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The Houston office market recorded negative 27,037 square feet of net absorption in Q3/26. So far in ’26, the market has posted 110,561 square feet of positive net absorption, considerably less than the approximately 1.9 million square feet reported during the first three quarters of ’25. Absorption trends have remained volatile, with periods of expansion often followed by renewed contraction. On an annual basis, Houston has experienced negative absorption in three of the past five years and six of the last ten, highlighting the market’s ongoing difficulty in sustaining consistent demand for office space.

Since Q3/16, quarterly net absorption has averaged negative 85,088 square feet, reflecting the longer-term weakness in Houston’s office market. The availability rate, which includes vacant, soon-to-be-vacant, and sublease space, peaked at 28.5 percent in Q3/23 before easing to 26.1 percent in Q3/26. Years of uneven demand have contributed to the elevated level of available space that remains in the market.

Despite ongoing challenges in the office market, asking rents remained above $30 per square foot in Q3/26. Average gross rents were $31.04 per square foot, up 2.2 percent from $30.38 in Q3/25, but slightly below the $31.11 recorded in Q2/26. The continued strength in asking rents reflects demand for well-located, higher-quality properties, particularly Class A space, even as overall market conditions remain challenging.

The Houston office market continues to face an elevated level of available space. By class, available space totals approximately 37.9 million square feet in Class A buildings, 25.6 million square feet in Class B properties, and 1.9 million square feet in Class C assets. While overall availability edged down to 26.1 percent in Q3/26, conditions remain far from pre-’15 norms, when availability rates were below 20 percent. Sustained improvement in demand will be necessary to meaningfully reduce the amount of available space over time.

Despite elevated availability and uneven demand, asking rents have remained relatively stable in Houston’s office market. Higher-quality properties continue to command stronger rents, reflecting tenants’ preference for well-located buildings with modern amenities.

Office construction remains constrained by elevated vacancy and lingering oversupply, resulting in a limited development pipeline. Office deliveries totaled approximately 1 million square feet in ’24, followed by 2 million square feet in ’25, both below the 10-year annual average of 2.2 million square feet. As of Q3/26, approximately 1 million square feet of office space was under construction, representing 0.4 percent of Houston’s total office inventory of 249.3 million square feet. Medical office projects accounted for approximately 18 percent of space under construction, reflecting continued activity in this segment despite the subdued overall development pipeline.

Newer office buildings continue to outperform older properties in Houston’s office market. As of Q3/26, vacancy rates for buildings constructed within the past 15 years (since ’11) averaged 12.0 percent, compared with 26.8 percent for buildings constructed before ’11, highlighting the continued preference for newer, higher-quality office space.