeline remains suppressed, this could lead to rent premiums and shrinking concessions in top-tier assets as quality space options become more constrained. As companies adapt to the new normal of hybrid work, they are seeking higher-quality office environments that replicate the desirable aspects of working from home.